The gender pay gap: what employers need to know

male and female figurines standing on coins


Employers with over 250 employees now need to report their gender pay figures. Figures have to be reported annually by end of March for public sector organisations and by early April for private companies – 4th April 2019 is the next reporting deadline for private firms’ figures for the period from April 2017 to April 2018 and 30th March for public sector organisations.

Gender pay gap reports have to be maintained on the company’s website for a period of three years so can be used to monitor the reduction or closure of the original gap identified.

Since the first figures came out, there have been increased calls for employers to publish a narrative alongside their data to put the figures in context. There have also been calls to extend the legislation to smaller employers and to extend the legislation to publishing parental leave policies. The publicity around the gender pay audits has, in addition, brought more focus on other diversity issues, with more focus on, for instance, the ethnicity pay gap.

The process

As part of the gender pay audit, employers have to publish six calculations showing their:

  1. average gender pay gap as a mean average
  2. average gender pay gap as a median average
  3. average bonus gender pay gap as a mean average
  4. average bonus gender pay gap as a median average
  5. proportion of males receiving a bonus payment and proportion of females receiving a bonus payment
  6. proportion of males and females when divided into four groups ordered from lowest to highest pay.

The results have to be published on the employer’s website and a government website. They must, where relevant, be confirmed in a written statement by an appropriate person, such as a chief executive.

Employers can provide a narrative alongside the data to put the figures in context.

The median hourly rate is calculated by ranking all employees from the highest paid to the lowest paid, and taking the hourly wage of the person in the middle. That means the median gender pay gap is the difference between women’s median hourly wage (the middle paid woman) and men’s median hourly wage (the middle paid man).

What is the gender pay gap and what did the 2018 figures show?

The gender pay gap is a measure of the difference between men’s and women’s average earnings across an organisation or the labour market.

It is not the same as unequal pay, which involves women being paid less than men for doing the same work or work deemed of equal value.

However, unequal pay may be a factor in the gender pay gap. The gender pay gap has many different causes. Chief among them is the lack of women in senior roles in organisations and the concentration of women at the lower end of the pay scale.

The national gender pay gap is also linked to the lack of women in better paid sectors, such as technology. Part-time work and the fact that there are few part-time jobs at senior levels also hold back women’s pay. The reason more women than men do part time jobs is that they are still more likely to be the main carers of children or others.

Another factor is the struggle women who have taken a career break often face to get back to jobs that are on a level with what they were earning previously. Other factors that contribute to the gender pay gap are unconscious bias, including assumptions that women do not want to progress their careers if they have children, lack of sponsorship and support as compared to men [the so-called ‘old boys’ network’], high childcare costs which can lead to women dropping out of the workplace or taking lower paid part-time work, lack of flexible working, pregnancy and maternity discrimination and stereotyping of women in particular roles which are lower paid.

The 2018 figures had to be published by the first week of April. At the time, they showed that around three quarters of employers pay men more than women and that the national median pay gap for all workers was 18.4%, with the public sector reporting an overall pay gap of 14% and the figure for full-time workers only being 9.1%. The Chartered Institute of Management’s recent analysis of bonuses and other benefits such as long-term incentive plans shows that basic earnings are only one part of the gender pay gap.

What employers can do to address the gaps?

In addition to placing their figures in context, employers are advised to outline measures they are taking to reduce the gender pay gap.

These include:

  • When recruiting, avoiding asking for previous salaries to ensure pay rates can be set at a level which recognises the objective factors of the role, such as experience and qualifications, rather than being set according to previous lower salaries
  • Advertising roles as flexible and embedding a flexible working culture so flexibility is open to employees at all levels of the organisation
  • Investing in initiatives which address career progression issues for women, such as mentoring, sponsorship, identifying and promoting employees with potential, addressing systemic bias and reviewing traditional career paths to check if they are a barrier to progress for those who have taken extended periods of leave
  • Initiating returner programmes for those who have taken career breaks
  • Promoting Shared Parental Leave by actively communicating policies and enhancing Shared Parental Pay
  • Supporting more dads to work flexibly
  • Addressing childcare issues

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