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Gender Pay Gap Reporting and what it means for your business.
The Gender Pay Gap is the difference in pay between Male and Female employees in the workplace. According to the Institute for Fiscal Studies, the UK’s gender pay gap stands at 18% and it is predicted to take 60 years to close even though it has been illegal to pay men and women differently for the same job since the 1970’s.
The closing of the gender pay gap is not just about achieving gender equality however, it is also about boosting the economy as it is estimated that the under-utilisation of women’s skills costs the UK economy 1.3–2% of GDP annually, and that eradicating the full-time gender pay gap would contribute additional spending into the economy of £41 billion each year (according to the Women and Work Commission Report (2016)
The Government considers the current rate of progress to close the Gender Pay Gap is too slow and has therefore introduced new legislation requiring companies with over 250 employees to report on the following 6 key measures that analysis the difference in pay between Male and Female employees.
- Mean gender pay gap: the difference between the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees.
- Median gender pay gap: the difference between the median hourly rate of pay of male full-pay employees and that of female full-pay relevant employees.
- Mean bonus gap: the difference between the mean bonus pay paid to male relevant employees and that paid to female relevant employees.
- Median bonus gap: the difference between the median bonus pay paid to male relevant employees and that paid to female relevant employees.
- Bonus proportions: the proportions of male and female relevant employees who were paid bonus pay during the relevant period.
- Quartile pay bands: the proportions of male and female full-pay relevant employees in the lower, lower middle, upper middle and upper quartile pay bands.
The legislation requires organisations to take a snap shot of this data as of 5th April and this is then to be published on 4th April 2018 on the organisations web site.
Quality of Data
In order to be able to produce accurate data for calculating this information companies will need to be recording the following:
- Identifying relevant employees (Active, Full-Pay Employees)
- Ensuring all relevant employees have a Gender assigned to their record
- Weekly working hours;
- Pay received during period;
- Bonus payments received during period
It is also recommended that additional analysis of this information is carried out by recording:
- Employees Name and ID number
- Employee Contractual Status
- Other employee Characteristics such as ethnicity and age
According to the CIPD, the key factor for accurately reporting the Gender Pay Gap within your organisation will be the quality of the data used. Inaccurate data will produce inaccurate results which will inevitably mean calculating your gender pay gap will take a lot longer than it should do and potentially produces results that either overestimates or underestimates the gender pay gap in your organisation.
Time spent ensuring that the quality of your data is as good as it can be, and, if necessary, planning to obtain any missing data, is time well spent, as is ensuring that the data you will use for gender pay gap reporting is in the format required by the regulations.
In addition to producing the Gender Pay Gap reports it is also important to carryout further analysis of the data. For example, comparing the differences in Pay for Males and Females against other data such as Job Title, Job ‘level’, Age range and Ethnicity. See examples below: