Gender Pay Gap Reporting: What You Need To Know

March 14, 2017 Gender, Pay

In April, new regulations requiring businesses to publish details of pay discrepancies between male and female employees come into force.

Gender Pay Gap (GPG) reporting is backed up in legislation by the Equality Act 2010. It comes into effect this year following a lengthy consultation with business and industry about how best to tackle the average 9.2 per cent pay gap still separating men and women across all sectors of the economy.

GPG reporting regulations make it a statutory requirement for all organisations with 250 employees or more – private, public and voluntary – to carry out a pay gap audit and publish details both on their own website and on a government page.

The audit is based around six calculations:

  1. GPG as a mean average of salary
  2. GPG as a median average of salary
  3. A mean average of differences in bonus payments
  4. A median average of differences in bonus payments
  5. The proportion of males and females receiving bonus payments
  6. The proportion of males and females in each pay quartile ranked from highest to lowest.

From the start of the reporting period on April 5, organisations will have 12 months to complete audits and publish results for the 2016/17 tax year. This cycle will then be repeated annually.

The new GPG reporting regulations are distinct from equal pay laws, under the terms of which it is illegal to pay a man or woman different amounts for carrying out the same or similar job roles. GPG reporting is intended to highlight discrepancies across the whole workforce, for example where there are stark differences in the number of men in high earning roles compared to women.

The rationale is that this will help organisations recognise issues where they occur, while the publication of figures will provide an incentive to take remedial action.

Getting Prepared

The new regulations put into statute many of the guidelines provided by the 2011 Think, Act, Report paper which set out a framework for organisations to carry out voluntary gender equality audits. Much of the advice given in that paper provides a useful starting point for getting started with GPG reporting.

For businesses which have not already carried out equality audits voluntarily, it is advisable to do so before completing a formal GPG report. This will allow room to work out issues like the categorisation and grading of employees in different pay bands.

It is also useful to have advanced warning of any major discrepancies which might arise. As well as the statutory calculations, the GPG report allows organisations to include a narrative response alongside the figures. This means they are able to provide key contextual information about the organisation and its pay structures, but also offers a platform for setting out a response to any gender gaps identified.

This response might involve looking at whether there is any justification or mitigating circumstances which explain the gaps. But it is also an opportunity to put together a plan of action for tackling them, which can then be outlined in detail in the GPG report. This might include setting targets for subsequent years, therefore highlighting a firm commitment to reducing gender pay inequality and providing a clear framework for improvement.