Under the Gender Pay Gap Information Act 2021, employers are obliged to report the hourly Gender Pay Gap across several metrics and publish this information by December 2022. The Gender Pay Gap information must be published on the employer’s website or in an alternative manner that is accessible to all its employees and to the public.

In May 2022, the Department for Children, Equality, Disability, Integration and Youth published its guidance on how employers should calculate the Gender Pay Gap in their Organisation, which was updated in June 2022.

The guidance states that employers choose a ‘snapshot’ date in June 2022 of their employees and report on the hourly Gender Pay Gap for those employees on the same date six months later (December 2022). The guidance also outlined what information is required to be reported and how it should be used to calculate the gender pay gap. In summary, employers are required to report:

• the mean and median gap in hourly pay between men and women
• the mean and median gap in bonus pay between men and women
• the mean and median gap in hourly pay of part-time male and female employees
• the mean and median gap in hourly pay of temporary male and female workers
• the percentage of men and of women who received bonus pay and benefits-in-kind
• the proportions of male and female employees in the lower, lower middle, upper middle and upper quartile pay bands.

Organisations must also publish a report setting out the reasons for any pay differences in the opinion of the employer and measures (if any) being taken, or proposed to be taken, by the employer to eliminate or reduce such differences.

Gender Pay Gap reporting will extend to other organisations with 150+ employees from 2024 and 50+ employees from 2025.

However, since the publication of the gender pay gap regulations, there has been confusion relating to interpretation of elements of the guidance note, such as how bonus payments and statutory leave should be addressed. To provide some further clarity, a supporting document was published in July 2022.

Reduction in headcount: If an organisation reduces its headcount below 250 after their snapshot date in June, they are still obliged to report their data.

The employer should be reporting on those employed on the snapshot date using the data for the previous 12-month period.

Bonus payments including shares: Further guidance has been provided on how to report bonus payments and when adjustments are required. Annual bonus payments are straightforward given they are within the 12-month reporting period. Additional monthly payments, such as commission, earned in the 12-month period should be included in the hourly rate calculations.

However, if an employee receives a payment that relates to a timeframe longer than the reporting period it should be adjusted to calculate the amount relating to the reporting period only.

Also, if the employee receives shares as part, or in full, of their bonus payment, it should be included in the data based on the value it was given to the employee and at the value of the share when it was issued.

Statutory leave payments: In the original guidance note, statutory pay, such as maternity leave, was not included given the employee is not at work nor are they available to work. However, the guidance published in July by the Department of Children, Equality, Disability, Integration and Youth stated that these payments should be included.

This guidance states the preferred approach to calculate the data for any employee in receipt of statutory payments is to use the notional number of hours that the employee would have worked had they not been on leave.

However, the latest guidance does not outline what to do about periods of unpaid leave. Since periods of paid leave must be included, the general consensus is that employers should use the notional hours during the period of unpaid leave.

Pension contributions: The data used to calculate the hourly rate should be that before deductions at source, i.e. before tax. If payments, such as pension contributions, are taken before tax they should be included. Any payments taken from the net salary should not be included.

Employment status of employees: The employment status of employees as of the snapshot date should be noted; full-time, part-time, temporary, contract. The guidance provides details on whether they should be included and if so, how the data of each should be reported.

In terms of the definition of “employee” for the purposes of gender pay gap reporting, the clarification note states that all employees are counted however, in instances where an employee does not self-identify as either gender, an employer may omit the individual from the gender pay gap calculations but this must be handled sensitively and appropriately by the employer.

Gender pay gap reporting has now been in place in the UK for five years and in that time there have been elements that have worked and some that haven’t. While our reporting is somewhat different, there is certainly a lot we can take from their experiences. In that time the pay gap has narrowed but the biggest impact has been focusing attention on gender diversity. Issues around the types of work that women do, lack of representation at senior roles and higher paid positions and the impact of having a family.

Having a Gender Pay Gap doesn’t necessarily mean an employer has acted inappropriately or in a discriminatory way. Generally, Gender Pay Gaps are about demographics and the roles women do within the workplace. Implementing plans to support greater gender balance in your workplace demonstrates commitment, builds better engagement and helps retention and recruitment.

To help achieve a more meaningful gender balance, a holistic approach must be taken. Awareness is just step one; practical policies and practices should be put in place to back up the intention for real change.

Implement measurable strategies: There is a need to implement measurable, practical strategies to genuinely shift the scales in favour of a fairer and more transparent gender balance landscape, including setting meaningful targets for change and involving both genders to deliver a better balance.

In addition to the ethical argument for gender balance, there are additional far-reaching benefits to an equal opportunity workplace. We know getting the balance right across organisations drives a more successful and cohesive business environment for everybody. This includes growth in revenue and ultimately success. It creates better workplaces and better decision making led by an engaged workforce with opportunities for everyone.

Encourage employees to highlight bias: People can be unconsciously biased so bias training should be introduced for all staff (can be part of Diversity & Inclusion training). Education is a key tool in raising awareness of gender equality.

It is also important for employers to review all documentation to ensure gender neutral language is used, e.g. job specifications, etc.

Appropriate supports: By ensuring there are the right supports in place for female employees helps create a better working environment. For example, approximately 600,000 women are affected by menopause at any one time. And, up to 60% of women experiencing menopausal symptoms report that it has a negative impact on their work and therefore, many feel they miss out on promotions, training, lose confidence in their work and some may see their salary drop.

Flexible working arrangements: During the pandemic, it became clear that implementing flexible working arrangements had little or no impact on productivity. By permanently implementing flexible working arrangements it helps to create a more positive work-life balance, regardless of gender. It helps parents share “stay-at-home” responsibilities, redress any negative workplace gender balance.

Gender equality is applicable to all: For change to happen, the workplace must become a more welcoming environment for both men and women. Balance is not exclusively a women’s issue, it involves everyone from the top down, and success in shifting the dial comes when balance is embraced by all. There are so many practical initiatives that can be introduced, but these cannot just be targeted at women: there must be a universal approach.

Gender balance is about changing the dynamic towards a more inclusive and welcoming working environment. It is ultimately about fairness and equality, something every employer should be striving for in their organisation.

Gender-balanced recruitment: Employers should ensure their recruitment process should reflect diversity in the interview panel, job descriptions should promote gender equality and induction processes.

There are numerous positives to a more gender balanced workforce, such as different perspectives, improved staff retention, wider talent pool for recruitment and improved corporate reputation. While there are additional costs and resources required for gender pay reporting, the benefits in achieving the ultimate goal of gender diversity cannot be overstated.