Gender pay gap reporting – all you need to know.

Since 2017, any employer with 250 or more staff on their snapshot date, (31^st March or 5^th April depending), must report their gender pay gap to the government on an annual basis.

The gender pay gap is the difference between the average earnings of men and women across an employer’s staff body. It is expressed as a percentage of men’s earnings. For example, ‘women earn 20% less than men per hour’.  The gender pay gap can be calculated across the entire workforce for subgroups such as age, or employment status such as part-time. This kind of targeted analysis can help your HR professionals establish if certain subgroups are more impacted than others.

Although there is good news to report, in that the gender pay gap has been generally declining since ONS records began in 1997, there is still work to be done.  The most encouraging data comes from the under-40s where the average gender pay gap is at 3.2% – this is considered low by the ONS. The picture worsens dramatically in the older population, with the gender pay gap for 40-49-year-old full-time employees being around 10.9%, and in the 50-59 group it is 11.7%. In the over-60s group, the gender pay gap sits at 13.9%.

Information to be reported and by when

Employers with 250 or more employees are required to report their gender pay gap information within a year following their snapshot date, and this requirement applies for each year that the employer’s headcount is 250 or more on the snapshot date. The employer must calculate and report on and publish the following gender pay gap data:

1. percentage of men and women in each hourly pay quarter
2. mean (average) gender pay gap using hourly pay
3. median gender pay gap using hourly pay
4. percentage of men and women receiving bonus pay
5. mean (average) gender pay gap using bonus pay
6. median gender pay gap using bonus pay

The calculation process is broken down into two defined stages and these are:

1. data collection and,
2. calculation.

Data collection

Data collection is a task in itself, and time and resources must be set aside for its completion. Advanced notice of deadlines may need to be supplied to your payroll department since they will be supplying a lot of the required data. The government guidelines divide the data collection process into the 5 following tasks:

1. You must first define your relevant employees, which is basically anyone with a contract of employment and/or the self-employed. For each of these relevant employees, you will need to gather the following specific payroll data:
2. The amount of ordinary pay received by each full-pay relevant employee in your employer’s pay period that includes your snapshot date (the relevant pay period). Ordinary pay constitutes basic pay, allowances, pay for piecework, pay for leave, and shift premium pay.
3. Bonuses paid to each full-pay relevant employee, within the pay period that includes the snapshot date (the relevant pay period), and total bonuses paid within the 12-month period prior to your snapshot date.
4. The normal weekly working hours as these are used to establish an employee’s hourly pay. The government provides specific guidance on how to establish the normal weekly working hours for relevant employees who work irregular hours.
5. Hourly pay, since the gender pay gap is based on hourly pay excluding overtime, and this is generally calculated using the payroll data from the first 4 steps of this process.

Calculation

Once you have collated your data, the calculation process can occur. It is a laborious process that does require your HR team to adhere to the government’s very specific calculation method, which can be found here under ‘Making Your Gender Pay Gap Calculations’

Thankfully, the calculation process should be straightforward for a numerate individual with a good grasp of excel and an understanding of basic statistical principles and terminology. If you engage the services of an excel data analyst, they should be able to automate the gender pay gap data calculation process for you. Several vendors including KPMG and Gapsquare offer gender pay gap reporting HR software tools that can augment and automate much of this laborious process. Or, you may find that you can run a report in your own HR software that helps you with this process – HR software such as SenseHR lets you design your own reports and define the data that gets pulled.

Reporting

Once you have prepared your gender pay gap analysis, you must report and publish your figures using the government’s gender pay gap service. Once published, your company’s gender pay gap submission can be viewed by the general public alongside around 13,500 gender pay gap submissions, making it easy for enquirers to do comparisons and benchmark your organisational pay gap against industry norms or the competition.

You are also required to publish your gender pay gap report in a prominent place on your company’s public-facing website, along with an accompanying written statement if you meet certain criteria.

Employers can also publish a supporting narrative and action plan to help explain the gender pay gap, but this is discretionary. If you have a significant gender pay gap, the gap is growing bigger or if the pay discrepancy is worse than industry norms, then a written statement might be prudent. Guidance can be found here on how to do this.

As we pointed out earlier, it is a legal requirement for relevant employers to report on their gender pay gap, and a failure to do this accurately within one year of the legal snapshot is unlawful. Employers who are found to be in breach of these regulations risk enforcement action from the Equality and Human Rights Commission (EHRC) which may include court orders and fines.

This is just a guide and does not constitute legal advice.