Equal pay and the gender pay gap – Confused?

16 February, 2018

April is looming, bringing with it new legislation surrounding gender pay gap reporting; organisations with over 250 employees will be required (while smaller organisations are encouraged) to publish their gender pay gap data.

The issue of pay inequality, meanwhile, is widespread in the UK media. The BBC scandal demonstrates just one example with Carrie Gracie, the former China editor for BBC news, accusing the broadcaster of a “secretive and illegal” pay culture.

So is there a difference between equal pay and the gender pay gap, and why should you care?

Yes, there is a difference and both are relevant…

Equal pay

Equal pay is concerned with the pay differences between men and women who carry out the same job, similar job or work of equal value. It is a legal requirement for all employers, regardless of size, to pay employees doing the same job the same amount, and has been in place since the Equal Pay Act 1970, and more recently the Equality Act 2010.

Gender pay gap

The gender pay gap shows the difference between the average (both mean and median) hourly earnings of men and women in an organisation. The difference is expressed as a percentage of men’s earnings, for example: women earn 20% less than men. Crucially, this calculation compares the overall pay between men and women in an organisation.

The gender pay gap legislation is being introduced to tackle the current high levels of inequality between men and women in the UK. The gap is often attributed to our society’s culture – for example, in 2015 mothers provided 74% of total childcare time. This leads to women taking more part-time roles and older mothers being paid less than similar aged men due to levels of experience.

The government is hoping that active co-operation from employers will change society’s standards and foster fairness and equality. Importantly, future reporting can be used for year on year analysis and to track the impact of any initiatives your company has introduced to address the gender pay gap. Such initiatives are likely to include reviewing recruitment strategies, starting salaries and gender balance, succession planning and the talent pipeline to address the inequality of women in senior management and higher paid positions.

Do I need to report?

Private, voluntary and public sector employers with 250 or more employees on 5 April of a given year must comply with the legislation; whilst government departments, local authorities and NHS bodies with 250 or more employees on 31 March of a given year must also comply. An ‘employee’ includes employees, workers and agency workers, and certain self employed people. It also covers those who work overseas but have UK employment rights.

Failure to report within one year of the ‘snapshot’ date is unlawful and the Equality and Human Rights Commission has the power to enforce any failure to comply with the regulations. Further, employers run the risk of reputational damage which, given the amount of press coverage surrounding the issue, could be severe.

What do I report?

  • The mean and median gender pay gap as a percentage difference to men’s hourly rate
  • The mean and median bonus gender pay gap
  • The proportion of males receiving a bonus payment
  • The proportion of females receiving a bonus payment
  • The proportion of males and females in each quartile pay band
  • A written statement from an authorised senior person confirming the accuracy of the above calculations.

 

So what if you have fewer than 250 employees?

Whilst smaller organisations are not required to comply, there are benefits to publishing gender pay gap data:

An employer can use the information to understand underlying causes for a gender pay gap and take action to minimise it. Benefits vary between employers but can include creating a reputation for equality and progressiveness, attracting a wider pool of talented staff, and enhancing productivity as staff are engaged in a culture committed to fairness.

If you have questions about the gender pay gap and equality, contact rhona.darbyshire@crippspg.co.uk.