Gender pay gap reporting
The gender pay gap is the average difference between men and women’s aggregate hourly pay. This gap is due to a number of reasons, such as differences in job and industry, differences in the types of jobs carried out by men and women and differences in the length of the working week.
Subject to the approval of Parliament, the regulations are likely to come into force in December 2016. The regulations will require employers to calculate gender pay gaps using data from a specific pay period, expected to be 30 April, commencing from 2017. Employers will have up to 12 months to choose when they publish this information.
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- The gender pay gap is not the same as equal pay or pay discrimination.
- The Equality Act 2010 requires all employers who employ 250 or more to calculate the hourly pay for women in comparison to the hourly rate for men.
- Employers are required to publish the figures on the organisation’s website and submit evidence of compliance annually to the Government.
- Employers will also need to calculate and publish a separate gender bonus gap.The gender pay gap differs from equal pay as it is concerned with the differences in the average pay between men and women over a period of time no matter what their role is. Equal pay deals with the pay differences between men and women who carry out the same or similar jobs. Organisations who have a higher level of men in senior jobs and women in junior roles are more likely to have a gender pay gap.Employers will need to calculate the hourly rate for women in comparison to the hourly rate for men. The hourly rate will be the pay employees receive during their normal pay period in which the 30th April 2017 falls, then employers will need to carry out the exercise every year on the same date. Pay periods may differ for employees in the same organisation, for example for employees paid weekly it will be the one week around 30th April while for salaried staff it will be the whole month in which that date falls.
- Employers are required to calculate the percentage difference between the:
- Calculating the gender pay gap
- The Equality Act 2010 requires employers to report on gender pay gap to help greater transparency and fairness between the genders. This can also help with a company’s reputation with both existing and potential employees.
- mean (average) gross hourly pay of women in relation to men
- the mid-point (median) gross hourly pay value of women in relation to men.Bonus pay must also be included when they relate to an employee’s normal pay, but bonus payments will be calculated separately. The regulations require employers to calculate and publish a separate gender bonus gap report. Unlike the gender pay gap that looks at the employee’s pay period that includes the 30 April, the bonus gap will include all bonus payments made in the 12 months up to and including the 30th April.
- Bonus payments are likely to include such payments as:
- Employers will need to calculate the number of men and women in each pay quartile as this information will also need to be published.
- profit sharing
- productivity payments
- performance payments
- commission.Although there is no requirement for employers to support the figures with a narrative report, they may choose to do so. On an annual basis the employer will need to publish the report on their own website as well as submit evidence of compliance to the Government, this will entail employers uploading the report to a government website where it will be available to members of the public. Organisations must publish their first report within 12 months from 30th April 2017.Addressing the gender pay gap
- Organisations may wish to review and update policies to help address any gender pay gap, these policies include:
- Employers will be required to keep this information online for three years in order to show the progress made.
- Publishing the gender pay report
- equality and inclusion
- bullying and harassment
- flexible working
- people development.Employers may involve employees or their representatives in carrying out any review of policies.
- It would be good practice for employers to review how they pay people and understand the reasons behind the gap and consider in a fair and non-discriminatory way how to reduce the gap.