Whilst the reporting of gender pay gap statistics was suspended last year, that data still had to be captured and must be reported by 5 October 2021. If you’ve not been involved before what are the key things to get right?
Not equal pay
People often confuse gender pay with equal pay, but they are not the same. Equal pay for men and women doing the same job has been a legal requirement for over 45 years since the Equal Pay Act 1970 which came into force in 1975. Gender pay gap reporting looks at the difference in average earnings between men and women over a standard time period, regardless of their role or seniority, so it’s more about pay progression, i.e. are women more likely to be in junior, lower paid jobs than men?
Inequality. It’s about pay inequality resulting from differences in the types of job performed by men and women. An organisation with a high proportion of men in senior roles will have a gender pay gap. Just because you don’t have any pay discrimination due to the fact that men and women are paid equally for the same jobs it doesn’t mean that you don’t have a gender pay gap. There is a separate measurement about average bonuses between the two genders, because this can also indicate inequality.
Current gap?
In 2019 the overall gender pay gap was 17.3% in the UK (whilst employers in Northern Ireland don’t have to report under the regulations, the government can work out statistics on gender pay from the Annual Survey of Hours and Earnings that a random sample of employers are obliged to complete each year). This means that, on average, women were paid approximately 83p for every £1 men were paid.
Who and when?
The obligation to report is for each “relevant employer” that has 250 workers on the snapshot date. The snapshot date is the pay period that includes 5 April in the private and voluntary sectors, and 31 March in the public sector. Each legal entity must report separately on their employees. In order for the data to compare people on a like-for-like basis, only “full pay relevant employees” are included in the statistics, so this excludes anyone who on the snapshot date is receiving less pay than normal as they are on any reduced pay leave such as maternity or furlough as this would skew the figures.
What data and metrics?
The data you will need relates to somebody’s gender, the hours they work and the earnings they receive.
Pro advice. Unlike with NI where birth gender is always used, for gender pay gap reporting the employee can legally request that their proposed gender is used in the calculation.
The definition of earnings or “ordinary pay” is the gross pay before statutory deductions – not taxable pay. For example, pensions contributions are not taken off for net pay schemes, but equally it is gross pay after any optional remuneration arrangement as that is the employee’s contractual pay. Include in ordinary pay these earnings:
- shift premiums
- on-call, standby and unsocial payments and anything considered a bonus (any type of profit sharing, performance bonus or commission) if paid in the snapshot period
- pay for leave and allowances such as a car or clothing, but not overtime of any sort
- redundancy pay or termination payments
- benefits in kind or reimbursed expenses.
The hours used are:
- normal weekly working hours as defined by the employment contract, or if that’s not appropriate
- total annual contracted hours divided by 12/52 or their relevant pay frequency. For employees with variable hours it’s the total hours over last twelve weeks.
These hours don’t count:
- rest breaks for hourly paid staff
- sleeping time at work if just there for security, e.g. they live above the shop, are a sleep-in carer
- travelling on business/training
- normal commuting.
The reporting obligation is to provide six different metrics about the gender pay gap and the bonus pay gap and then display this split into four quartiles across the organisation.
True comparison
You are calculating an hourly rate for everybody so that you can easily compare full-time and part-time employees. The regulations are therefore very specific about the length of pay periods used to calculate the initial hourly rates: annual means 365.25 days, quarterly means 91.32 days, monthly means 30.44 days and weekly means 52.18 weeks.
For the mean and median percentage difference and for displaying the quartiles use the full pay relevant employees, i.e. those who didn’t have any reduction in pay on the snapshot date. For the bonus calculation use all employees employed on the snapshot date. Here are the six metrics:
Mean percentage difference. To calculate the mean or average hourly rate difference you first have to work out the average male hourly rate. Do that by adding up all the male hourly rates of pay and dividing them by the total number of men. Then do the same for the female hourly rates. You then subtract the female hourly rate from the male hourly rate, divide by the male hourly rate and multiply by 100% and that will give a percentage difference. If the figure is positive, it means that the average gender pay gap is in favour of men, if it’s negative it’s in favour of women.
Median percentage difference. To calculate the middle point or median, arrange the male and female hourly rates in ascending order and select the hourly rate that falls exactly in the middle.
Mean bonus. Add up all the bonus payments in the twelve months prior to the snapshot date for the male employees and divide by the number of men who received a bonus, and the same for the female employees and divide by the number of women who received a bonus. This gives an average bonus for each gender. Then subtract the average female bonus from the average male bonus and divide by the average male bonus and multiply by 100% and that will give a percentage difference. If the figure is positive, it means that the average bonus pay gap is in favour of men, if it’s negative it’s in favour of women.
Median bonus. Arrange the male and female bonuses in ascending order and select the bonus that falls exactly in the middle.
Bonus eligibility. How much more likely are men or women to get a bonus? Add up all the male bonuses divided by the total number of male workers (not just those who got a bonus) and then do the same for female workers.
Quartiles. Put all the hourly rates in ascending order and split them into four equal chunks or quartiles and then look at how many men and women are in each quartile.
Reporting
The March/April 2020 data needs to be uploaded to GOV.UK by 5 October 2021 (see Follow up ). The only part of the reporting that is voluntary is whether you choose to add in any narrative to explain what your figures represent and any plans the business has to improve them.
Gender pay gap reports from the March/April 2020 snapshot dates must be uploaded by 5 October 2021. Be sure to exclude those on furlough at the snapshot date as that will skew the figures. For gender pay gap reporting the employee can legally request that their proposed gender is used in the calculation.
The next step
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