Gender Pay Gap Reporting – Key Facts

by | Apr 7, 2017 | Best Practice, Employment Law, Library & News, Remuneration & Benefits, Strategy

Gender pay gap reporting will be required, from April 2017, by all private and voluntary sector organisations with 250 employees or workers are required to publish specific data on the pay gap that exists between their male and female workers.

Key Facts

  • The legislation will apply annually to any private or voluntary organisation who each year in April, has 250 or more employees or workers
  • The definition of who counts as an ‘employee’ includes traditional employees and workers some of whom may be self-employed.  For further information on the definition of a worker, please contact Beststart HR.
  • There are six calculations that must be carried out – details below.
  • The results must be published within 12 months of the ‘snapshot date’ each year on the organisation’s website and through the Government’s ‘gender pay gap reporting service‘. The results must be accompanied by a written statement from a senior individual within the organisation such as CEO or Managing Director.
  • Details must be retained on the website for a minimum of 3 years.
  • Narrative can be provided with the calculations to show challenges that the organisation is facing; the reasons for the results; and any longer term plans to address the gap.

Calculations Required

  • Mean Gender Pay GapThis calculation shows the difference between the mean hourly rate of pay that male and female employees receive.  The calculation is:

mean hourly rate for men – mean hourly rate for females  x 100

/ mean hourly rate for men

  • This will be expressed as a percentage where a positive percentage will indicate that on average female employees and workers have lower pay than men.
  • Median Gender Pay Gap This calculation shows the difference between the median hourly rate of pay that male and female employees receive.  The calculation is:

median hourly rate for men – median hourly rate for females  x 100

/ median hourly rate for men

  • This will be expressed as a percentage where a positive percentage will indicate that on average female employees and workers have lower pay than men.
  • Mean Bonus Gender Pay GapThis calculation shows the difference between the mean bonus payments that male and female employees receive.  This calculation only includes male and female employees who received a bonus payment in the relevant period, those who did not receive a bonus are excluded from the calculation.  The calculation is:

mean bonus pay for men – mean bonus pay for females  x 100

/ mean bonus pay for men

  • This will be expressed as a percentage where a positive percentage will indicate that on average female employees and workers have lower bonus pay than men.
  • Median Bonus Gender Pay GapThis calculation shows the difference between the median bonus payments that male and female employees receive.  This calculation only includes male and female employees who received a bonus payment in the relevant period, those who did not receive a bonus are excluded from the calculation.  The calculation is:

median bonus pay for men – median bonus pay for females  x 100

/ median bonus pay for men

  • This will be expressed as a percentage where a positive percentage will indicate that on average female employees and workers have lower bonus pay than men.
  • The proportion of male and female employees receiving a bonus paymentThese two calculations show the proportion of male employees who were paid any amount of bonus pay, and the proportion of female employees who were paid any amount of bonus pay.  The reporting requires a comparison of the two percentages.  The calculations are:

Number of male employees who received a bonus  x 100

/ Number of male employees

Number of female employees who received a bonus  x 100

/ Number of female employees

  • A comparison of the two results will indicate how much more likely male employees are to receive a bonus compared to female employees.
  • The proportion of male and females in each quartile bandThis calculation shows the proportions of male and female employees and workers in four quartile pay bands, which is done by dividing the workforce into four equal parts.  This calculation is done in four stages:
  1. List all employees and workers in order of their hourly pay from lowest to highest.
  2. Divide the list into four groups with an equal number of employees in each (or as near as possible).  These are your four quartiles – lower quartile; lower middle quartile; upper middle quartile; and upper quartile.
  3. If there are a number of employees on the same hourly rate of pay crossing between two of the quartiles, make sure that the males and females are split as evenly as possible across the quartiles.
  4. For each quartile perform the following two calculations:

Number of male employees in the quartile  x 100

/ Number of employees in the quartile

Number of female employees in the quartile  x 100

/ Number of employees in the quartile

  •  Comparing the two results within each quartile will indicate the distribution of male and female employees in the quartile. Comparing results across quartiles will indicate the distribution of male and female employees across the organisation.

What do I need to do now to prepare?

  • As the definition of who this applies to is broader than for some legislation, the first task is to identify which employees and workers should be included in the calculations.
  • Ensure that you have the following data available by employee for all relevant employees and workers:
    • Employee Name
    • Sex
    • All bonus payments received.  Bonus payments include all contractual and discretionary bonuses which are received in the form of cash, vouchers, securities, securities options, and interests in securities.  This includes bonuses related to profit sharing, productivity, performance, incentive and commission.
    • All ordinary pay that has been received before deductions (Including before deductions for pension contributions).  This includes all monetary payments including basic pay, allowances, pay for piecework, pay for leave and shift premium pay.  It does not include pay related to overtime, redundancy or termination of employment, pay in lieu of annual leave or pay which is not money
    • Weekly working hours
    • Hourly pay (calculated using both ordinary and bonus pay identified)
  • Identify where on your website you are going to publish this data.  This might be an ideal opportunity to look at what other information you might like to publish which could include details of job and career opportunities; your values as an organisation; or information about corporate social responsibility activities that you undertake.
  • If you are aware that you are in an organisation or industry that is likely to have gender pay gap issues, this is a good time to consider what you might be able to do proactively to address these before you need to publish your first set of data.  Please talk to Beststart HR for ideas on what you might be able to do.

For assistance in calculating, interpreting and reporting on Gender Pay Gaps, please contact Anita Wynne at Beststart HR on awynne@beststarthr.com or Tel: 01438 747 747.