21st August 2017
The gender pay gap has once again come into focus, following the reveal of the salaries paid to employees of the BBC. However, while the story certainly caught the attention of the wider public, business owners should already be switched on to the issue of the gender pay gap. New legislation came into effect in 2017, and there’s important action to be taken.
What is the gender pay gap?
The gender pay gap is the difference between the pay men and women receive. It’s measured in countries all over the globe, and in the UK it stands at around 18% in 2017. It’s not as simple as women being paid 18% less on average than men for doing exactly the same job and hours, although it’s believed that this sort of salary discrepancy is still a minor part of the problem, despite being illegal. This is defined as an equal pay issue rather than one related to the gender pay gap.
Instead the gap comes from a number of other factors. Often fewer women are promoted into more senior management roles, so you’ll find large companies with male-dominated management teams receiving the higher salaries. It’s also been found that it can be harder to attract and then retain women in the job sectors that offer higher salaries.
Finally there’s the element of working hours to consider. Broadly speaking, women work fewer hours as they still take a more prominent role in a family, with maternity leave outweighing paternity leave and a tendency to work flexible or fewer hours in order to look after children around work.
What is the law on the gender pay gap?
There is no law on the bridging of the gender pay gap, beyond the equality laws that require anyone doing the same job to be paid the same rate. These laws were first introduced in the Equal Pay Act of 1970, which has now been superseded by the Equality Act 2010, which also introduced directives on fair pay based on race and disability.
It’s important that these laws are upheld, and any company that still has imbalances in the salaries that it offers workers for the same work should address that as soon as possible. In October 2014 the Equality Act was amended to instruct employment tribunals to carry out a full equal pay audit on any business that has been found to be in breach of the laws, to identify where any salary discrepancies are widespread.
There are no laws to address the more prominent issues of the gender pay gap directly. There’s no obligation to have equal numbers of women and men in senior management roles, or to hire an equal number of women into a job role where there aren’t enough applicants.
What is the requirement on reporting the gender pay gap?
Despite there being no law on addressing the causes of the gender pay gap directly, there is a new government requirement about to come into force. Before April 2018 all businesses with more than 250 employees must publish full details of their gender pay gap. This includes what the gap is, and what the causes for the gap are. This will then be an annual report.
This stops any business from hiding any discriminatory behaviours, and should highlight companies that are clearly not making any efforts to reduce the gender pay gap.
What are the key points to consider?
As mentioned, the gender pay gap data must be published by any business with at least 250 employees as of 5 April each year (private and voluntary sectors) or 31 March (public sector). This employee count includes all workers, including some self-employed workers. Full definitions are made clear in the Equality Act 2010. Businesses with fewer than 250 employees are not required to publish this data, although they may wish to.
There are six measurements that need to be reported on, and the data must be made available on both the government’s website and the company’s own website. It can include a narrative, if the employer wants to explain why there is a gap, any challenges to reducing it, any successes in helping to narrow the gap and any future plans to address the gap, including recruitment drives.
The six measurements of the gender pay gap report
There are six calculations that need to be included in the gender pay gap report. These are:
- the gender pay gap as a mean average
- the gender pay gap as a median average
- the mean average of the gender pay gap in relation to bonus payments
- the median average of the gender pay gap in relation to bonus payments
- the proportion of both males and females that received a bonus payment
- the proportion of males and females within groups when the company pay structure is split into 4
To clarify that last point more, each company must show its pay structure split into four equal groups – so the top 25% of earners, the next 25%, the next 25% and then the bottom 25%. Within these groups, the proportion of men and women must be clear. So, based on the current problems with the gender pay gap, many companies will show a higher proportion of women in the bottom pay group compared to the top pay group which will contain the senior management staff.
Why publishing this data is so important
The existence of a gender pay gap, as already clarified, is not unlawful. Nor is it the intention of the government to highlight illegal activity by enforcing the reporting of gender pay gap data. Instead, the idea is that companies will start to become more aware of the issues surrounding the gender pay gap, and take steps to help reduce it. It won’t just help companies themselves, but also wider organisations including the government in finding common trends where support could be offered across the whole market. Make sure, if your company employs 250 or more people, that your data is published, otherwise the government will take measures against you.