The obligation on employers to report pay information will come into force in April 2017. The obligation to report only applies to employers who have 250 "employees" or more. However, as always – this is not straight forward so read on to determine whether this may apply to you.

What about groups of companies?

Fortunately for some employers who form part of a group of companies, it has been confirmed that each company in a group of companies will be treated as a separate employer.

However, if you have a complicated group structure and pay all employees through a central administrative company even though they may work in other areas of your business then you may fall within the obligation to report and should take advice.

Who is an employee?

A wide approach has been taken to this question: for the purposes of reporting, you must count all employees, workers and any self-employed contractors who are obliged to provide personal service. You do not have to include any agency workers because they will be counted in the numbers for the agency's reporting obligation. But you do have to include any of your staff that work overseas if they are engaged on a contract governed by British laws or have a home in Britain or pay taxes in Britain.

For most employers, staffing levels will change throughout the year and so the relevant date for the calculation of the number of "employees" is 5 April of each year – this is called the "snapshot date". Please note that if you use zero hours employees or casual workers and they are not working for you on 5 April then they may still have be counted if they are engaged under an umbrella contract rather than on an ad-hoc basis. If you're borderline and unsure whether to count certain categories of staff then take advice.

You've counted your "employees", now what?

First you need to identify which of your staff are "relevant employees". This means that they fall within the wide definition above and they were employed by you or working for you on 5 April. All of these relevant employees will be taken into account when calculating average bonus.

Then you need to identify which of the "relevant employees" are "full-pay relevant employees". This means that they were receiving their full normal pay during the pay period in which 5 April falls. If you pay weekly then the pay period will be the week in which 5 April falls, if you pay monthly then the pay period will be month in which 5 April falls, etc. This definition excludes anyone who was being paid less than their full normal pay in that pay period because of leave e.g. because of sick leave or maternity leave. However, it doesn't exclude anyone who was paid less than their normal full pay in that pay period because of something other than leave e.g. a strike. Only these full-pay relevant employees will be taken into account when calculating average pay.

Let's tackle bonuses first:

The relevant period for bonus reporting is the 12 months ending on the "snapshot date" i.e. 5 April. The first snapshot date is 5 April 2017 and so the first report will apply to any bonuses paid in the period from 6 April 2016 to 5 April 2017 inclusive.

The full amount of any bonus paid must be taken into account. If you paid out a large bonus that had been earned over several years (e.g. under a long term incentive scheme), there is no mechanism to reduce pro-rata that large bonus to show a "per year" bonus. Similarly, if you paid out a reduced bonus to staff because they had not worked the full year or because they worked part time, there is no mechanism to increase pro-rata that small bonus to show a full year/ full time equivalent bonus.

This may influence your results. For example, female staff are more likely to work part time and receive a reduced bonus amount. This is not necessarily unfair or discriminatory, but will skew your data. You may want to include an explanation of this in the narrative that accompanies your data.

What is a bonus? Any kind of pay in the form of money, vouchers, securities or securities options or interests in securities. And, pay which relates to profit sharing, productivity, performance, incentive or commission. Accordingly, sales commission should be included within your calculations.

You must publish the following bonus information:

1. average bonus as a mean

• a. add up all the bonuses paid to "relevant employees" who are male and divide the total amount by the number of "relevant employees" who are male to get a mean bonus per male;
• b. add up all the bonuses paid to "relevant employees" who are female and divide the total amount by the number of "relevant employees" who are female to get a mean bonus per female;
• c. calculate the difference in your two means to establish the gender pay gap as a percentage as follows: (a-b)/a x100.

2. average bonus as a median

• a. sort all the bonuses paid to relevant employees who are male into order from smallest bonus payment to largest bonus payment and identify the middle bonus payment to get a median bonus per male;
• b. sort all the bonuses paid to relevant employees who are female into order from smallest bonus payment to largest bonus payment and identify the middle bonus payment to get a median bonus per female;
• c. calculate the difference in your two medians to establish the gender pay gap as a percentage as follows: (a-b)/a x100.

