Gender pay gap reporting deadline approaching
27 March 2018
Gender pay gap reporting requirements now apply to all employers with 250 or more employees. The requirements involve the disclosure of six key metrics on the differences in pay and bonus pay between men and women within the organisation. Employers in the private sector must report these figures by 4 April 2018 and public sector employers must report by the end of March 2018.
This year is the first time employers have had to report these figures and, although the data has been available for some time, so far disclosures have been limited. Around 4,000 employers have reported so far out of an estimated 9,000 required to report - we therefore expect to see a large number of disclosures over the coming days as companies which are yet to report publish their figures. The disclosed figures so far are broadly in line with the national average at April 2017 of 18.4% (source: ONS Annual Survey of Hours and Earnings), although some sector themes are beginning to emerge with financial services and other professional service companies typically having the highest figures. We have also started to see significant media attention on this subject, the published figures are under increasing scrutiny and there have been a number of high profile discussions about gender pay equality in the news.
Why have disclosures been limited?
One reason may be that employers are allowing more time to ensure that their figures are accurate. Whilst initially the reporting requirements appear straightforward there are a number of technical areas that can be difficult to implement. In our experience some common areas of complexity include:
- Understanding how the requirements apply to Group structures with multiple employing entities;
- Determining which employees should be included in the calculations (e.g. NEDs and contractors);
- Calculating an hourly rate for employees with variable hours (e.g. employees on zero hours contracts);
- Determining the treatment of various pay elements and bonus pay elements (e.g. share schemes); and
- Understanding the calculations required (e.g. which employees and data to include in each calculation).
In our experience many employers are spending time now to carefully consider how to present this information in a way that tells the full story. The communication challenge of reporting this kind of potentially sensitive information is new to many organisations and requires care and thought to manage the needs of the various stakeholders (current and prospective staff, investors, customers, etc). Organisations that get this right will not only be more attractive to talent - men as well as women - but also more favourably perceived within the marketplace.
Whilst the reporting requirements are currently front of mind for many employers, we hope that the primary intention of the regulations, to promote fair opportunities for all in the workplace, are not forgotten. Whilst this initial reporting cycle will be very revealing and requires careful thought, we think the emphasis will change over time from employers with the highest pay gaps to focus on those whose gap has not reduced. In many cases, the actions required to reduce pay gaps will take time to manifest and employers which want to improve their figures in the future need to spend time now considering, beyond the strict requirements of the regulations, how to interpret the results and critically review their processes and diversity strategy to ensure it promotes the correct change.
It is important to understand why, how and where gaps arise as much as what the gaps are. We are working with a large number of leading employers on this issue and if you would find it helpful to discuss further, including understanding what best practice looks like, please do not hesitate to get in touch with our team.