How to plan for gender pay gap reporting

The UK’s gender pay gap has caused much controversy over the last decade, with latest figures suggesting that women in the UK still earn on average 20% less than men. Despite some aspects that are thought to have contributed to this pay gap, including maternity leave and an increase in part-time positions for female employees, the government is introducing a mandatory gender pay gap reporting scheme in order to reinforce gender equality in the workplace. The scheme will require large businesses (250+ employees) to release a first report on April 2018. The clause, s.78, in the Equality Act 2010, will “require employers to publish information relating to the pay of employees for the purpose of showing whether… there are differences in the pay of male and female employees”. The report will need to be published both on the company’s website and in paper format.

How to plan for gender pay gap reporting

Although the first report is due in 15 months, businesses will need to start thinking about collecting the necessary data in order to formulate the report. Therefore, organisations should now begin to audit their pay practises to ensure that male and female employees are rewarded fairly. We have provided 5 sequential tips to consider in preparation for the final publication in April 2018:

1: Begin auditing

All businesses that meet the criteria of this new scheme are being urged to carry out an equal pay audit as soon as possible, and gather information about what their employees are currently being paid. Guidance from the Equality and Human Rights Commission recommends that employers should gather information about their pay and grading arrangements, job evaluation scheme, payroll system, HR information systems and occupational segregation.

2: Determine equal jobs

The gender pay gap is based on employees that are doing “equal work”. The Equality Act 2010 defines equal work as: “like work”; “work rated as equivalent”; and “work of equal value”. Therefore, the next step is to determine groups of employees that are performing similar tasks and have similar workloads. “Like work” is defined as work that is the same or broadly similar; “equivalent work” is where the demands of a job are determined to be equal to those of another job under a job evaluation scheme; and “work of equal value” is work that is different to another job but of equal value in terms of the demands of the role.

Employers should consider carrying out a job evaluation scheme to help determine whether or not employees are performing equal work, if they have not already done so.

3: Identify potential pay gaps between equal jobs

Once the equal job titles have been determined, you can then begin to identify the possible pay gaps between male and female employees in that particular position. For each group that performs equal work, calculate the average basic pay and the total average pay for men and women, including benefits, and determine whether or not there are any gaps between them. It may also be worth comparing the pay of part-time and full-time employees, as statistics suggest that more women tend to work in part-time positions than men.  

4: Discover the reasons behind these pay gaps

If certain gaps have been identified, look at the causes. There are many non-discriminatory variables to fluctuations in pay for equal jobs, such as: pay progression, pay protection, performance-related pay, allowances etc. Be sure to categorise these pay gaps and evaluate whether gender has been an unjust factor to lower or higher pay between male and female employees. Once verified, the formulation of an annual pay gap report can begin.

5: Develop an equal pay scheme

If certain employees have been subjected to unequal pay through gender, the next step is to ensure that this is dealt with and prevented in the future. The obvious solution is to increase the salaries of those who may be a victim of gender discrimination, though it is important to evaluate the risks of each option, as insensitive actions may cause dissatisfaction and demotivation amongst other employees if not dealt with appropriately. Although following these steps will not entirely remove the risk of equal pay claims, putting right significant gaps will help to ensure that the majority of employees receive equal pay for equal work.

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