The government requirement for gender pay gap reporting has arisen from the ongoing discrepancies between male and female pay for jobs of equal value. Gender pay gap reporting, therefore, seeks to identify discrepancies in pay so that organisations can begin to acknowledge and rectify the difference where appropriate.
Putting the spotlight on the gender pay gap presents an excellent opportunity for UK employers to demonstrate that they are, or are taking action to becoming, UK employers of choice by consciously managing their own reward to ensure a ‘fair days pay for a fair days work’, irrespective of gender.
The regulations are intended for UK organisations, however, the gender pay gap is far from a UK only issue. 2016 saw thousands of women in Iceland leave work at 2.38pm (the time from which they are working for free by comparison with the salaries of their male counterparts) to march in protest.
Whilst positive steps are being taken by organisations globally, the World Economic Forum predicts it could take another 170 years to achieve parity if we continue to move at today’s momentum. This has serious implications for businesses wanting to minimise the opportunity for industrial action, and complete with more forward-thinking organisations in attracting savvy, top talent.
Reasons for the pay gap are vast and can be complex. For example, women are tyipcally more likely to work part-time, which can mean a lower rate of pay pro rata. Women are also underrepresented in senior roles that tend to command high salaries. Interestingly, 20’s is reported be by 5%. However, this gap significantly increases for women in their 30’s (arguably when women are starting have or are well into family life) reaching 30% by mid 40’s.
Whilst gender pay gap reporting will impact a significant percentage of businesses in the UK, few are prepared to deal with it. According to XpertHR, just 6.2% of private sector employees had formal procedures in place to actually measure the gap.
So, what am I going to need to be able to report on?
As of 5th April 2017, employers with 250+ employees are obligated to publish six specific average metrics showing their pay gap and bonus gap using calculations set-out in the regulations:
1. Average gender pay gap as a mean average
2. Average gender pay gap as a median average
3. Average bonus gender pay gap as a mean average
4. Average bonus gender pay gap as a median average
5. Proportion of males receiving a bonus payment and proportion of females receiving a bonus payment
6. The proportion of males and females when divided into four groups ordered from lowest to highest pay.
Both ‘Ordinary’ pay (allowances, leave etc) and ‘bonus’ pay (remuneration such as commission, incentives, share options etc.) are to be considered when calculating the gap.
Businesses have just 12 months to make this information public on their website, signed by a director. At present there are no plans to penalise companies who do not comply, however, should compliance levels be too low, then, of course, this will be reviewed.
What steps can I take to help my business?
Below is a checklist of actions you can take to ensure you’re ready for the deadline:
1. Do you need to report, i.e. how many employees do you have? Take contractors/temporary staff into consideration here and do they need to be included?
2. Ensure your systems, payroll, in particular, are able to quickly and easily produce the data you need, specifically by gender
3. Note the timing of payments including bonuses/incentives
4. If systems are already in place, run a test using the April 2016 pay period as a calculation to identify areas of risk
5. If large gaps are uncovered, try and decrease these as quickly as possible
6. Share your processes with other similar businesses and you may be able to improve your own