So, after a distinctly lack lustre effort from companies voluntarily reporting their gender pay gap, (with only 5 out of 270 businesses signed up actually reporting anything), mandatory gender pay reporting for companies with more than 250 employees has been enacted and will be law no later than 26th March 2016. The year long delay will be used to consult with companies on how and when they will report their gap, but will also look at what should be measured.
But why consult? How hard is to establish if men and women are being paid equally in your organisation?
Unfortunately, it’s quite hard to ensure that we’re all looking at the same thing; there’s a number of ways we can choose to interpret the pay gap between our employees.
1. Full-time vs. Part-time
First question, are you going to compare the pay of:
a) your full-time staff
b) your part-time staff
c) all your staff together
All are legitimate ways to look at your gender pay gap, but make quite a difference to the outcome. The ONS reports nationally, that the full-time gender pay gap is 9.4%, the part-time pay gap is -5.5% (i.e. in favour of women), but all employees together is 19.1%. You don’t want to be reporting your all staff pay gap when your competitors are reporting their full-time staff pay gap.
2. Mean vs. median
Second up, what average are you going to use? One for the math nuts perhaps, but when you compare the ‘average’ gender pay gap you can choose to compare the mean or the median. The mean is what most people think of as an average; the total pay divided by the number of employees, so £550,000 paid to 11 employees is a mean of £50,000. The median is used by the ONS when they calculate their pay gap figures and simply takes the middle earning person’s salary. So of those 11 employees, the middle earner might be on a salary of £40,000. Either is an acceptable figure to calculate your pay gap, but as you can see they can make quite a difference.
3. Base pay only vs. total earnings
Thirdly, are you going to report on base pay only, or include other earnings such as allowances, overtime, and bonuses? Most people start with base pay. It’s simple to understand and readily available, but a number of equal pay claims have been made where male employees have had access to overtime which significantly increased their earnings over female employees doing similar work; so there was a ‘hidden’ pay gap which wasn’t obvious from base pay alone.
4. Company overall vs. ‘like work’ or ‘work of equal value’
Next, are you going to dig deeper and look at the pay gap of your employees in similar jobs or grades? We have seen occasions where a company has an overall gender pay gap, but this disappears when you look at the pay gap of employees in the same grade. In a nutshell, they appeared to be paying equally within their grades but they simply had proportionally more women in lower paid roles and more men in higher paid roles, hence the overall gap. So, it can be useful to break down your reporting, but only if you are confident that you have well-defined levels or grading, typically supported by a job evaluation system.
Like work is relatively intuitive. You should be comparing two jobs which perform similar work. However, this has still caught out organisations, famously with careworkers vs. refuse collectors, and most recently cases being brought forward against Asda and Sainsbury’s.
Work of equal value is slightly trickier. The intent is to compare what seem to be dissimilar roles but deliver equal value to the business. For example, this could help you compare a desk-based receptionist and a shelf-stacker; very different attributes but potentially both delivering equal value to the business and therefore should be paid equally.
And that’s all…?
These questions are really just the tip of the iceberg. You can choose to dig a lot deeper into areas such as starting salaries, access to training, frequency of promotion, etc. For more guidance on what to consider, there is free advice available from the EHRC and the upcoming consultation will narrow down the compulsory reporting requirements.
However, we recommend you start looking and understanding your equal pay position now. The sooner you figure out your pay gap and the possible causes, the sooner you can start addressing any gaps. Then you’ll be in a stronger position when you have to start telling the world.
