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Gender pay gap reporting: What your business needs to know


In the run-up to new legislation, the gender pay gap has been at the forefront of discussions in business and of how organisations must work to close the gap as they scramble to report their figures.
 
Since April 2018, all employers with 250 employees or more are required to publish their gender pay gap data every year.
 
But what actually is the gender pay gap, what can we do to address any imbalance and what does it mean for small and medium-sized enterprises (SMEs)?
 
What is the gender pay gap?
 
The gender pay gap refers to the average amount of money men and women earn in the workplace on an hourly basis.
 
The difference in the gender pay gap reflects how many men hold higher-paid positions in comparison to women.
 
What is the difference between gender pay gap and equal pay?
 
The gender pay gap is not to be confused with equal pay, which refers to the legal requirement that men and women must be paid the same amount for similar work. Originally the Equal Pay Act 1970 this has since been replaced by the Equality Act 2010.
 
Why do businesses have to publish their data?
 
The reason that a company has to report their data is to help identify any gaps between men and women in the workforce with a view to understanding why they exist and identifying any issues that are causing the gap. 
 
The legislation is not predominantly about discrimination but is about taking positive action.
 
For example:
 
If women are working in more part-time roles, then flexible working hours or remote-working opportunities would help to support the external commitments that women may have.
 
Or, offering more support to women in lower-level positions within training opportunities and encouragement for managerial and mentorship for director roles could address an imbalance.
 
What should employers publish and when?
 
All companies with 250 or more employees (on the snapshot date) must complete and submit their gender pay gap data. 
 
This includes employers in:
  • Private sector and listed companies
  • Voluntary sector
  • The public sector

The snapshot dates are:

  • 31 March for public sector employers
  • 4 April for private and voluntary sector employers

If you are legally bound to report your gender pay gap data and don't, then you are liable to enforcement action from the Equality and Human Rights Commission.

 

How do I calculate my gender pay gap?

A company with more than 250 employees is legally obligated to report their full gender pay gap data including:

  • 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

A full explanation of which employees are included/excluded in the reporting can be found here.

 

What is the difference between a mean and a median?

A mean is calculated as the sum of individual units of data, divided by the number of individual units.

For example, at Werks & Co. there are five employees, earning: £20k, £20k, £25k, £30k and £120k.

For Werks & Co, the mean of pay is £43k.

The vulnerability of mean averages are that they are easily skewed by outlier data points. In the example above, the managing director who earns £120k is taking the workers' average pay way above what the other four typical employees earn.

Another way to consider this is, imagine a warehouse full of packing staff who earn between £20-25k each. You would expect an average of around £22-23k.

If the owner and founder of the company who has a multimillion-pound salary walks into the room and joins the equation, the average goes through the roof and all the salaries of the 1,000 warehouse employees and one wealthy founder creates a mean average salary in the millions.

A median is calculated as identifying the unit number that is midpoint in a series of data.

For example, at Werks & Co we calculate the median by arranging the data units in numerical order and then finding the middle number.

Immediately, we can see this is a much more realistic and true representation of the average salary of all employees at Werks and is not skewed by the large salary of the MD (£120k). Half of the employees earn less than the median and half earn more.

 

To find out more about how you can calculate the gender pay gap, visit Sage's informative article.

 


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