‘Gender pay gap’ refers to the difference between the average earnings of men and women across an organisation.
The Gender Pay Gap Reporting Regulations were introduced in 2017 to make it a legal obligation for employers to take action to identify and publish any gender pay gaps within their organisation.
Under the regulations, organisations with 250 employees or more must, on a given ‘snapshot’ date, report annually on their gender pay gap using six differing measures.
In addition to providing figures, some employers also have to submit a written statement, while all are encouraged to also provide a ‘supporting narrative’ to provide context to the numbers.
Together, this information should be used by employers to improve and narrow any identified gender pay gap within their organisation.
It is a legal requirement for all relevant employers to publish their gender pay gap information. Failure to meet the requirements can result in enforcement action and reputational damage.
In this guide, we explain which employers are required to submit a gender pay gap report, what the requirements and deadlines are for reporting.
Temporary suspension due to Coronavirus
In response to ongoing pandemic issues, the deadline for the 20/21 reporting year has been postponed until 5 October 2021. Employers are being encouraged to continue to meet the standard deadline where possible, ie 30 March 2021 and 4 April 2021, but the Equality and Human Rights Commission (EHRC) has confirmed that enforcement action will not be taken against employers, as long as they by 5 October 2021.
Although it should be mentioned that no enforcement action has been taken against any employer who did not report or reported late for the reporting year 2019/20 (snapshot date of either 31st March 2019, or 5th April 2019) in recognition of the uncertainty and pressure resulting from the Coronavirus pandemic. The government has confirmed that reporting will resume in 2021 in the same way as before.
The snapshot date for private sector employers is 5th April 2020, which came just after the first national lockdown and the rollout of the Job Retention Scheme. Normal rules dictate that employees do not need to be included within the ‘reporting pool’ if they were not on full pay on the snapshot date. In practice, this means any employee on furlough, and who did not have their pay topped up to 100%, can be discounted for the purposes of the report.
Another key issue to remember is that employers may have reduced their staffing numbers during 2020 and believe they are no longer required to produce a report because staffing levels have reduced below 250. The general rule is that if an employer satisfied the criteria on the key date of 5th April 2020, then they should produce a report.
Which employers are subject to gender pay gap reporting?
It is a legal requirement for all companies with 250 employees or more to report and publish their gender pay gap information. There are two sets of regulations, one applicable to most public authorities and the other for private, voluntary and all other public authority employers.
Six Measures of the Gender Pay Gap
The requirements on employers comprise six different ‘measures’ of pay gaps that must be reported:
- Mean gender pay gap – This is the difference between the mean hourly rate of relevant male full-pay employees to that of their relevant female counterparts
- Median gender pay gap – The difference between the median hourly rate of relevant male full-pay employees to that of their relevant female counterparts
- Mean bonus gap – The difference between the mean bonus paid to relevant male employees to their female counterparts
- Median bonus gap – The difference between the median bonus paid to relevant male employees to their female counterparts
- Bonus proportions – The proportion of male and female relevant employees who received bonus pay during the relevant period
- Quartile pay bands – The proportion of male and female full-pay relevant employees in the lower, lower middle, upper middle, and upper quartile pay bands.
Each measure provides a slightly different view on the gender pay gap and becomes increasingly meaningful if read in conjunction with the other measures and within the context of the overall HR and payroll policies, including training, development, recruitment, or selection. Before calculating gender pay gap figures, specific payroll data for each relevant employee will need to be gathered. This is done by determining relevant employees and full-pay relevant employees from a headcount and using this data to make gender pay gap calculations.
What is the relevant ‘snapshot date’?
There are two deadlines which each have their own ‘snapshot’ date.
Most public authority employers must use a snapshot date of 31st March, publishing their gender pay gap report by 30th March of the following year.
Private, voluntary, and all other public bodies must use a snapshot date of 5th April. They must publish their gender pay gap report by 4th April of the following year. These employers must also provide a written statement confirmed by an appropriately senior individual, such as a Chief Executive. Such individuals depend on the type of employer involved: a corporate body (other than a limited liability partnership (LLP)) will need a director, an LLP will require a designated member, a limited partnership will need a general partner, any other type of partnership will require a partner, for an unincorporated body of persons (other than a partnership), it will be a member of the governing body or senior officer, and for any other type of body, it will be the most senior employee.
The written statement, or supporting narrative, should explain the reasons for the results and provide details about action being taken to reduce or eliminate the gender pay gap.
Public authority employers are not required to submit a written statement unless they are not listed in Schedule 19 to the Equality Act 2010.
The written statement can include:
- An explanation why the results show ‘challenges’, such as why executives receive the highest bonuses and most of them are men. If a challenge has been identified, an employer should consider taking new or implementing quicker or additional actions to reduce or eliminate their gender pay gap.
- Detail why the results show ‘successes.’ For example, if a recent change to a bonus policy has helped lower the gender pay gap.
- Highlight ‘plans for long-term results’, e.g., tackling the underrepresentation of women in a specific industry or sector such as science, engineering, or technology, by running a recruitment campaign for junior roles. In the short term, this could have the effect of widening the gender pay gap because more women will be at starting salaries, but in the longer-term will balance out as more women rise through the ranks.
While not a mandatory requirement, employers are encouraged to publish a supporting narrative to explain the figures within the report.
