Gender pay reporting legislation requires employers with 250 or more employees to publish statutory calculations every year showing how large the pay gap is between their male and female employees.

Reporting may show, for example, that on average men earn 10% more pay per hour than women, that men earn 5% more in bonuses per year than women, or that the lowest paid quarter of the workforce is mostly female. These results must be published on the employers own website and a government site. This means that the gender pay gap will be publicly available, including to customers, employees and potential future recruits.

As a result, employers should consider taking new or faster actions to reduce or eliminate their gender pay gaps.

Regulations for the private and voluntary sectors have now been approved and will commence from April 2017, from which point employers will have up to 12 months to publish this information. Public sector regulations are subject to the approval of Parliament but are expected to follow the same timescale. We will update our guidance following this final approval.

There are two sets of regulations. The first is mainly for the private and voluntary sectors (taking effect from 5 April 2017) and the second is mainly for the public sector (taking effect from 31 March 2017). Employers will have up to 12 months to publish their gender pay gaps.

Key points

  • An employer must comply with the regulations for any year where they have a ‘headcount’ of 250 or more employees on 5 April (where the private and voluntary sector regulations apply) and 31 March (where the public sector regulations apply), but employers of all sizes should consider the advantages.
  • A wider definition of who counts as an employee is used here (from the Equality Act 2010). This means that workers are included, as well as some self-employed people. Agency workers are included, but counted by the agency providing them.
  • Gender pay reporting is a different requirement to carrying out an equal pay audit.
  • There are six calculations to carry out, and the results must be published on the employer’s website and a government website within 12 months. Where applicable, they must be confirmed by an appropriate person, such as a chief executive.
  • Employers have the option to provide a narrative with their calculations. This should generally explain the reasons for the results and give details about actions that are being taken to reduce or eliminate the gender pay gap.
  • While the regulations for the public, private and voluntary sectors are near identical, and the calculations are directly comparable, the public sector regulations also take into account the public sector equality duty.

 

UK Businesses unprepared for Gender Pay Gap Reporting

 

Totaljobs research reveals that UK employers are unprepared for Gender Pay Gap Reporting legislation, with more than a third (32%) failing to review salaries across genders to safeguard against pay discrimination.

Totaljobs’ survey of 4,700 employees and 145 employers revealed 82% of companies are not reviewing their gender equality/equal pay policy and 58% don’t have salary information available across roles and genders. Little more than half (53.1%) of employers feel “very confident” that salaries are equal across the genders.

While employers will be required to keep salary records, the research showed men are currently more likely to receive a bonus than women and typically receive more. In the past year, 43% of men received a bonus of £2,059, on average, versus 38% of women, who, on average, received £1,128.

Nearly a quarter of women (23%) feel men are paid more for the same role while just 44% of women feel both genders receive equal pay, compared to 58% of men. Women appear to feel more inclined to move jobs to increase their salary – when it comes to negotiating pay, 75% of women admit they don’t feel comfortable asking for a higher salary, even though 75% say they do expect a higher salary if they move roles.

John Salt, director, totaljobs said:

“Gender Pay Gap Information reporting is a fantastic step taken by the government to address the issue of gender pay inequality and encourage employers to explore necessary reforms for a fair and inclusive remuneration structure. It’s imperative that we act now, especially when our research showed 51% of employers don’t coach or prepare their management on equal pay and gender equality.

“The remuneration decision-making process needs to be made more transparent – pay decisions should not be kept to the confines of top management and board meetings. Our research found 26% of men and 31% of women don’t know how their company makes decisions on salary and pay rises. This information should be readily available. This legislation forcing the review of pay structures could be the internal reflection organisations need to avoid future discrimination and effect positive cultural change.”

What are the calculations?

An employer must publish six calculations showing their:

  1. average gender pay gap as a mean average
  2. average gender pay gap as a median average
  3. average bonus gender pay gap as a mean average
  4. average bonus gender pay gap as a median average
  5. proportion of males receiving a bonus payment and proportion of females receiving a bonus payment
  6. proportion of males and females when divided into four groups ordered from lowest to highest pay.

What should be done with the calculations?

The results must be published on the employer’s website and a government website. They must, where applicable, be confirmed in a written statement by an appropriate person, such as a chief executive.

Employers have the option to provide a narrative with their calculations. This should generally explain the reasons for the results and give details about actions that are being taken to reduce or eliminate the gender pay gap.

  • The narrative can say why the results show challenges. For example, an employer might explain that their executives get the highest bonuses and most of them are men. Where there is a challenge, employers should consider taking new or faster actions to reduce or eliminate their gender pay gaps.
  • The narrative can say why the results show successes. For example, an employer might explain that a recent change to their bonus policy has helped provide a much lower bonus gender pay gap.
  • The narrative can also be used to show plans for long-term results. For example, an employer might want to tackle the underrepresentation of women in their science and engineering roles by running a recruitment campaign for junior roles that particularly encourages women to apply. In the short-term this means more women will be at the starting salaries, which could make the gender pay gap look higher. However, in the longer-term this will balance out and the underrepresentation should be reduced.

While employers may already be taking steps to improve gender equality and reduce or eliminate their gender pay gap, this process will support and encourage action.

Gender pay reporting is different to equal pay

Equal pay deals with the pay differences between men and women who carry out the same jobs, similar jobs or work of equal value. It is unlawful to pay people unequally because they are a man or a woman.

The gender pay gap shows the difference in the average pay between all men and women in a workforce. If a workforce has a particularly high gender pay gap, this can indicate there may a number of issues to deal with, and the individual calculations may help to identify what those issues are.

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View or download:

 Download the joint Acas & GEO guide on Managing gender pay reporting 

Gender pay gap reporting in the public sector 

Acas fact sheets