Despite being in the sixth year of gender pay gap reporting in the UK, there is a long way to go to achieve the objective of closing the gender pay gap. The gender pay gap should be considered separately to equal pay. Equal pay is concerned with pay discrimination, and the legal requirement to pay men and women the same for doing equal or similar work. The gender pay gap, on the other hand, is largely about the roles that men and women statistically fill in the workplace (for example, women being in less paid roles, more women working part-time and women being under-represented in senior or more highly paid roles).
The Institute of Fiscal Studies conducted research in December 2021, which revealed that even after taking into account increases in women’s educational attainment over the past 25 years, there had been minimal progress in closing the gender pay gap.
The purpose of the gender pay gap legislation
Mandatory gender pay gap reporting was introduced by the Equality Act (Gender Pay Gap Information) Regulations in April 2017, meaning that organisations with 250 or more employees on a ‘snapshot’ date each year, are required to produce an annual report with data about their gender pay gap. The reporting obligations differ for public authority employers. Gender pay gap reporting should be seen as a crucial tool for employers and HR professionals to understand the extent of this issue within their own organisations, identify gaps and set action plans to reduce those gaps for the future.
When the Regulations were published, the Government committed to review them within five years, and this review is now due. Although the scope of the review is yet to be determined, one possible change is that reporting obligations may also be imposed on smaller organisations.
A non-statutory guide to help employers comply with their obligations can be found on gov.uk. Find out more here.
When is the snapshot date for gender pay gap reporting?
Most public authority employers must use a snapshot date of 31 March, publishing their gender pay gap report by 30 March the following year. The snapshot date for private, voluntary, and all other public authority employers is 5 April, and the obligation is to report on this data by 4 April the following year.
What gender pay gap figures must be calculated?
Under the regulations, employers must calculate, report on and publish their gender pay gap using six different metrics:
- the percentage of men and women in each hourly pay quarter in a ranking of their employees from lowest- to highest-paid per hour
- the mean* gender pay gap in hourly pay
- the median** gender pay gap using hourly pay
- the percentage of men and women receiving bonus pay
- the mean gender pay gap in bonus pay
- the median gender pay gap in bonus pay
*Mean is the average hourly rate of pay, calculated by adding the hourly pay rate for employees then dividing by the number of employees.
**Median is the middle hourly pay rate, when you arrange your pay rates in order from lowest to highest.
Along with the figures, private or voluntary sector employers must also submit a written statement confirming the accuracy of the information and signed by an appropriate person – most public authority employers do not need to do this.
Supporting narrative and creating an action plan
There is no legal obligation on any employer to provide a supporting narrative or explanation for their gender pay gap, although this is encouraged. The Government has emphasised the importance of organisations voluntarily providing a written narrative to accompany their gender pay gap statistics. The supporting narrative helps anyone reading your gender pay gap report to understand what’s causing your pay gap and the specific measures being implemented to address it.
It could include:
- Explanations of the figures and context, including workforce statistics to provider a clearer picture of why the gender pay gap exists in the organisation.
- Clarifying why there are ‘challenges’ highlighted in the results, such as the over-representation of men in executive roles and why they receive the highest bonuses.
- Elaborating on the reasons behind any ‘successes’ shown in the results, such as the impact of a change to a bonus policy on reducing the gender pay gap.
- Outlining ‘long-term plans’ aimed at addressing the issues that are causing the gender pay gap.
The benefits of having a supporting narrative include the potential to positively enhance an organisation’s reputation, the opportunity to clarify that measures taken to address the gender pay gap may take time to reflect in the annual report, and the chance to demonstrate an ongoing commitment to achieving the goals of closing the gender pay gap (if supporting narratives are published each year).
Employers are also encouraged to publish an action plan explaining how they plan to reduce the gender pay gap. The action plan could include clear, specific targets that the employer can commit to achieving within a stated amount of time. These can relate to actions aimed at understanding or closing the gender pay gap.
Publishing the gender pay gap report
The annual gender pay gap report must be published within 12 months of the snapshot date; it must be uploaded to the government website, as well as on the organisation’s own website and kept online for three years. The report must be accompanied by a signed written statement of accuracy and specify the name and job title of the person who certifies it as such.
For any organisations that don’t have a website, they should publish their findings on the intranet and/ or parent company website ensuring that the information is brought to the attention of its employees.
What happens if an organisation fails to report their gender pay gap?
If an employer fails to report accurately or on time, they will breach the regulations and will be at risk of enforcement action from the Equality and Human Rights Commission (EHRC), potentially resulting in court orders and fines if warning notices are ignored (although no such sanctions have been issued to date).
Additionally, failing to report exposes the organisation to reputational risk, causing harm to the brand as suspicions may arise regarding pay gap issues. The EHRC publishes the names of organisations that have failed to report and details of any investigation or enforcement action taken against them. Employers must also consider the effect of adverse publicity should they fail to comply with the obligations, and the extent to which it may harm employee relations and retention, and deter applicants from applying for roles.
Specialist support with your legal requirements
For guidance on how to calculate your gender pay gap and advice on how to implement an action plan for closing the gender pay gap, download our guide on Gender Pay Gap Reporting for employers and HR Professionals, here.
