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What is the gender pay gap and how do workplaces contribute to it?

Paystream News

Monday 27th Feb, 2017

The gender pay gap is the average difference (mean or median) between a man's and a woman's aggregate wages or salaries which is expressed as a percentage of men's earnings e.g. women earn 15% less than men. Whilst Equal Pay deals with comparing one job with another - the gender pay gap is about the difference in gender pay across the whole organisation.

Reporting on the gender pay gap provides a valuable tool for assessing levels of equality in the workplace, female and male participation, and how effectively talent is being maximised.

The gender pay gap may vary by occupation, age group and even working pattern and it is noted that the gap tends to be higher in industry sectors such as finance, energy and construction and lower in sectors such as public administration, support services and health and social work.

Complying with the Regulations

An employer must comply with the regulations for any year where they have 250 or more employees on April 5th.

Compliance is not required where an employer has fewer than 250 employees on April 5th, however the business benefits of doing so should be taken into consideration.

For the purposes of gender pay reporting, the definition of who counts as an employee can be found in The Equality Act 2010 which includes:

  • employees (those with a contract of employment)
  • workers and agency workers (those with a contract to do work or provide services)
  • some self-employed people (where they have to personally perform the work)

How to carry out gender pay reporting

Relevant employers must follow the rules in the regulations to calculate the following information:

  • Their mean gender pay gap
  • Their median gender pay gap
  • Their mean bonus gender pay gap
  • Their median bonus gender pay gap
  • Their proportion of males receiving a bonus payment
  • Their proportion of females receiving a bonus payment
  • Their proportion of males and females in each quartile band

A written statement, authorised by an appropriate senior person, which confirms the accuracy of their calculations (Providing a narrative will help people to understand your view of why a gender pay gap is present and what your organisation intends to do to close it)

These calculations will employ two types of averages:

  • A mean average which involves adding up all of the numbers and dividing the result by how many numbers are in the list.
  • A median average which involves listing all of the numbers in numerical order. If there is an odd number of results, the median average is the middle number. If there is an even number of results, the median will be the mean of the two central numbers.

For the results of the first four calculations:

  • A positive percentage figure (which almost all organisations are likely to have) reveals that typically or overall, female employees have lower pay or bonuses than male employees.
  • A negative percentage figure (which some organisations may have) reveals that typically or overall, male employees have lower pay or bonuses than female employees.
  • A zero percentage figure (which is highly unlikely, but could exist for a median pay gap where a lot of employees are concentrated in the same pay grade) would reveal no gap between the pay or bonuses of typical male and female employees or completely equal pay or bonuses overall.

The specific calculations required can be found on acas website.

What should be done with the calculations?

The information must be calculated within one calendar year and must be published on both the employer’s website and on an elected government website (details of the government website will be available closer to 5th April 2017).

Public and private sectors alike must take action to eliminate the gender pay gap. An employer should use the information generated to help understand any underlying causes for their gender pay gap and take appropriate steps to minimise it. Benefits will differ between employers but can include developing a reputation for being a fair and progressive employer, attracting a wider pool of potential recruits for vacancies and the enhanced productivity.

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