June 15th, 2017 / Insight posted in Blog

Gender Pay Gap Reporting is here…but what’s the point?

If you employ more than 250 people in the UK, it’s likely that you’ve heard that Gender Pay Gap Reporting will affect your business.

As at 30 April 2017, you need to have reported on the pay differential between male and female employees in your organisation. The detail will then need to be published on 4 April 2018. It’s all fairly straightforward, but I’ve read some articles asking what the point of it is!

The Government introduced this new initiative in the hope that it will solve the issue of dispartity of pay between males and females. Some say this is rather a half-hearted attempt at solving a long-standing problem due to the fact that there is no penalty at all for non-compliance. Nor is there seemingly a way for the published pay gap reports to be analysed effectively by the Equality and Human Rights Commission (EHRC).

However, what businesses should not forget is their overall brand and image as an employer. If you employ over 250 people you will be obliged to publish this pay data on your company website. This means that all prospective employees will be able to view this information and make judgements about your organisation accordingly. With more and more job seekers turning to resources like Glassdoor before they accept an interview or job offer, the image that your business puts out to the world as an employer is as important as the image it portrays to its customers/clients. And let’s not forget the Equal Pay Act and its implications.

So maybe the point is, that although there is no official penalty for not publishing the data, Gender Pay Gap Reporting should go some way to addressing the disparity.

What type of pay needs to be included?

Basic pay, allowances, paid leave (on full pay), bonuses and commission which relate to the relevant pay period, but not overtime. The figures may be skewed, however, as someone receiving a car allowance will be included, but someone who opts for a company car instead will not show up in the data. There are other similar issues which will hopefully be addressed as things progress.

Whose pay needs to be reported on?

To establish if an organisation has 250 employees, the regulations refer to the Equality Act definition of an employee. This includes those on casual or zero hours contracts and apprentices. It may also include freelancers or those on a contract for services who are employed personally to carry out work. Partners are not included. Those not on full pay (e.g maternity leave or sick leave) as at the relevant pay period will not be included but will count towards the 250 head count.

What needs to be reported?

  • The mean (average) and median (mid point) hourly pay for male and female staff
  • The mean and median bonus pay
  • The proportion of male and female employees who received a bonus
  • The proportion of men and women in each quartile of pay bands.