Gender pay gap reporting – What employers need to know

Miracle Dynamics, February 12th 2018

Gender pay reporting legislation calls for employers with 250 or more employees to publish statutory calculations by April this year and thereafter annually showing how large the pay gap is between their male and female employees.

 

From April 2017, employers were given 12 months to publish this information.

 

The gender pay gap shows the difference between the average earnings of men and women. This is expressed as a percentage of men’s earnings e.g. women earn 15% less than men.

Used to its full potential, gender pay gap reporting is a valuable tool for assessing levels of equality in the workplace, female and male participation, and how effectively talent is being maximised.

 

Reporting might show for example, that on average men earn 10% more pay per hour than women, that men earn 5% more in bonuses per year than women, or that the lowest paid quarter of the workforce is mostly female. These results must be published on the employers own website and a government site.

This means that any gender pay gaps will be publicly available to customers, employees and potential future recruits. As a result, employers should consider taking new or faster actions to reduce or eliminate their gender pay gaps.

There are two sets of regulations, one for the private and voluntary sectors (which took effect from 5 April 2017) and the second mainly for the public sector (which took effect from 31 March 2017). The deadline to report is 4 April 2018 (or 30 March 2018 for public sector employers).

Employers can register their organisation on the government's online reporting service www.gov.uk/report-gender-pay-gap-data.

 

Key points

 

An employer must comply with the regulations for any year where they have a 'headcount' of 250 or more employees on 5 April (where the private and voluntary sector regulations apply) and 31 March (where the public sector regulations apply), but employers of all sizes should consider the advantages.

For the purpose of gender pay gap reporting the term ‘employee’ is defined in The Equality Act 2010. This is known as an ‘extended’ definition which includes:

  • Employees (those with a contract of employment)
  • Workers and agency workers (those with a contract to do work or provide services)
  • Some self-employed people (where they have to personally perform the work)

There are six calculations to carry out, and the results must be published on the employer's website and a government website within 12 months. Where applicable, they must be confirmed by an appropriate person, such as a chief executive.

 

Gender pay reporting is a different requirement to carrying out an equal pay audit.

 

Employers have the option to provide a narrative with their calculations. This should generally explain the reasons for the results and give details about actions that are being taken to reduce or eliminate the gender pay gap.

While the regulations for the public, private and voluntary sectors are near identical, and the calculations are directly comparable, the public sector regulations also take into account the public sector equality duty.

 

I’ve made the calculations, now what?

 

The results must be published on the employer's website and a government website. They must, where applicable, be confirmed in a written statement by an appropriate person, such as a chief executive.

The narrative can say why the results show challenges. For example, an employer might explain that their executives get the highest bonuses and most of them are men. Where there is a challenge, employers should consider taking new or faster actions to reduce or eliminate their gender pay gaps.

 

The narrative can say why the results show successes. For example, an employer might explain that a recent change to their bonus policy has helped provide a much lower bonus gender pay gap.

The narrative can also be used to show plans for long-term results. For example, an employer might want to tackle the underrepresentation of women in their science and engineering roles by running a recruitment campaign for junior roles that particularly encourages women to apply.

In the short-term this means more women will be at the starting salaries, which could make the gender pay gap look higher. However, in the longer-term this will balance out and the underrepresentation should be reduced.

While employers may already be taking steps to improve gender equality and reduce or eliminate their gender pay gap, this process will support and encourage action.

 

Gender pay gap reporting is different to equal pay

 

Equal pay deals with the pay differences between men and women who carry out the same jobs, similar jobs or work of equal value. It is unlawful to pay people unequally because they are a man or a woman.

The gender pay gap shows the difference in the average pay between all men and women in a workforce. If a workforce has a particularly high gender pay gap, this can indicate there may a number of issues to deal with, and the individual calculations may help to identify what those issues are.

 

What if I fail to publish the gender pay report?

 

It is a legal requirement for all relevant employers to publish their gender pay report. Failing to do this within one year of the snapshot date is unlawful. The Equality and Human Rights Commission has the power to enforce any failure to comply with the regulations.

 

Employers will also run a reputational risk if they fail to publish the information, and in many cases the suspicions behind why an employer failed to publish their gender pay gap could have a negative impact and be far worse than the report findings would have shown.

 

To start reporting your gender pay gap data visit https://www.gov.uk/report-gender-pay-gap-data

 

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