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Gender Pay Gap

In April 2017, new Regulations made the UK one of the first countries in the world to require employers to undertake gender pay gap reporting. The Government hopes that this will help to “break the glass ceiling” and create a modern workforce, giving women the same opportunities as men to fulfil their career potential.

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So what is the gender pay gap? Note that it is not the same as equal pay. Equal pay deals with comparing the difference between men and women within an organisation who carry out the same or similar jobs (equal pay for equal work). In contrast, the gender pay gap is the difference between gender pay across a whole organisation. The UK gender pay gap currently sits at 18.1% - the lowest on record - but the Government considers that there remains ample room for narrowing that gap still further and ultimately, wants to eliminate the gap entirely.

Many employers, however, will be less than enthusiastic about having to comply with what they consider to be yet further, time-consuming red tape, with one self-confessed cynical commentator describing the Regulations as being “fantastically and pointlessly prescriptive”.

In brief, the new Regulations require voluntary, private and public sector employers with 250 or more employees in any year to publish their:

  1. mean average gender pay gap.

  2. median average gender pay gap.

  3. mean average bonus gender pay gap.

  4. median average bonus gender pay gap.

  5. proportion of men and women receiving a bonus payment.

  6. proportion of men and women when divided into 4 equal-sized groups, organised according to hourly-rate pay (quartiles), ordered from the lowest paid to the highest paid.

When calculating whether or not an employer has 250 or more employees, the Regulations have adopted the Equality Act’s wider definition of “employee”, so that it includes workers (such as those on zero hours contracts and “gig economy” workers), as well as some self-employed people. Agency workers, however, are not included. Instead, they will be counted as the employees of the agency providing them to the end-user employer.

The gender pay gap calculations should be based on the pay period containing a specific date in April each year (the “snapshot date”). The first snapshot date was 5 April 2017 and an employer’s gender pay gap data must be published on its own website by 4 April 2018 (and remain there for three years), as well as being uploaded to a Government website.

Although it is not mandatory to do so, employers are being encouraged to include a narrative in their gender pay gap report, to put their calculations into context, explaining the reasons for their results and giving details about actions being taken to reduce or eliminate the gap.

The Regulations themselves give details of how to undertake the necessary calculations and ACAS and the Government have together produced guidance, identifying a five-step approach that employers should take to gender pay gap reporting.

Perhaps the biggest criticism of the Regulations is that there is no sanction for failing to comply with them. As such, the most likely incentive on employers to comply is the threat of public “naming and shaming” by trade unions, shareholders, the media and employees themselves. Government figures suggest that 84% of women aged 16 to 30 would consider an employer’s gender pay gap when applying for a job and 80% would make a comparison of a potential employer’s gender pay gap when seeking work.

We are happy to assist employers in understanding their obligations further, reviewing their gender pay gap calculations and drafting an explanatory narrative for their reports.

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