The BBC’s newly published Gender Pay Gap Report reveals a shocking inequality in salaries paid to men and women causing media attention worldwide, and quite rightly so.

Fifty years ago, the Equal Pay Act was introduced. It’s therefore rather disheartening to learn that many experts believe it could take as long as another fifty years to fully close the gap between male and female pay in the workplace.

Without effectively tackling the key issues surrounding flexible working, supporting women aged over 40 back into the workforce and sharing unpaid caring responsibilities, the gender pay gap stands little chance of being eliminated. Indeed, the Women and Equalities Committee has recently made practical recommendations based on solid evidence to address these issues. They did this by liaising with a number of stakeholders including academics, businesses and unions.

The recommendations made to the government by can be found in the committee’s full report on tackling the pay gap, which was published last year. They asked for a number of changes to be made, including a more effective policy on shared parental leave, increased training opportunities for low-earning female staff and fully-supported pay progression.

There are few things in business less palatable than gender inequality when it comes to pay. Despite this, it’s a topic that continues to dominate HR, yet one for which a nationwide solution appears oddly absent. However, gender pay gap reporting is now a trending topic thanks to The BBC.

Before taking a look at just what exactly gender pay gap reporting is,  let’s take a very quick history lesson.

What is the Equal Pay Act?

Swallowed up in the Equality Act (2010), the right to equal pay requires that businesses pay men and women equally for like work – i.e. work that is rated of equal value.

As an example, if you’re a female marketing executive with the same role, job title and responsibilities as a male co-worker, you should receive equal pay.

The act goes a little further than that, by entitling everyone to equal pay if the job undertaken is deemed to offer similar value in terms of effort, decision making and skill as another role.

Despite this very clear, sensible ruling, the gender pay gap unfortunately still exists.

Why does the gender pay gap prevail?

One of the causes could be businesses not following the rules contained within the Equal Pay Act, but it isn’t the sole cause. There are other reasons the gap exists. These include the following:

  • Lack of confidence among female staff seeking pay increases. There is a perceived – and wholly unfair – lack of confidence among female staff when it comes to seeking pay rises. And that’s entirely understandable in a job market that suffers from gender pay inequality.
  • Occupational segregation. The distribution of people across and within jobs based on demographics is a key issue when it comes to increasing the gender pay gap.
  • Market-rate salaries. There’s absolutely nothing wrong with setting market-rate salaries, but when this happens in sectors typically dominated by male workers, a gender pay gap can easily surface as a result.
  • Over-reliance on management discretion. Again, there’s nothing wrong with management discretion when it comes to granting pay rises, but if there’s too much reliance placed on heads of departments to offer staff more money, a gender pay gap could proliferate (on either side of the fence).

The gender pay gap is a troubling, complex issue, and as you’ll note above, the variety of reasons it exists make it a very hard nut to crack.

So, what is gender pay gap reporting?

The UK is one of the first countries in the world to require gender pay gap reporting and is a key part of the government’s work to eliminate the gender pay gap. The new gender pay gap mandatory reporting requirements are part of wider work the Government is doing to support women in the workplace.

Around 9,000 businesses, charities and other large public sector organisations in the UK employing over 15 million employees are now required to publish their gender pay gaps to help break the glass ceiling and create a more modern and equal workforce.

Gender Pay Gap Reporting – 10 Facts You Need to Know:

  1. All businesses in the UK with over 250 employees, both private and public sector must comply with the new UK regulations.
  2. Gender Pay Gap reporting is a different legal requirement to carrying out an equal pay audit.
  3. There are six calculations to carry out, and the results must be published on the employer’s website and a government website within 12 months.
  4. Organisations will be asked to publish their median gender pay gap statistics from a snapshot period in April to calculate the wage of the middle earner, the median is the best representation of the ‘typical’ gender difference.
  5. Organisations will need to publish their mean gender pay gap statistics by undertaking a full earnings distribution review. It will need to consider the low and high earners across the organisation too. This is particularly useful as women are often over-represented at the low earning extreme and men are over-represented at the high earning extreme.
  6. Employers will need to publish the proportion of men and women in each quartile of the pay structure. This data will show the spread of male and female earners across an organisation. It will allow employers to assess where women’s career development isn’t progressing in line with their male counterparts so that they can take action.
  7. Employers will need to publish the proportion of men and women in each quartile of the pay structure. This data will show the spread of male and female earners across an organisation. It will allow employers to assess where women’s career development isn’t progressing in line with their male counterparts so that they can take action.
  8. Employers will need to publish the gender pay gaps for any bonuses paid out during the year. Bonus payments, regularity the processing of and reporting of bonus payments has always been a tricky issue. With the new Gender Pay Gap Reporting rules, employers will also have to publish the proportion of male and proportion of female employees that received a bonus during the year.
  9. A wider definition of who counts as an employee is used (from the Equality Act 2010). Which means workers that are included, as well as some self-employed people. Agency workers are included but counted by the agency providing them.
  10. Employers can give a written response to support their statistics. Reasons behind the gender pay gap and what actions are being taken to reduce it.

Why should my business undertake gender pay gap reporting?

If you run a company that employs more than 250 people and our list above has left you asking the question “how will I find the time to do this?”, there are some very good reasons why you should comply.

As it stands, the Government hasn’t implemented financial penalties for companies that fail to produce the report, but that shouldn’t make it something that can be freely avoided. Nor should it simply be seen as a rule one must abide by; gender pay reporting is being enforced because it is the right thing to do.

There are very few people in the workplace who would actively support inequality when it comes to pay. A business is a team, and in order to drive a high level of staff morale and build a workforce that is engaged, it’s essential that pay is equally and fairly distributed across the business.

Although many businesses are worried about reporting their findings, and how this will affect their brand reputation (see CIPD’s case study on The BBC) many businesses can use it to differentiate who they are and capitalise on their organisation is a transparent and fair workplace. Especially smaller companies who are not legally obliged to report on their gender pay. It is estimated that around 15.6 million are employed by SMEs, who make up 99% of the 5.4 million businesses in the UK. If SMEs report their gender pay gap and take action to close it, the positive impact on gender equality, small businesses and the economy would be huge.

Here are some reasons the gender pay gap report will be a great thing for your business:

  • It can raise staff morale;
  • it can decrease the number of uncomfortable pay-related conversations during personal reviews;
  • the brand will benefit, as it will be able to accurately convey to the world that it supports gender equality in the workplace;
  • hiring the best talent will become markedly easier, as it becomes clear to new candidates that they’re entering a world of equal pay;
  • HR teams will be spared the unsavoury task of dealing with gender inequality when it comes to renumeration;
  • future pay gap reports will do nothing more than prove that you fully support equal pay.

The only problem facing smaller businesses is the systems in place to gather the information easily, securely and accurately. For smaller businesses, HR data is often stored manually, on excel spreadsheets or even filing cabinets and would be an unnecessary task for already busy HR departments. As legislation increases around employment law, reporting and monitoring, the movement to a cloud-based HRIS is more important than ever for SME’s.

Affordable, SME focussed HRIS solutions for businesses with 50-1000 employees are now available and can optimise HR activities including Gender Pay Gap Reporting.

Natural HR’s powerful analytics tool can support businesses to simplify Gender Pay Gap Reporting in just a few clicks.

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