The government’s decision to include employees working in the ‘gig economy’ was a bit of game changer for gender pay reporting.
The final regulations, published at the end of 2016, were amended to include non-permanent staff. This is particularly significant for companies with staffing levels just below the 250-person threshold. Many may now need to comply with the regulations as workers previously considered to be casual staff workers will be included in their headcount.
There has been an increasing amount of political attention on the gig economy over the past year, with several companies being accused of ‘using the system’ to pay less than the minimum wage.
Despite the media attention on low pay in the gig economy, the amended definition of ‘relevant employees’ with regards to gender pay reporting brings a whole host of workers from a variety of pay levels into this classification. This includes consultants, self-employed workers and independent contractors.
There is scope to omit these casual staff where “it is not reasonably practicable for employers to obtain the data” but organisations should be able to justify why they have done this, before the figures are signed off and published.
The reality is, companies will need to include more workers than they may have considered relevant when they were looking at this last year. This means gender pay calculations have become considerably more complicated. There are three main reasons why this may be:
1. Sporadic pay
The nature of the gig economy means workers do not earn a consistent amount each month. Whereas it is relatively simply to calculate the hourly income of salaried workers – who earn a set amount and work a set number of hours. Casual workers’ income varies. For example, depending on workload, a casual worker in a company may earn £500 in June, £200 in July and £1000 in August.
2. Unknown hours
When freelancers or consultants take on a project, they will often agree to perform a set job for a set price. There may be a deadline when the task needs to be completed by, but this doesn’t necessarily mean that the number of hours that will be worked has been agreed. To calculate an hourly rate, however, we need to establish how many hours were worked against what they were paid.
3. Different rates of pay
Casual workers may also be paid at different hourly rates depending on the project they are working on. For example, someone might be retained to maintain the upkeep of an office building but he may separately tend to the office gardening once a fortnight too. When the hourly rates for each project are calculated they not be the same and as a result Jim’s hourly rate may vary. This further adds to the complexity of the calculations.
Companies will be able to utilise their HR and Payroll software, like ResourceLink to complete much of the work required to establish salary averages. However, by including casual workers, it’s clear that a fair amount of manual manipulation will also need to be carried out before accurate figures can be established.