As of the end of the last financial year, the rules around gender pay gap reporting have changed, with organisations of a minimum of 250 employees obliged to publish their figures annually. These measures were driven by the Equality and Human Rights Commission (EHRC) with the first deadlines being the 30th March 2022 for public authority employers and the 4th April for those in the private or voluntary sector.
For organisations across all sectors, gender pay gap reporting has an importance far beyond that of a legislative obligation. Any report is likely to shed light on key factors both internal and external which can provide context for wider and more deeply rooted issues. Reporting on these matters is important to provide clarity for employees and key stakeholders, not to mention providing you with the information you need to build a framework that helps bridge any potential gaps.
In this article we will be covering:
- Who is affected by gender pay gap reporting
- Gender pay gap reporting deadlines
- How to work out your gender pay gap
- Some gender pay gap reporting examples
- Assessing how your business is currently
Who is affected by gender pay gap reporting?
All companies and organisations with 250 or more employees are required to file a gender pay gap report, the number of organisations reporting has fallen compared with before the pandemic, from about 9,000 to 8,200 in the latest reporting period.
Changes to legislation proposed by the EHRC was postponed until October 2021 with the deadlines of 30th March 2022 for public authority employers and the 4th April for those in the private or voluntary sector introduced for reporting. These requirements are now set to be an annual obligation, meaning that organisations will be required to undertake a yearly audit of the pay process and reconciling themselves with any potential gaps.
We have already seen clear patterns emerge as a result of reporting, with certain industries finding themselves under greater scrutiny: Research carried out by the CIPD found that the greatest disparity was within the construction industry, with the median wage for women standing at just 36p to ever £1 earned by men.
The advice from the CIPD is to take advantage of the opportunities presented by reporting and to not simply focus on the mechanics of reporting but rather, take the time to examine the implications of their figure and what biases and wider issues it identifies.
Gender pay gap reporting deadlines
The changes introduced as of 2022 will now be in force annually for all parts of the United Kingdom, excluding Northern Ireland. The deadlines will be the 30th March for public authority employers and the 4th April for those in the private or voluntary sector.
How to calculate your gender pay gap
Understanding legislative change is one thing but ensuring an accurate and regular appraisal of your pay process is another matter entirely. With the demands of gender pay gap reporting now an annual responsibility, businesses across all sectors will need to understand how to implement accurate and effective reporting.
One of the first steps will be to gather specific payroll data for each relevant employee. This will mean collating information for each of your people employed during a specific period and will better enable you to get a snapshot of your organisation’s pay structure at this time.
For accuracy you also need to look beyond basic wages and take into account any additional payments such as allowances for extra certification such as first aid training or fire wardens.
Next, ensure you are familiar with the new deadlines. Remember it’s the 30th March for public authority employers and the 4th April for those in the private or voluntary sector. Also take into account that this reporting will occur during an already hectic time for your payroll teams so it is vital that you are rendering any necessary assistance.
The basic gender pay gap calculation is as follows:
|Pay gap type||How to calculate|
|Mean gender pay gap||Deduct the mean female hourly pay rate from the mean male hourly pay rate. Then, divide the result by the mean male hourly pay rate and multiply by 100.|
|Median gender pay gap||Deduct the median female hourly pay rate from the median male hourly pay rate. Divide the result by the median hourly pay rate and multiply by 100.|
|Mean bonus gender pay gap||Deduct the mean female bonus pay from the mean male bonus pay. Divide the result by the mean male bonus pay and multiply by 100.|
|Median bonus gender pay gap||Deduct the median female bonus pay from the median male bonus pay. Divide the result by the median male bonus pay and multiply the resulting figure by 100.|
Gender pay gap reporting examples
So, what exactly will your gender pay gap report look like? Before undertaking your annual reporting, it’s worth considering the potential that your reporting has beyond mere admin. Remember, your gender pay reporting is a unique snapshot of your organisation and how the information is communicated is as critical as the data itself.
We have provided examples below of what should be included in your reporting.
