In July 2015, the UK Government published details of the introduction of mandatory gender pay gap reporting which will be a legal requirement for companies that have over 250 employees.
The aim of gender pay gap reporting is to help bridge the gap between the earnings of male and female employees who are have the same tasks and responsibilities in the workplace to restore fairness of financial remuneration across genders.
The clause, s.78, will “require employers to publish information relating to the pay of employees for the purpose of showing whether… there are differences in the pay of male and female employees”.
Although a date for gender pay gap reporting is currently in the draft stages and the regulations are yet to be released, larger companies are being urged to begin preparation for when the new legislation comes into force.
Here are our tips to help employers get ready for gender pay gap reporting.
Now is the ideal time to begin gathering data on the earnings of each employee, and grading arrangements, job evaluation scheme, payroll system, HR information systems and occupational segregation.
The next step is to decide which jobs are equal. The Equality Act 2010 defines equal work as: “like work”; “work rated as equivalent”; and “work of equal value”.
“Like work” is defined as work that is the same or broadly similar; “equivalent work” is where the demands of a job are determined to be equal to those of another job under a job evaluation scheme; and “work of equal value” is work that is different to another job but of equal value in terms of the demands of the role.
Pinpoint Pay Gaps
By undertaking the two steps above, you should now have the information that will allow you to group together employees that carry out equal work and identify any gender pay gaps by calculating the basic and total average pay for both men and women. These calculations should also include any benefits and bonuses.
Justifying pay gaps
Next comes the tricky part. Once any pay gaps have been identified you must look if there are any reasons for these differences that would justify the difference in pay. Reasons that financial remuneration may differ can include non-discriminatory elements such as pay progression, pay protection, performance pay, competency pay, premiums and allowances.
However, these reasons must be genuine and gender must not be a contributing factor.
Work towards equal pay
If you have determined that some employees have not been receiving equal pay despite undertaking equal work due to gender, you must seek to address this imbalance by putting together an equal pay action plan.
Unpaid staff can be upgraded to the next level of the pay scale to match their equal job colleagues, however this could be costly for organisations who have identified a large number of pay gaps.
It may be tempting to try and reduce the pay of any overpaid employees to attempt to recoup some of these costs, however reducing the pay of overpaid employees is likely to cause dissatisfaction among those affected and could result in breach of contract and/or constructive dismissal claims if the matter is not handled carefully.
Seek legal advice
In these situations, we advise that legal advice is taken prior to making any changes to employee pay to decide what would be the best course of action and to ensure that you are well prepared for gender pay gap reporting when the new legislation comes into force.