The gender pay gap has been a recurring issue in the business industry, with reports suggesting that women earn up to 18% less than men on average. Not just this, but the pay gap seems to widen for women who are also mothers, for up to 12 years after the birth of their first child. Women are reportedly just as likely to ask for a pay rise as men but are less likely to receive one. Though the gender pay gap issue is widely recognised and commented on within the industry, it’s often overlooked and remains unacknowledged by the larger companies.
However, new legislation comes into effect on the 6th April that could change the way businesses handle pay discrepancies.
Under the new regulations, companies with 250 employees or more will need to declare their wage differences for men and women on their own website and a government website. Essentially, these figures will be easily accessible not only by the government but by their current employees, future employees, clients and anyone else that wishes to view the wage difference.
The six calculations
There are six different calculations that an employer must declare, which are;
• Average gender pay gap as a mean average (total pay divided by number of employees)
• Average gender pay gap as a median average (middle pay value)
• Average bonus gender pay gap as a mean average (total bonus divided by number of employees)
• Average bonus gender pay gap as a median average (middle bonus value)
• Proportions of males receiving a bonus payment and proportion of females
• Proportion of males and females when divided into four groups ordered from lowest to highest pay
Employers need to display these six figures, which are intended to highlight any large discrepancies between men and women’s pay or bonus pay between genders. To grant authenticity, they must be partnered with a written statement by a person of authority within the company such as a CEO.
Employers are also invited to provide a description with the calculations outlining any possible reasons for the results, as well as precautions or measures taken to reduce gender pay discrepancies. This narrative can and should display an employer’s long-term plan to address the gender pay gap.
What constitutes an employee?
Typically, legislation such as this does not include agency or temporary staff. However, to provide a much more comprehensive overview of gender pay discriminations, all employees should be included in these calculations. That includes full time, part time, self-employed and agency members of staff, though agencies will be responsible for counting their own staff.
It’s been nearly five decades since the Equal Pay Act was enforced, and this legislation finally goes a step further to diminishing the archaic wage difference. Whether 250 employees or less, every employer should consider the advantages of declaring these results.
The process of declaring the wage gap on every large business website will open the eyes of many to an issue that has been overlooked within the industry for years.
Gathering payroll data
If you don’t have suitable reporting and analytics systems to report on wage data, it’s worth reconsidering your workforce management system so you can digest and analyse the payroll data accurately. Dissect your workforce by gender and examine the senior roles as well as starting salaries over the past year to gauge an initial idea of your workforce’s pay.
Integrated payroll systems and reporting will allow for streamlined data collection so that you can view the workforce as a whole with ease. From here, you can calculate the six figures required and start reporting any wage difference from the offset, demonstrating a proactive attitude. Clear targets can be set and worked into your accompanying narrative to show your commitment to fair and equal wages.
If the results show a large gap, it will be vital that you provide a suitable explanation. Not providing a narrative with your calculations may show that you were unaware of the difference and have not provided adequate steps to eliminate it.
Those that can demonstrate a fair and equal wage have the opportunity to demonstrate success. Use the narrative to highlight the procedures you have in place to combat the wage difference between roles or the recent changes in policy to award your employees. Being able to show that you value all employees and that they all have equal opportunity for promotion and bonuses puts you at an advantage to some of the companies that will not be able to reciprocate.
Outlining future steps to eliminate the pay gap
Use your gathered payroll data or workforce management system to set clear targets within your business, demonstrating your commitment to eliminating the gender wage gap. Options include introducing a certain number of women within senior roles in your business, or a certain wage by the end of the year. Outlining future steps shows a desire to change archaic attitudes within your business for both your current employees and future ones.
Consider extra benefits for parents of both genders to further demonstrate a step towards gender pay gap elimination. You could introduce a scheme to help mothers and fathers return to work following maternity or paternity leave, or allow flexible working or salary sacrifice schemes, to go the extra mile.
The new legislation aims to change the way businesses deal with an equal opportunity for promotion and bonuses. But has the legislation gone far enough?
The ‘name and shame’ nature of displaying results is sure to make prospective clients and future employees check the statistics before applying for a role or hiring services. But whether it’s enough to deter a job application or hire, is yet to be seen.
Employers may feel more pressure now to provide an equal chance for promotion and bonuses within the company, however more pressure is needed to eliminate the pay gap entirely. Penalisation based on results or a certain quota that the six calculations should reach is the next step towards gender pay gap elimination, however the legislation is yet to stretch that far. Either way, employers need to control the situation by acting proactively to outline steps to minimise the pay gap in order to retain social standing within the industry.
RITEQ UK is a leading supplier of workforce management and partners with numerous HR & Payroll suppliers, providing Best of Breed solutions that combine depth of functionality with a single input of information, and strategic reporting. RITEQ Analytics can not only assist with providing the stats for the Gender Pay Gap, but also looks at productivity and schedule optimisation and provides visibility to make business change and strategic decisions across any organisation.
For more information call us on 020 3846 0600 or fill in our contact form and we will get back to you.