3. the proportion of males receiving a bonus payment and the proportion of females receiving a bonus payment.

Now, let's tackle pay:

Average pay is to be calculated based on the pay received by each "full-pay relevant employee" in the pay period in which 5 April falls. If they're paid weekly, the pay period will be the week in which 5 April falls. If they're paid monthly, the pay period will be the month in which 5 April falls, etc.

Pay includes:

• Basic pay.
  Allowances and enhancements paid on top of basic pay – e.g. shift allowances and premiums, allowances for additional duties such as first aiders and fire wardens, London weighting allowances or other location based allowances e.g. for working overseas, etc.
• Pay for piecework.
  Bonuses or commission – please note that if a bonus or commission is paid in the pay period in which 5 April falls, then it should be included in your calculation but can be reduced pro-rata across the period for which the bonus or commission is paid. For example, if it is an annual bonus then it should be reduced to 1/12th for your calculation.
• Holiday pay – but only if this is equivalent to full normal pay.

Pay does not include:

• Overtime pay
• Non-monetary benefits including salary sacrifice arrangements.
• Expenses.
• Employer's pension contributions.
• Redundancy pay or pay in lieu of notice or any other termination payment.

Once you know which elements of pay you need to take into account, you must work out the hourly rate of pay for each "full-pay relevant employee". You will do this by calculating the total pay for the pay period and then multiplying this by (7 / the number of days in the pay period) and then dividing that outcome by the number of hours worked in a week. The Regulations specifically state that there are 30.44 days in a month.

For example:

• Max earns £3,200 in salary in April 2017 and receives his annual bonus for 1 January 2016 to 31 December 2016 in the sum of £9,600.
• He works an average of 55 hours per week.
• His bonus is for a historic pay period, but will still be taken into account in this pay period. However, it is possible to pro-rata it to 1/12th of the total.
• His pay for the pay period of one month in which 5 April 2017 falls is therefore: £3,200 salary + (1/12th x £9,600 bonus) = £4,000.
• £4,000 x (7/30.44 days) = £920
• £920 / 55 = £16.72 per hour.

You must publish the following pay information:

1. average pay as a mean average

• a. add up all the hourly pay rate to "full-pay relevant employees" who are male and divide the total amount by the number of "full-pay relevant employees" who are male to get a mean hourly pay per male;
• b. add up all the hourly pay rate to "full-pay relevant employees" who are female and divide the total amount by the number of "full-pay relevant employees" who are female to get a mean hourly pay female;
• c. calculate the difference in your two means to establish the gender pay gap as a percentage as follows: (a-b)/a x100.

2. average bonus gender pay gap as a median average

• a. sort the hourly pay rates paid to "full-pay relevant employees" who are male into order from smallest hourly pay rate to hourly pay rates and identify the middle bonus payment to get a median hourly pay rate per male;
• b. sort the hourly pay rates paid to "full-pay relevant employees" who are female into order from smallest hourly pay rate to hourly pay rates and identify the middle bonus payment to get a median hourly pay rate per female;
• c. calculate the difference in your two medians to establish the gender pay gap as follows: (a-b)/a x100.

For example, if the mean hourly rate for full-pay relevant employees who are male is £16.72 and the mean hourly rate for full-pay relevant employees who are female is £14.90 then the difference as a percentage is:

(£16.72 - £14.90)/(£16.72) x 100 = 10.89%

3. the proportion of males and females ("full-pay relevant employees") when divided into four groups ordered from lowest to highest pay. This will show, for example, whether there are more females in the lowest paid quarter of the workforce.

Where do you publish the information?

On your own website and on a government website – this has been set up but the website address is not yet known. The information must be available on the websites for a period of three years.

The published information must be confirmed by a signed statement of accuracy by an appropriate person – such as a Managing Director.

You have the option to publish a narrative with the data to explain anomalies and/or explain what you are doing to address any differentials in pay by gender.

The deadline for publication is 12 months from the snapshot date – and so the first deadline is 4 April 2018.