Organisations with a headcount of 250 or more employees on the ‘snapshot date’ of 5 April 2018 are required to publish gender pay gap reports by 4 April 2019 at the latest.
Ahead of the deadline, we look at the recent Government Equalities Office (GEO) guidance published earlier this month to help organisations further understand their pay gap and initiate an action plan, and discuss the significance of the second round of reporting.
Grasping the gap
The GEO’s paper titled “Eight ways to understand your organisation’s gender pay gap” sets out eight key considerations in respect of identifying causes for a pay gap:-
Do people get ‘stuck’ at certain levels within the organisation?
Employers must look further than the pay information they are obliged to publish, and assess their own internal seniority structure to assess gender-related barriers to reaching senior levels.
Is there a gender imbalance in promotions?
The guidance suggests that the proportion of male-to-female candidates who apply for a promotion should match the proportion of the pool from which the candidates apply from. If there were 70% women and 30% men within a pool, but the promotion-hunters from that pool were only 20% female, this would mean that the pay gap is likely to be worse at higher levels.
If internal recruitment processes have regimented stages, an employer should look at each stage to understand any imbalances associated with these.
Are women more likely to be recruited into the lower paid roles within the organisation?
This could be the case if:
a) women are less likely to be hired into level levels
b) women are more likely to be hired into lower levels
To address this, employers could explore further the potential applicant pool and look once again at the regimented stages of recruitment processes (to understand if and where the proportion of women within the process is decreasing). Employers are encouraged to “go the extra mile” in seeking to remove blockages to female promotion. One example given, which may help in some instance but not necessarily universally, is to promote more flexible working atsenior roles.
Do men and women leave your organisation at different rates?
A higher female staff turnover can contribute to a pay gap, especially if women are exiting from senior levels. Staff surveys and structural analysis (such as reviewing the availability of flexible working arrangements) can be used to assess whether women are being put off reaching, or staying in, senior job roles.
Do particular aspects of pay (such as starting salaries and bonuses) differ by gender?
One aspect to this is that some research has shown that where starting salary negotiation is permitted, women are less likely to negotiate their pay than men, and that when women do, they are judged more for doing so.
Accordingly, employers could ensure that information relating to salary ranges is published during a recruitment process, and inform applicants when salaries are negotiable or not. This might help to even the equality of opportunity to negotiate.
Do men and women receive different performance scores on average?
Employers should look at performance ratings.
If there is a broad difference between the scores of men and women in comparable roles, this can contribute to a pay gap – as performance is a factor in progression.
If a pay gap is identified under this point, employers must strive to ensure women are being given equal opportunities, equal resources for development and equal professional support.
The guidance also refers to research that indicates that women tend to rate themselves lower than men in self-rating exercises, and employers can look to remedy this.
Are you doing all that you can to support part-time employees to progress?
More women than men work part-time. Employers could consider offering more senior positions on a part-time basis, support managers in understanding how roles can be done flexibly, and advertise jobs as flexible by default.
Are you supporting both men and women to take on caring responsibilities?
Employers should support all staff to take on caring roles if they choose to. This can be done after analysis of the taking of flexible working, shared parental leave and paternity leave by gender.
Being the “second round” of reporting, we think April 2019 is when gender pay gap reporting will get particularly interesting.
To what extent have pay gaps changed?
How will employers explain shortcomings in their approach (or indeed, lack of any approach) in regard to improving the pay gap?
Employers are likely to face enhanced scrutiny and criticism if they have fallen short in this regard, particularly if they delivered narratives and action plans last year. The level of this scrutiny is likely to depend on specific sectors, and employers should assess the risk of any reputational damage that may be brought by publishing results.
As a result, Thomson Snell & Passmore recommends that employers consider using the above to identify where their pay gap may be stemming from, in order to inform any results and narrative that accompany the published data.
The GEO also published “Four steps to developing a gender pay gap action plan” and Employers may also use this resource to kick-start a gap-narrowing action plan.
We would also remind businesses to remember the procedural elements to publishing gender pay gap reporting – especially in light of some insightful research undertaken by Paygaps.com that found nearly a third of the gender pay gap reports for 2019 have made mistakes. Common mistakes are detailed in the following PersonnelToday article: Gender pay gap 2019: Three in 10 reports have errors.
For the full GEO guidance on understanding your organisation's gender pay gap, please visit: “Eight ways to understand your organisation’s gender pay gap”.
For the full GEO guidance on developing a gender pay gap action plan, please visit: “Four steps to developing a gender pay gap action plan”.