Prepare to go public: the gender pay gap under scrutiny
From April 2017, the Government is expecting companies to be open about the pay gap that exists between male and female workers says Chris Harland.
The move is a response to a large body of evidence, collected over many years, which shows men tend to get the better deal when it comes to salary. And that’s despite the fact that the Equal Pay Act (now largely superseded by the Equality Act) was introduced as far back as 1970.
According to the Office for National Statistics, the gender pay gap for full-time employees in 2016 was 9.4%. The gap for all employees, both full and part-time, was 18.1%. Although both figures are down since the 1990s, they are falling fairly slowly.
In the hope that public scrutiny will force private-sector employers to act, large businesses are now required to publish data on the pay gap every year. The rules apply to any company employing at least 250 employees as of 5th April each year. By 4th April 2018, businesses are expected to publish their data on their websites.
The Equality Act 2010 (Gender Pay Gap Information) Regulations of 2017 says they will have to let the public know:
- the organisation’s overall gender pay gap (expressed as a percentage), using both the mean and median hourly rate of pay for female and male employees;
- the proportion of male and female employees in each of the organisation’s four pay quartiles;
- the organisation’s overall bonus gender pay gap (expressed as a percentage), using both the mean and median bonus payments received by female and male employees over the preceding 12-month period;
- the proportion of female and male employees who received a bonus in that period.
For the purposes of this exercise, a ‘relevant employee’ is defined as being anyone working ‘under a contract personally to do work’. This means that casual staff and self-employed contractors need to be considered – both in terms of headcount and also the financial rewards they receive. There is, however, a recognition that if you don’t have the relevant data about an individual – or it’s not reasonably practicable to obtain it – you don’t have to include it in your calculations.
So, what should your business be doing to ensure you’re complying with the law? First of all, establish if you are a ‘relevant employer’ under the terms of the regulations. If you believe you are, then start the process of analysing your employees’ remuneration packages and assembling the necessary information to make your calculations.
Remember, if there is a significant pay gap within your organisation, it may have PR implications for you. So now is the time to start thinking of the narrative you may choose to publish alongside the figures – explaining why there’s a discrepancy and informing the wider world of what you’re doing to address it.