Question: What has recently linked organisations as diverse as the BBC, Virgin Money, Acas and the Church of England? Answer: they have all reported their gender pay gap data in recent months. The requirement for any organisation that has 250 or more employees to publish and report specific figures about their gender pay gap (the difference between the average earnings of men and women, expressed relative to men’s earnings) by 4 April 2018 remains firmly in the spotlight.
Highlighting the issue last month, following publication of the latest provisional gender pay gap statistics by the Office for National Statistics (ONS), Theresa May’s renewed her commitment to improve workplace equality stating:
“…the gender pay gap isn’t going to close on its own – we all need to be taking sustained action to make sure we address this [and] that’s why today I am calling on more businesses, both small and large, to take action to make sure the gender pay gap is eliminated once and for all.”
Mrs May was calling not only for organisations required by law to report their gender pay data but also for smaller firms to release their pay details. Her direct approach is echoed by the Government Equalities Office, which has recently begun sending letters reminding organisations with 250 or more employees, both of their reporting obligations and of the deadline for reporting and uploading the data onto the Government’s “View Gender Pay Gap Information” website which is publicly available to view. Currently, fewer than 200 of the estimated 7000 UK employers with 250 or more employees have uploaded their figures.
On 26 October the latest provisional gender pay gap statistics published by the ONS show that the gender pay gap for full-time employees (based on median hourly earnings) decreased, from 9.4% in 2016 to 9.1%,. This is the lowest since the survey began in 1997.
Part-time female employees, separately, continue to earn more than men working part time though the gap is narrowing, from negative 6.1% in April 2016 to negative 5.1% in April 2017, as earnings for part-time men increased by more than for women.
Overall, combining figures for full-time and part-time gender pay gaps, there has been a marginal increase in the gap for all employees, from 18.2% in 2016 to 18.4% in 2017 and 10 November marked Equal Pay day (as for last year) when women in the UK effectively work for free for the rest of 2017 because of the gender pay gap.
The Equality and Human Rights Commission’s (EHRC) timely report: ‘Fair opportunities for all: A strategy to reduce pay gaps in Britain’ features six key areas that it believes both employers and government should tackle to reduce pay gaps. These include use of fair and transparent processes for senior and board level appointments, work to tackle prejudice and bias in recruitment, performance, evaluation and reward decisions, as well as making sure that flexible ways of working are available for all employees from the start. Recognising that tackling pay gaps is more complicated that a straightforward male/female comparison, the EHRC has also recently published research into gender, disability and ethnicity pay gaps.
Key points of the gender pay gap legislation
Any private organisation that has 250 or more employees who are based in England, Scotland or Wales must both publish their gender pay gap data and a written statement on their public-facing website and report their data to government online using the gender pay gap reporting service by 4 April 2018 and annually thereafter. Public sector organisations must publish by 30 March each year. Organisations which have fewer than 250 employees can publish and report voluntarily but are not obliged to do so. Employees include workers but not partners, including those in an LLP.
The figures must be calculated using a specific reference date (the ‘snapshot date’ each year), which is 31 March for public sector organisations and 5 April for businesses and charities. Therefore, the first snapshot date on which data must be analysed is either 31 March or 5 April 2017.
Employers will be required to provide information on the mean and median gender pay gap and mean and median gender bonus gap, together with the proportion of men and women in receipt of a bonus; and proportion of men and women in each of four pay quartiles.
The gender pay gap is based on the difference in the gross hourly rate of pay of male and female “full-pay” employees for the pay period that includes the snapshot date. The bonus pay gap relates to bonus payments made during the year ending with the snapshot date. “Full-pay” relevant employees are those not on a reduced pay rate or nil pay during the snapshot period.
Further details are contained in a Law at Work article published earlier this year.
What should organisations be doing now?
Each relevant employer should report individually, even if they are part of a group structure. Conversely if an organisation is a relevant employer but runs multiple payrolls for different departments or business functions this data should be collated into one set of figures for the organisation.
The data that employers are required to publish and report on both their organisation’s public facing website and to the government comprises the:
- mean gender pay gap in hourly pay
- median gender pay gap in hourly pay
- mean bonus gender pay gap
- median bonus gender pay gap
- proportion of males and females receiving a bonus payment
- proportion of males and females in each pay quartile
Supplying additional narrative?
Although only the gender pay gap information is obligatory, Acas provides guidance on a voluntary accompanying narrative to add contextual information which may explain any particular circumstances or anomalies that have led to a higher than expected gender pay gap. These will be employer specific but could include details about bonus schemes, demographic of the workforce, increased salaries for particular roles due to skills shortages, or grandfathering of pay due to TUPE transfers or other variations potentially unrelated to gender. Employers may also expand on actions they have taken or are taking to narrow the gender pay gap such as reviewing recruitment, selection and promotion processes, employee bonus schemes or championing talent through mentoring schemes. They would then comment on progress made in future reports on their gender pay gap. Providing contextual information is important not only for the organisation and its own employees, but also potential recruits and other stakeholders who will have access to the data. It is important to ensure that any strategies referred to are acted on with the full knowledge and engagement of current staff.
In order to manage both the collation and calculation of the data as well as its analysis, organisations will benefit from creating internal teams from HR, benefits, payroll and legal to lead on gender pay gap reporting, together with input from senior management who will sign off the data and, if appropriate, its contextual narrative.