Last reviewed 31 March 2022

The Equal Pay Act was introduced in 1970 and was the first bold move towards equality in pay between the genders. However, fast forward 52 years and this remains a problem today. The Office of National Statistics has presented the following findings from data reported in April 2021.

  • Full time employees gender pay gap in April 2021 was 7.9% (compared to 7.0% in April 2020 and 9.0% in April 2019).

  • A large difference in gender pay gap is evident between employees aged 40 or more, and those aged under 40.

  • A much larger difference between the sexes was seen for higher earners.

  • The managers, directors and senior officials occupation group experienced the largest fall in gender pay gap since the pre-pandemic April 2019 figure, especially for those aged 50 years and over.

  • England has the highest gender pay gap compared to Wales, Scotland and Northern Ireland.

Gender pay gap reporting is one tool that has been introduced, and is mandatory for certain employers since February 2017 (including publication of the organisations pay gap on a government website), that helps organisations identify their gender pay gap. If reporting compulsorily, they are also encouraged to provide a supporting narrative considering the reasons why a pay gap exists and actions they can take to address this. Many employers also choose to undertake this process voluntarily.

What is the gender pay gap?

The gender pay gap is the difference between the average (mean or median) earnings of men and women across a workforce.

Which businesses need to report on their gender pay gap?

Not all organisations are required to comply with gender pay gap reporting. Employers must report their gender pay gap data if the organisation has 250 or more employees on the snapshot date. The snapshot date each year is 31 March for most public authority employers and 5 April for private, voluntary and all other public authority employers.

What are the deadlines for gender pay gap reporting?

Most public authority employers are required to report and publish their gender pay gap data by 30 March 2022. For private, voluntary and all other public authority employers the deadline is 4 April 2022, these employers must also include a written statement that confirms the accuracy of the information and is signed by a director, partner, or most senior employee (where there is no other to sign) of the business.

What do employers need to report?

Organisations need to report the:

  • percentage of men and women in each hourly pay quarter

  • average hourly gender pay gap

  • percentage of men and women who received bonus pay

  • average gender bonus pay gap

  • person in the organisation who is responsible for the data

  • link to the organisation’s written statement if it is reporting as a private, voluntary or other public authority employer.

How should employers submit their report?

Organisations must use the Government’s gender pay gap service to report their gender pay gap figures and submit the organisation’s written statement if the employer is required to follow the regulations for private, voluntary and all other public authority employers.

Employers must also publish their gender pay gap report (and written statement if applicable) in a prominent place on their public facing website.

Organisations can choose to also publish a supporting narrative and an action plan to help explain their gender pay gap.

Other considerations

Gender pay gap reporting should be part of a wider approach by employers to improve diversity and inclusion in the workplace, alongside other measures such as providing diversity training, implementing positive action recruitment strategies and instilling a zero-tolerance approach to bullying and harassment.

Government initiative to reduce the gender pay gap

On International Women’s Day this year, 8 March 2022, the Government Equalities Office (GEO) announced a new pilot scheme to improve pay transparency in a bid to tackle pay inequality. It is hoped this will tie into the Government’s wider “levelling up” initiatives and improve employment opportunities for women.

Participating employers will list salary details on job adverts and stop asking about salary history in the recruitment process. A Glassdoor survey found 68% of jobseekers thought salary was the most important factor of a job advert. Separate research saw 4/5 jobseekers are less likely to apply for a role if the salary isn’t listed in the job advert. As such, employers who amend their recruitment strategy in light of this will optimise its success and be better placed to attract candidates.

Fifty-eight percent of women felt they had received a lower salary than they would have if they hadn’t been asked about their salary history as part of the recruitment process. Where wages are influenced by what an individual earned in their previous employment, unfair gaps are created and continue to follow the employee throughout their working life. Instead, all employees should be given equal pay for equal work, regardless of what they earned in the past.

Removing the requirement to provide a salary history also gives women a much firmer footing in pay negotiations. Indeed, removing negotiating completely, by simply setting a fixed rate of pay for all, can improve transparency, trust and employee satisfaction within organisations. Employers who pay their staff equally also minimise the risk of pay-related grievances and discrimination claims. They will also see a boost to their company culture, supporting diversity and inclusion, which helps to boost retention and productivity.

However, it is recognised by the Government that many employers lack a clear pay structure and may struggle to provide this information on job adverts. Part of the pilot, therefore, will be to develop a methodology for employers to provide pay information at the recruitment stage, rather than relying on pay history.

The benefits of addressing gender pay gap and having a clear pay structure

Clear salary structures and pay progression schemes can further improve transparency and equality. Some organisations have gone so far as to introduce a pay secrecy policy and threaten disciplinary action in an attempt to avoid staff members discussing their remuneration and benefits packages. Whilst such actions are unlawful, it still creates a culture whereby salary discussions are strongly discouraged, leaving employees concerned about sharing such details, despite organisations being limited in the action they can take against them for doing so. Such a culture can create a toxic workplace and contribute towards high turnover and an inefficient workforce.

Wider diversity and inclusion benefits

Diversity and inclusion initiatives are imperative to ensure the fair and equal treatment of all staff members and to close the gaps of employees from underrepresented groups. Introducing gender pay gap reporting can be a useful way of evaluating the number of employees from underrepresented groups and proactively take steps to increase this. However, businesses should also consider wider approaches to encouraging workplace inclusion. For example, introducing diversity and unconscious bias training for managers and communicating a clear zero-tolerance approach to any form of bullying, discrimination or harassment. Ultimately, this will enhance the working environment and provide a well-rounded staff force which businesses can leverage to optimise success.

Overview

Gender inequality has been an issue for a long time. The only way to stop it from being one is for employers to take positive steps to identify and eliminate their gender pay gap, how ever that has arisen. Employers are therefore encouraged to undergo a process to identify the extent of their gender pay gap, even where they are not legally required to do so. This will give them a better understanding of this issue within their organisation and is the first step towards eliminating it.