So the “new look” 5th April, how was it for you….?
Did you spend the day on “hold” as you scrabbled to use up your remaining ISA allowance? Were you locked in a room with your payroll provider getting all hot and bothered, or are you saving that for later in the month? Or are you enjoying the spring sunshine, wondering what on earth I am talking about?
As of yesterday, of course, 5 April is no longer a “big day” simply by virtue of being the last day in the tax year. It is now also the annual “snapshot date” for the purposes of the new Gender Pay Gap Reporting obligations. From now on, UK employers having 250 or more employees will have to capture their payroll data for the payroll that includes 5 April each year and then both calculate and report on their gender pay gap statistics. The question is, are you ready?
According to research published by Totaljobs yesterday, the answer to that question for many is an unsurprising and resounding no.
Whilst there are some employers who are still blissfully unaware even that the new GPG Regulations exist, scarcely half of the employers which took part in the Totaljobs survey are “very confident” that salaries are equal across the genders. This misses the point more than slightly, of course – given that there was a national gender pay gap of 18.1% in 2016 (down from 19.6% in 2015), it is reasonable to assume that many employers’ pay gap statistics will look very similar. Some will be better, some much worse. There are numerous and sometimes complex reasons for differences in gender pay, none of which mean the employer is acting in any way unlawfully. However, 51% of employers in the same survey also admitted they invested little in coaching management on gender pay and equality issues and that is clearly something that needs to change.
Although it is true that the reporting itself does not need to be done until April 2018, there are many good reasons to start your gender pay analysis sooner rather than later. Firstly, although the individual calculations themselves are easy enough to do, extracting the information you need from your payroll to do them accurately may not be. Having worked with a number of clients on dummy runs of the reporting process, this is easier said than done, with the required data often having to come from a number of different sources/reports.
Secondly, depending on what your statistics actually look like, particularly when compared to the UK national and/or sector average, you may want time to analyse the results in more detail to try to better understand what they are telling you about pay, recruitment, retention and progression of men and women within your organisation. Are there any obvious pay disparities that have crept in between people doing the same job; or is it simply a question of there being more men than women in the most senior roles within your organisation? The survey also indicated that about a quarter of employed women believe that men get paid more for the same job. It is our perception that like-for-like pay discrimination is now much less common than it was and therefore that employers will make far greater inroads into their pay gaps by focussing on the advancement of women up the ranks rather than fiddling with individual roles’ pay rates.
Whilst an organisation is unlikely to be pilloried for having statistics at or about the national or industry average, interested parties (employees, unions, shareholders amongst others) will nevertheless be looking to see an improvement in the position from one year to the next. (Though NB there is at best a moral obligation here and no legal shame in not removing a pay gap if, seen at an individual and role level, there is no unlawful discrimination in your pay rates. If a senior women resigns and is replaced on entirely justifiable grounds by a man, that may even knock your pay gap backwards, but it simply doesn’t matter legally so long as you can explain it). That means it will be important to identify potential problem areas, to think about what strategic and policy changes might be required to support improved diversity and with that not only create the opportunity to narrow any pay gap but also enable you to develop a much clearer narrative around your reported statistics if you want one. And given the time it takes for such changes to have any meaningful impact, the sooner you can do this, the better.
Squire Patton Boggs has a Gender Pay Reporting taskforce. To receive our toolkit or to talk to us about how we can help you with your reporting obligations and how best to consider and analyse your data, please contact David Whincup, Janette Lucas or Clare McNicholas or your usual Squire Patton Boggs contact.