Removing the gender pay gap is a priority for the government. As we said in our blog The shocking reality of equal pay it’s not only the right thing to do but essential for improving productivity.
There's been a lot of talk on gender pay since consultation on the draft regulations concluded in March. But the final regulations, expected in October 2016, have not yet been published.
However, the public sector consultation published over the summer gave us some insight into changes we can expect to see when the final regulations come into force. This includes a revised publication date of 5 April (rather than 30 April), a change of the way employees are defined and the addition of bonus median as a metric.
So, as we inch closer to the final regulations what do we know so far?
Who needs to report and when?
The legislation covers 8,000 employers in the private and voluntary sectors – those with over 250 employees. It will be extended to the public sector and consultation has begun.
You are required to calculate your gender pay gap using a 'snapshot' date of 5th April each year, and publish it by 4th April the following year.
This means the first snapshot date is 5th April 2017, and you will need to be published before 4th April 2018. So the need to implement systems and start gathering data is paramount.
Who does it cover?
Reporting must now cover employees as defined by Section 83 of the Equalities Act 2010 : those with a contract of employment, apprenticeship or a contract to personally do work.
What needs to be reported?
There following measures are required:
- Mean pay gap
- Median pay gap
- Mean bonus gap
- Median bonus gap
- Proportion of men and women who receive a bonus
- The proportion of men and women in each employee quartile
The pay calculations include base pay, paid leave (unless paid less because of the leave), allowances, shift premiums, piecework and any bonus paid in the reference period (this is the normal pay period e.g. weekly or monthly).
The bonus calculations include payments made in the 12 month period to the 4th April for any employees who have received a bonus.
You will have to identify which director will provide a written statement to confirm accuracy of the data. There is also the opportunity to voluntarily provide a narrative to explain the gap and the actions being taken to address it.
Where is it reported?
You'll need to publish the report on your UK website, accessible to both employees and the public. The data is to be retained on the site for three years to demonstrate progress.
In addition, the data is to be uploaded onto a government-sponsored website. This is expected to be used to monitor compliance and create sector-specific league tables.
What will the reporting tell us?
The reporting is about headline figures. It's useful as it provides a consistent measure to compare pay gaps across different companies.
It will show where women and men are concentrated in your organisation and where there are blockages to progression. The quartile data will show where gaps are at their widest. It gives the opportunity to address the root causes; culture, job design, expectations, support and unconscious bias.
The league tables will give consumers and talent choice over where they spend and choose to work. However the attention could discourage women from joining the very sectors that the government is targeting for greater female involvement such as science and technology. It may also encourage quick fixes from employers rather than sustainable change.
Let’s hope that reporting doesn’t become a tick box exercise but is used by employers to ask questions about how the gender pay gap can be eradicated.
As we’ve said previously , reporting should be used as a catalyst for diversity and increasing wider representation at higher organisational levels.
What should next steps be?
The legislation is expected shortly. But it’s wise to start looking at how you will comply. Start to:
- Gather data – an Equal Pay Audit is a great place to start
- Identify your gender pay gaps
- Determine the cause of the gaps
- Consider your internal and external communication messages
- Create an action plan to address your pay gaps
Image courtesy of Ewen Roberts, 'Gap in the bridge'