Employer Branding

UK Lessons on Bridging the Gender Pay Gap

There have been countless studies, media reports and even employment tribunals challenging the pay difference between men and women doing the same jobs – and it’s a worldwide problem.

The Nordic countries have the smallest global gender gap index, but African and Middle Eastern countries, trail a long way behind them. Rwanda is the one exception as it boasts the sixth smallest gender gap, sitting just below Ireland.

Now something is being done about it forcing companies to be transparent about what they pay their employees. From April 2017 new gender pay reporting regulations come into force in the UK, joining other countries in the world.

President Barack Obama tried to introduce something similar in America during his time in office but the nearest thing that he got to introducing is the Employer Information Report EEO-1, which is a tool to collect data from employers starting in March 2018.

The Executive Order from President Obama goes back to 2014 and stipulates that every year, most federal contractors and other private employers (with at least 100 employees) will tally and report summary pay data for their employees by sex, race, and ethnicity.

But, companies in America do not have to disclose the gender pay gap. The reporting outlined by the EEO-1 form above is required and summary pay data is collected and analyzed across many categories by the American Community Survey and the Current Population Survey, both of which are sponsored by the Census Bureau.

Kate Nielson, State Policy Analyst at American Association of University Women, says the American regulations don’t go far enough in bridging the gender pay gap.

I applaud the UK for bringing more transparency to the issue of the gender pay gap. Sunlight is the best disinfectant. Many companies want to do the right thing, they are just unaware that there is a problem, so shining a light on the issue and revealing the data is an excellent way to make progress toward women bringing home a fair paycheck that they deserve.

So what are the new gender pay gap reporting regulations in the UK and are you ready for it? According to a survey carried out by XpertHR many of you are not prepared for it at all.

What do you need to know:

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 is a new law which affects all private and voluntary sector companies with 250 employers or more. It requires them to publish statutory calculations every year showing how large the pay gap is between their male and female employees.

What do you need to do to comply with the new law?

  • Check out the guidelines about who is classed as an employee because their specific rules – don’t just assume
  • Gather your information first and take plenty of time working them out – this will help you in the long run
  • Prove that your calculations are correct by providing a written statement confirming it by a director or chief executive or another senior person. If your company does have a gender pay gap explain why and show who you aim to close it.
  • Do the calculations for 6 specific categories – there are six calculations to carry out, and the results must be published on the employer’s website and a government website within 12 months.

Working out the pay calculations for the 6 categories

  1. Your mean gender pay – this is the difference between the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees.
  2. Your median gender pay – this is the difference between the median the mean hourly rate of pay of male full-pay relevant employees and that of female full-pay relevant employees.
  3. Your mean gender bonus pay – this is the difference between the mean bonus pay paid to male relevant employees and that of female relevant employees.
  4. Your median gender bonus pay – this is the difference between the median bonus pay paid to male relevant employees and that of female relevant employees.
  5. Your proportion of men and women getting a bonus payment – this is the proportions of male and female relevant employees paid bonus pay.
  6. Your proportion of men and women in each quartile band – this is the proportions of male and female relevant employees in the lower, lower middle, upper middle and upper quartile pay band.

What happens with this information?

This has to be published. Try and do it on your own website or intranet as soon as possible so it’s accessible to everyone in the company but eventually it will have to be published on a designated UK government website – details of which will be available nearer to April 2017. You can get more information on what to do and how to do it on the ACAS website.

What are the penalties for not doing it?

Well there are no penalties as such but remember it is the law. If you don’t comply then it would amount to an ‘unlawful act’ falling within the existing enforcement powers of the Equality and Human Rights Commission which are set out in the Equality Act 2006.

As well as it being an ‘unlawful act’, by not complying you risk harming your company’s good name and reputation. You are also less likely to be considered as an employer to potential candidates who will happily go to rival firms who have been open about its gender pay and will have complied with the regulations.

Mary Hope, from Career Success, says:

Transparency is a good thing for candidates and employees. Where there is a clear equality of pay and esteem it will make organisations attractive to discerning employees. But often the differences might be masking some subtle and legitimate reasoning which statistics can hide. Clever organisations will obfuscate the picture. It will very probably lead to wage inflation as organisations outbid each other in the competition for talent. So whilst publicly ‘outing’ firms who have gender pay gaps might appear a way forward.. it may also be subject to the law of unintended consequences.

By Ushma Mistry

Editor & Content Strategist at Link Humans, download our new eBook now: Measuring Employer Brand: The Ultimate Guide and check out our latest product The Employer Brand Index.