Introduction of the company
This may not seem like the most obvious step but it is worth considering that as a relatively new responsibility for organisations, gender pay gap reporting is an area which will be garnering a lot of attention, particularly externally.
The way you communicate your gender pay gap reporting says a lot about your organisational culture and ethos and can serve as a reflection of your overall employee value proposition- something which is invaluable in securing the services of new talent.
Take the time to introduce your company and to frame your gender pay gap reporting in the proper context. What is the message that you want to send? Are you happy with the figures? If so, champion them. If things aren’t where you need them to be right now, then acknowledge that and make it clear that you are on the road to doing better.
E.g. With over 250 staff, our company is delighted to share the journey we’ve been on and what we are doing to narrow our gender pay gap. etc
Explain what the gender pay gap is
While it may seem an obvious point to make, it is important to take the time to explain what the gender pay gap is and why it is significant to be reporting on it. This serves a twofold purpose – firstly, you can be upfront about any gender pay disparities which exist- after all, no true project of transformation can occur without absolute candour.
Secondly, you can more effectively communicate intent to external parties such as prospective new hires who will undoubtedly want to see evidence of changes being made.
E.g. Gender pay looks at the difference in average pay of all men and the average pay of all women across the business, regardless of job types or how senior they may be. As with many other large UK organisations, we have more men than women in senior and higher paid technology and development roles, which results in us having a gender pay gap.
Include your calculations and explain them
It is important to include tangible figures and data to support your assertions within your report. These should include hourly pay quarterly rates, as well as median and mean pay rates, as well as extra earning disparities such as additional rates for extra qualifications for example, first aiders.
Offer the figures with context behind them- explain to your key stakeholders and other interested parties what the gaps represent and more importantly, what can be done to bridge them.Include a statement from a senior figure
When reporting on your gender pay gap, it is important to frame the information within the proper context. Presenting the information in a vacuum offers very little value to your organisation or to key stakeholders or interested external parties reading. It’s important to remember that this information serves as a reflection of your organisational culture and ethos and with that in mind, you should provide a clarifying and supporting statement from a key senior official in order to provide context and to outline your intent.
For example, “we declare that our data has been calculated according to the requirements of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.”
Include an action plan
Should your report highlight any incidences of gender pay disparity, then it is reasonable to assume that your employees, key stakeholders and interested external parties will want to see your organisation take some practical steps towards redressing the balance.
Our own gender pay gap report highlights a few key steps that Advanced identified in order to help bridge the gap. These included placing a greater emphasis on internal mobility for our existing employees in a way which eliminates gender related bias within the process, as well as looking at ways to make new roles more appealing to female candidates.
With gender pay gap reporting now an annual responsibility, this actually presents organisations with a unique opportunity to not only provide an action plan for improvement but also as a yearly touchstone to audit and assess how successful any previous initiatives may have been.
How is your business handling gender pay gap reporting?
With the new rules around gender pay reporting in full force, organisations across all sectors are finding a greater spotlight being shed on their pay processes and internal structure. This will undoubtedly lead to some tough questions being asked both internally and externally but overall, the message should be that your gender pay gap reporting should be much more than just a legislative hurdle to overcome.
Businesses need the most accurate information possible in order to build a complete picture of their pay structures and to identify areas where change needs to happen. Information is power and transparency in reporting offers greater opportunities for businesses to make changes for the better and to reaffirm their commitment to their people.
At Advanced, we believe in the power of technology to help you achieve more. We understand that understanding your gender pay reporting and providing accurate and proper data is vitally important which is why our Advanced HR software has been designed specifically to give you the oversight you need to not only understand the challenges and roadblocks affecting your pay structure but to also provide a framework to help you improve upon your processes.
For further information about the new gender pay gap reporting requirements, be sure to visit the official Government page.
If you’d like to discover more about how Advanced HR can help you achieve accuracy in your gender pay reporting and help transform the way you reward your people, come and explore our suite of People Management solutions and get in touch today.