The gender pay gap reporting deadlines are fast approaching with the 31st March being the snapshot date for public sector organisations closely followed by the 5th April as the snapshot date for businesses and charities. With this in mind, it is important that employers who are required to disclose their gender pay gap get rolling with an action plan! You might ask yourself: What is the purpose of this report? What are the obligations placed on the organisation? Where do I even start? Is it too late to book a holiday for the end of March?!
Why? Oh Why?!
The gender pay gap has fuelled many debates and in an effort to increase consciousness and improve pay equality, the UK government introduced plans to “end the gender pay gap in a generation” by requiring British employers in the private and voluntary sectors to report the gender pay gap for organisations with 250 or more employees by April 2018 and to publish details of their gender pay gap.
Gender pay gap reporting should not be confused with the issue of the equal pay gap. While the latter concerns itself with the ‘like for like’ differences in the rates of pay between men and women in the same or similar role; the gender pay gap looks at the difference in the average earnings of men and women, regardless of their role or seniority. It is, therefore, a broader measure capturing not just any equal pay issues within an organisation, but also any pay inequalities resulting from differences in the sorts of jobs performed by men and women and the gender composition of the workforce by seniority.
What goes in the report?
The gender pay gap is defined as the difference in median pay between men and women. Organisations caught by the rules will have to publish the following statistics (figures for gross pay should be used in all cases):
- Average women’s hourly earnings as a percentage of average men’s hourly earnings (based on both the mean and median average)
- Average gender pay gap as a mean average (ACAS)
- Average gender pay gap as a median average (ACAS)
- Average bonuses for women as a percentage of average bonuses for men (based on the mean average)
- Average bonus gender pay gap as a mean average (ACAS)
- Average bonus gender pay gap as a median average (ACAS)
- The percentage of women who receive bonuses and the percentage of men who receive bonuses
- The number of male and female employees in each quartile of the employer’s pay distribution (based on rates of hourly pay) (proportion of males and females when divided into four groups ordered from lowest to highest pay)
Mean and Median?
The ‘mean average’ refers to the average of the numbers (to calculate the mean add up all the numbers and divide by how many numbers there are).
The ‘median average’ refers to the middle number in a sorted list of numbers (to find the median place all the numbers you are given in value order and find the middle number).
You can report your figures to government as either whole percentages or percentages rounded to one decimal place.
What is included in “pay”?
When working out the gross hourly rate of pay for an employee, overtime, expenses, benefits in kind and the value of salary sacrifice schemes should not be taken into account. At the same time, shift premiums, on call and standby allowances will have to be included. Reduced pay, for example where an employee is on sick leave or maternity leave, should be used in the calculations rather than the normal contractual rate of pay.
What about employees on zero hours and casual workers contracts?
Employers should include staff on zero hours contracts in the calculation of their gender pay gap if they meet the relevant definition of an employee. Where employees don’t work the same number of hours each week, organisations need to calculate an average over the 12-week period that ends with the last complete week of the pay period. For this, take the total number of hours worked by each employee and divide by 12.
If the 12-week period includes a week where no work was done, organisations should choose an earlier week where work was done and use this instead as part of the average calculation. If you can’t reasonably use the 12-week average (for example because the employee has not been at work for long enough), use a number which fairly represents the employee’s weekly working hours.
Action points for schools
Although only larger independent schools are currently caught by the legislation, it is advisable for academies, academy trusts and maintained schools with around or over 250 employees to prepare to make the report.
- All school employers should work out the number of relevant employees they have (including considering which members of staff are “employed under a contract of employment”).
- Schools which are under but fairly close to the 250 threshold should consider seeking legal advice on this point.
- Schools with 250 or more relevant employees may wish to carry out a “dry run” analysis of the figures. This will help to uncover tricky aspects to the calculations. Schools will also have forewarning where the gender pay gap is significant and may need addressing on a strategic level.
What if it all goes wrong?
The Draft Regulations did not include penalties or prosecution actions, however a far greater risk lies with the potential reputational threat that an employer who does not comply with the Regulations could face. A possible action for the Government may be to ‘name and shame’ employers who do not comply.
Schools should be aware that a request could be made under the Freedom of Information Act and that the underlying salary information and calculations are likely to be disclosable.
The legal employer must report and publish their gender pay gap data. The necessary information must be published as a written statement by an appropriate person, on their public-facing website accessible to employees and the public. It must remain on the website for a minimum of three years. Employers must also report their data to government online – using the gender pay gap reporting service. (https://www.gov.uk/report-gender-pay-gap-data )
If you need any help or advice please speak to your HR consultant or give one of our team a call on 01924 827869.