Thousands of employers will publish their gender pay gap figures for the first time from today, helping break the glass ceiling and create a more modern workforce.
The UK is one of the first countries in the world to require gender pay gap reporting and follows the government’s commitment to introduce the requirements at the last election. This is a key part of the government’s work to eliminate the gender pay gap.
Voluntary, private and public sector employers with 250 or more employees will be required to publish their figures by April 2018. The regulations will cover approximately 9,000 employers with over 15 million employees, representing nearly half of the UK’s workforce.
The UK gender pay is already at a record low of 18.1 per cent. These requirements will help employers to identify the gaps in their organisations and take action to close the gender pay gap.
Ensuring that women have the same opportunities as men to fulfil their potential in the workplace is a key part of building a country that works for everyone, as the Prime Minister made clear in her first speech outside Downing Street.
Minister for Women and Equalities Justine Greening said:
“We have more women in work, more women-led businesses than ever before and the highest proportion of women on the boards of our biggest companies. This has helped us to narrow the gender pay gap to a record 18.1 per cent – but we want to eliminate it completely.
“Helping women to reach their full potential isn’t only the right thing to do, it makes good economic sense and is good for British business. I am proud that the UK is championing gender equality and now those employers that are leading the way will clearly stand out with these requirements.”
The benefits of helping women to unlock their talents are huge – eliminating work-related gender gaps could add £150 billion to our annual GDP by 2025. That is an opportunity that neither Government nor businesses can afford to ignore.
As part of the new regulations, employers will be required to:
- Publish their median gender pay gap figures
By identifying the wage of the middle earner, the median is the best representation of the ‘typical’ gender difference. Employers will be asked to use data from a ‘snapshot’ period in April to calculate this average.
- Publish their mean gender pay gap figures
By taking into account the full earnings distribution, the mean look at both the low and high earners in an organisation – this is particularly useful as women are often over-represented at the low earning extreme and men are over-represented at the high earning extreme.
- Publish the proportion of men & women in each quartile of the pay structure.
This data will show the spread of male and female earners across an organisation, helping to show employers where women’s progress might be stalling so they can take action to support their career development.
- Publish the gender pay gaps for any bonuses paid out during the year
As there is a significant issue around bonus payments in some sectors, employers will also have to publish the proportion of male and proportion of female employees that received a bonus during the year.
Employers will also be encouraged to publish an action plan alongside their figures, demonstrating the steps they will take to close the gender pay gap within their organisation.
The Government is working with leading employers who are exploring publishing their figures early.
The Government Equalities Office has also launched its new campaign page where employers can access resources, case studies and publish their gender pay gap figures.
The new gender pay gap mandatory reporting requirements are part of wider work the Government is doing to support women in the workplace. This includes £5 million to increase returnships, offering 30 hours of free childcare, and introducing shared parental leave and new rights to request flexible working. There is also extensive cross-Government work to get more women into the top jobs at the UK’s biggest companies and to get more girls taking STEM subjects at school.
We share reactions from the HR world below:
CIPD: ‘Major change, but its an opportunity’
Charles Cotton, Performance and Reward Adviser at the CIPD, comments:
“With fewer than one in three employers carrying out any analysis of the pay of men and women, we should appreciate that the gender pay gap reporting (GPGR) requirements are set to be a major change for many UK employers.
“However, it’s important that organisations recognise the opportunity presented by GPGR. It’s not just about reporting the right figures, at the right time and in the right way. It’s also an opportunity to explore why the gap exists and looking at what practical steps can be taken to reduce it, as well as creating a compelling narrative for employees and other stakeholders about what you’re doing and how. Our guide shows that there are many potential advantages for employees, business, society and the economy in reducing the gender pay gap. However, some of the causes lie outside the workplace, so Government and society also have an important part to play.
‘Employers hoping it will be like Norway where it soon became old news’
Crowley Woodford, employment partner at law firm Ashurst, said:
“The expectation is for fireworks when employers publish the differences between what they pay men and women. However, many employers are hoping that this will go the way of Norway, where after some initial surprise, it soon became old news.”
‘TUC: Reporting is a start – but we need action to close the gap too’
TUC General Secretary Frances O’Grady said:
“Publishing information on gender pay gaps in salaries and bonuses is a start. But it is just that – a start. To genuinely tackle the root causes of the gender pay gap, we need to understand why women are still being paid less than men and do something meaningful about it.
“We need to remove the barriers that stop women going into better paid, male-dominated professions and create more better-paid part-time and flexible jobs. And we must improve pay for undervalued – but vital – jobs that are predominantly done by women, like social care.
“But this won’t happen just with light-touch regulation. Government should extend the law to medium-size organisations as well as large employers. And bosses that don’t comply with the law should be fined.”
‘Tricky Areas and Potential Pitfalls for Employers’
Amanda Steadman, in Addleshaw Goddard‘s Employment Law team added:
“On the face of it the new gender pay gap reporting regime appears straightforward, but there are many tricky areas and potential pitfalls for employers. For example, just identifying which employees are within the scope of the exercise takes careful analysis – in certain circumstances independent contractors and overseas employees may need to be included. Similarly, where an employer operates a complex reward structure, care needs to be taken to ensure the right components of pay are counted. And once the exercise has been completed and the pay gap identified, employers need to turn their minds to the difficult question of how they will close the pay gap within their business: there are no “quick fixes” here.
“Remedial measures range from things like supporting women to ascend to senior, highly-paid roles and offering flexible working arrangements in such roles, to supporting women to return to work after periods of family leave and encouraging men to take time out of the workplace using shared parental leave. However, these kinds of measures take careful planning and need senior level sponsorship in order to make an impact”
“Whole sectors are unprepared and will need to play catch-up”
“The new gender pay gap reporting regulations are one of the biggest developments in employment law for years. Many businesses, indeed whole sectors, are still unprepared and will have to quickly play catch up.
“There are three key steps businesses need to take; firstly, working out whether they come within the scope of the new rules, ie. whether they have 250 or more employees; secondly, working out what figures they are going to have to publish come 2018 at the latest and what narrative they might include to ensure the stats are contextualised; and, finally and critically, considering whether they need to put in place changes to improve. This could include new training, implementing new appraisal systems or reviewing staff progression policies.
“One pitfall businesses will have to watch out for is that the definition of employee under the rules covers many self-employed or contract workers. This may see more businesses come under the scope of the regulations and could make gathering the requisite data a real challenge.
“Tackling gender disparity is a complicated task and the new reporting rules take a rather crude and broad-brush approach. They require the publication of aggregated figures, which can produce a distorted picture because they take no account of the gender composition of a given workforce – an employer with predominantly male senior management and predominantly female employees in junior or clerical roles will have “bad” gender pay gap figures, but this gives no clue as to whether they have an equal pay problem. ‘Gender pay is not equal pay’ is already emerging as a new mantra.
“However, while there are problems, there are also potential opportunities. For instance firms which can point to comparatively modest pay gaps and have a good story to tell on initiatives to promote gender equity may steal a march on the competition by publishing early and demonstrating their attractiveness to potential recruits. With a window of nearly a year – ending on 4 April 2018 – in which to publish, there is an important tactical decision for each firm to take on when is best to move.”