Category: Blogger's Corner, organisation, target, resource, encourage, guidelines
New government legislation will require all businesses with more than 250 employees to publish data relating to pay of both female and male employees from April 2018. And while this date may seem a long way off at present, the gender pay gap is something which should be on every businesses agenda right now.
Movements were made towards closing the pay gap back in 1970 with the Equal Pay Act, and in 2010 the Equality Act stated that employers must give men and women equal pay if they do the same or broadly similar work. However, the gender gap currently stands at 19.4%.
From meeting a number of organisations through our work at Paydata, I don’t believe employers will have a problem meeting the new regulations, as the time and resources required should be easy targets to meet. The problem lies with addressing any pay gap, something which the government will be trying to encourage by introducing the new reporting guidelines.
44% of organisations currently measure the state of pay, however 77% of those that do, don’t report on their findings; and only 1% publishing the differences externally. While organisations will have no choice on the matter when mandatory reporting comes into effect, ignoring the figures now could greatly impact your business in the long run.
It’s reported that the gender gap won’t be closed until 2069 if the current pay trends continue. So, why are employers still refusing to address the gap?
What Employers Need to Do
The legislation requires employers who have more than 250 members of staff to report on baseline pay gap figures at 2017 and again in 2018, with figures published at the latter date. Employers will then be required to look into what is driving these figures and take action to close the gap.
Pay gap figures are to include bonuses and car allowances, which can increase the potential for gaps. Bonuses, in particular, are often where gaps occur as they are individually determined. Pay and bonus figures are to be analysed separately.
Data is then to be published on the businesses website, accessible to employees and the general public for three years. Figures also need to be submitted to the government through a designated website.
Put It On The Agenda Now
Many may be thinking that if the data isn’t required to be published for over a year and a half, why should it be addressed now. Yet, depending on when you review employees pay, your 2016 figures may influence your baseline gap in 2017. Those who review pay between May and December may find this to be the case, proving businesses shouldn’t be complacent about the 2018 deadline.
As mentioned earlier, employers shouldn’t find difficulty in reporting these figures, the problem lies with being able to explain any gaps and addressing these in due course.
The government has stated, “If gender pay gap reporting is to have any impact, it must help employers understand why pay gaps exist and lead to action to address these problems. It must be seen as the beginning of a process rather than the culmination of a tick box exercise.”
Employers need to ensure they are fully invested in resolving pay gaps, rather than just complying with another piece of government legislation. A full and detailed pay audit will truly identify genuine pay discrimination and explain any pay gaps which currently exist.
We’ve established a clear process employers can go through to address gaps:
- Decide the scope of the review and identify the data required;
- Identify where men and women are doing equal work, like work, work rated as equivalent or equal value;
- Collect pay data to identify gaps;
- Establish the cause of pay gaps and decide whether they are free from discrimination; and
- If pay gaps aren’t free from discrimination an equal pay action plan should be developed, if there are no gaps, this should be reviewed and monitored.
Don’t Ignore It
The gender pay gap is a big deal and certainly not something businesses should be pushing to the back of their minds. Not only does it have the potential to lead to bad feelings internally in the business, from a PR perspective ignoring the gap can lead to a public disaster.
You only need to look to the case where Birmingham City Council were liable for at least £757 million to settle equal pay claims from women who missed out on bonuses, to realise the impact a gap could have on your finances, not to mention your reputation from the inevitable media coverage.
Public image aside the impact addressing the gap will have on employee engagement, recruitment and retention is unfathomable. If through measuring and equalising the gap you can enable employees to feel more valued and respected in their working environment, then they are likely to be more productive and place their loyalties with you.
Pay is such an emotive subject that if you fail to place gender pay reporting as your highest priority over the next couple of years, you’re likely to see a decline in employee engagement and morale, attract less new talent and put your public image at risk.
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