From 6th April 2017, private and voluntary sector employers with more than 250 staff will be required to gather data on pay under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Similar regulations were applied to the public sector from 31st March 2017.
Why is this needed?
Britain’s gender pay gap currently stands at 9.4%, which effectively means that women work free for part of the year. It’s an improvement on the 1997 statistic of 17.9%. However, it hasn’t closed significantly in years and the UK has slid to 22nd place in global equal pay rankings.
An analysis by Deloitte estimated that if we carry on at this rate, the pay gap will not be eradicated until 2069, a whole 99 years after the Equal Pay Act 1970 was introduced.
What does Equal Pay Reporting mean for employers?
By 2018, firms must publish (on their own website as well as a government site) their gender pay gap, gender bonus gap and a breakdown of how many women and men get a bonus. Additionally, they must report the proportion of men and women in each of four pay segments, or quartiles, from lowest to highest pay.
What are the other implications?
The regulations don’t stipulate fines for employers who fall short of equal pay measures. This is effectively an exercise in peer pressure by naming and shaming companies.
But apart from internal repercussions, it could mean that customers, potential job recruits might decide to go elsewhere. Indeed, 65% of women and 27% of men said they would not apply for a job at a company where “men and women are not equally paid for equal work,” according to a poll by Glassdoor.
Under these new rules, companies do not have to provide a narrative with their pay data, nor are there clear guidelines on the level of data that must be provided. This could significantly skew results, especially where large firms engage experts to advise them on how to present their data.
Yet many employers are woefully unprepared, despite having had over a year to consider this incoming change to legislation.
What can employers do to prepare?
The Office for National Statistics (ONS) notes the gender gap widens greatly from age 40 upwards (1.5% for 30-39 year-olds, 13.4% for the 40-49, and 16.2% for 50-59 year olds). Bearing this in mind, those who really want to close their pay gaps will look at their findings by:
- age group
- nature of the role (full-time and part-time)
- parental and other caring duties
- opportunities for flexible working
- number of women in senior, high-earning positions
Giving women a sudden pay rise will be difficult for firms that have not budgeted or planned for this. By benchmarking and action planning, they will be able to take measured steps to start to close any gaps.
To discuss how our team can help you with your Equal Pay Reporting action plans, contact us here.