Gender Pay Gap Reporting—Happy Anniversary?

April 4, 2019 will mark the first anniversary of mandatory private-sector gender pay gap reporting in the United Kingdom. One year in, and organizations appear to be in the same last-minute position they were in during the first reporting year, submitting their data just before the deadline. Regardless of timing, the key question is: has the last 12 months had any impact on the issue of addressing the gender pay gap generally?

The methodology in accordance with the Equality Act 2010 (Gender Pay Gap Information) Regulations is fairly crude in its approach. The Regulations apply to all employers in the private sector that engage 250 or more employees as of April 5 in each reporting year. A set of six statutory calculations must be published:

1. the mean ordinary pay gap,
2. the median ordinary pay gap,
3. the mean bonus pay gap,
4. the media bonus pay gap,
5. the percentage of males and females within each pay quartile, and
6. the percentage of males and females who receive a bonus payment in the 12-month bonus reporting period.

As reporting employers will testify, the process of interpreting what does and does not count as pay, which employees are included or excluded from scope, and what is (and is not) included within the definition of a “bonus” during the relevant period is difficult and time consuming. Often the resultant hourly rates can vary greatly; for example, if bonuses are paid in the pay period that includes April 5, they must be included in the ordinary pay calculations, which can sway hourly rate figures greatly. In addition, any employee who receives less than his or her normal contractual pay for a reason related to leave during his or her pay period (that includes April 5) are excluded completely from the ordinary pay gap calculations.

The pay gap calculations do not take job grade or the employee’s role within an organization into account. The calculations do not, therefore, go into sufficient detail to be able to identify whether gender pay discrimination is present within an organization. The questions remain: how accurate are the results and what purpose do they serve in reality?

The Gender Pay Gap Problem: Is Reporting Producing Results?

It is clear that organizations covered under the Regulations are required to report. The reporting requirement has shone a spotlight on the issue of gender balance within the workplace, and the issue is now being debated in a meaningful way.

The pay quartile data in most organizations shows a clear and significant underrepresentation of female workers in the upper pay quartile. The gender pay gap reporting requirements have also raised awareness of the underrepresentation of minority groups in higher paid roles. There may be many reasons for these phenomena. The hope is that the gender pay gap Regulations can facilitate discussions and encourage changing attitudes.

Note also that the gender pay gap Regulations are not designed to address the issue of equal pay in the workplace. The Equality Act 2010 provides clear and adequate protection for males and females who perform equal work but do not receive equal pay for a reason related to gender. The gender pay gap, on the other hand, is borne out of years of social stereotyping. Once a pay gap exists, it is then perpetuated until action is taken to change it.

Meaningful Change in the Workplace?

The gender pay gap Regulations at least bring the gender pay gap debate to the fore, at a minimum, every 12 months. The Regulations make it imperative for organizations to examine their data and have an honest debate about what the data means. In this regard, organizations may want to consider how engaged their workforces are and whether they are encouraging debate and analysis on gender pay gap issues.