Will you be required to report your Gender Pay Gap and what will this mean?
Gender Pay Gap reporting is a current focus for the media. To date mandatory reporting is only obligatory for businesses who have 250 employees or more, however, the Business, Energy and Industrial Strategy committee has now called for Gender Pay Gap reporting to be mandatory for those with 50 employees or more. The reason for including these smaller SMEs, is that only around half the members of the UK workforce are currently being covered by the present reporting requirements.
This will mean that SMEs will have to publish:
- Mean and median gender pay gaps based on an assessment of hourly pay rates
- The proportion of men and women in each quartile pay band (four bands from lowest to highest paid); and
- The differences in average bonuses between genders.
Businesses with 250 employees or more in the private sector are required to publish these results on an annual basis by 4 April 2019, public sector businesses need to report by 31 March 2019.
We still do not know if the call from the Business, Energy and Industrial Strategy committee will mean those employers with 50 or more employees will also have an obligation in 2019 or 2020.
Is the Gender Pay Gap just an extra administrative burden?
Those businesses with less than 250 employees can choose to voluntarily report and analyse their Gender Pay Gap.
While it will take some time to ensure Gender Pay Gap reporting and responsibilities are allocated and undertaken, analysing pay data, and more specifically, the Gender Pay Gap can help employers:
- Develop a more effective recruitment and retention policy;
- Establish where skills gaps appear in the organisation; and
- Identify and create a progression structure that helps employees (regardless of gender) reach their potential, helping the organisation grow.
Pay and reward strategy
Although the Gender Pay Gap is based on specific pay data and pay types, it can also help employers re-evaluate their pay and reward strategy. Pay and reward has been a popular topic of conversation lately (particularly in relation to the national minimum wage and senior level pay structures), and as the competition for key skilled workers is increasing, it is something that SMEs can use to help the business grow.
New pay and reward strategies have included:
- A focus on health and wellbeing to improve employee activity and mental health;
- Parental leave and pay policies – this is becoming more important, particularly in light of experimental analysis of PAYE data showing that females who delayed having their first child until their 30s were more likely to earn over £20,000 than the average for all women; and
- Training and development enhancements, including utilising apprenticeships to reduce costs and improve retention – which includes utilising the levy and wider Government funding.
- Improving communication and transparency around pay grades and bonus / other entitlements – this may include introducing Total Reward Statements, online benefit portals and discount sites.
What should businesses do next?
If your business has less than 250 employees you should look at your pay and reward structure, paying particular attention to the interaction with the Gender Pay Gap, given the press and publicity this new reporting obligation is currently receiving.
Publishing a Gender Pay Gap can be important from a reputational and engagement perspective, helping employees, suppliers and customers to better understand the current position and future aims of the business, as well as enhancing recruitment and retention.
Should the Government accept the recommendations made by the Business, Energy and Industrial Strategy committee and expand the reporting requirement to employers with 50 employees or more, seeking appropriate support from your payroll and reward advisers will be an important step to ensure that reporting is efficient, is utilising payroll technology and is communicated effectively.