Where a gender pay gap does exist, in many cases it may neither be discriminatory nor inappropriate. The supporting narrative helps people reading the gender pay gap report understand why a gender pay gap is present and what the employer is doing, and has already done, to address and close it.
A supporting narrative can also highlight to employees and others reading the report, a commitment to closing the gap.
Supporting narratives may include:
- Explanations for each gender pay gap figure within the report
- Explanation of the difference between unequal pay and the gender pay gap that contextualises and clarifies the results
- Providing workforce statistics that give a wider and clearer picture of the reasons for the existence of the pay gap
- Detailed analysis of the pay gap
- Can draw comparisons between previous years’ figures
- Describe how employees and their representatives are being involved in the process
- Efforts that have been taken to understand and address the gender pay gap
Employer action plan
An action plan explains how a company intends to tackle its gender pay gap; it can either be published as an addendum to your supporting narrative or as part of the main report. The plan should name clear, specific, and achievable targets that the company is committed to within a chosen timeframe.
Benefits of publishing an action plan with targets and clear actions include:
- It sends a powerful message about the company’s commitment to gender equality in the workplace
- It attracts a greater pool of potential recruits
- The company will develop a reputation for being a fair and progressive employer
- It creates enhanced productivity by ensuring the workforce feels valued and engaged in a company with a culture committed to tackling inequality
It may seem obvious, but nevertheless it should be mentioned, that before tackling gender pay gap, a diagnosis needs to be made as to the reasons driving it. This allows development of a meaningful and durable action plan that will have a real impact upon a gender pay gap. Evidence shows that, even in companies within the same sector, the causes can vary and things such as gender differences in recruitment and starting salaries, performance ratings and promotion (such as getting ‘stuck’ at different levels), or other factors like bonus payments or support of parental leave or part-time work and its effect on career progression.
The Government Equalities Office has published best practice guidance on understanding the gender pay gap on the gov.uk website, which includes actions employers can take or things they can include in their plans to reduce it.
How to publish the gender pay gap report
The gender pay gap reporting calculations, together with any supporting written narrative, must be published on both the employer’s website and the government website using the Gender Pay Gap Service. It must be published within a year of the snapshot date and all information kept for a period of three years from the date of publication.
For any companies that do not have a website where they can prominently publish the report, they should publish their findings on any company intranet and/or parent company website ensuring this information is brought to the attention of its employees.
Penalties for failing to report
Failing to report on time or report accurately will put an employer in breach of the regulations and places them at risk of enforcement action from the EHRC, which can lead to court orders and fines.
An employer also exposes their organisation to reputational risk and harm to the employer brand, since failure to report can raise suspicions of pay gap issues.
The EHRC publishes the names of organisations who failed to report and details of the investigation or enforcement action taken against them.
Gender pay gap service also applies publicly visible ‘late badges’ to those employers registered with the service who have failed to report and publish their gender pay gap information.
Benefits of early reporting
The benefits of reporting as soon as possible after the snapshot date include:
- Being identified as a leader within your field which may have a positive impact on recruitment, contract awards, and retention
- The data you need to calculate your gender pay gap may be more easily accessed
- Improve your ability to manage key employees needed to prepare your submission
- If there are any unexpected issues or complications, they can be tackled earlier on
- Early analysis of your gender pay gap report may mean you can identify, and tackle pay gaps sooner than otherwise
This helps anyone reading the gender pay gap report understand why a gender pay gap is present and what the employer is doing, and has already done, to address and close it. A supporting narrative can also highlight to employees and others reading the report, a commitment to closing the gap.
DavidsonMorris’ specialist HR consultants deliver comprehensive advice on all aspects of workforce management including meeting legal requirements in relation to gender pay gap reporting. Working closely with our employment law colleagues, we provide a holistic solution for employers to help nurture positive working relations while remaining compliant with your legal obligations. For help and advice with a specific HR or personnel issue, speak to our experts.
Gender Pay Gap Reporting FAQs
How do I publish a gender pay gap report?
The gender pay gap report should be placed prominently and publicly on the company’s website and/or parent company’s website. It must also be added to the government Gender Pay Gap Service website. For any companies that do not have a website, they should publish their findings on a company intranet and/or parent company website, ensuring this information is brought to the attention of its employees.
What is the deadline for gender pay gap reporting?
For private and voluntary sector employees, the snapshot date is 5th April with the submission deadline being 4th April of the following year. For public authority employers, the snapshot date of 31 March must be reported and published by 30 March of the following year.
What is the gender pay gap in 2020?
The gender pay gap among all employees was 15.5% in 2020, this is down from 17.4% in 2019. The gender pay gap was close to zero for full-time employees aged under 40 years but was over 10% for those in older age groups.
Is gender pay gap illegal?
Failing to report when you are required to do so is illegal and can cause court orders and fines. However, a distinction needs to be drawn between unequal pay and the gender pay gap because although unequal pay is illegal, the gender pay gap - the difference between the average hourly earnings of men and women - persists.
It there gender equality in the UK?
Sadly, in 2019 the UK fell six places down gender equality global rankings, dropping from the 15th most equal nation in the world to the 21st.
Does gender pay gap report overtime?
The Gender Pay Gap Regulations 2017 which sets out the gender pay gap reporting duties, specifically excludes overtime pay from the definition of pay that should be included within the calculations.
Last updated: 27 February 2021