The Gender Pay Gap: What the figures don’t tell you (and what they do)

The Gender Pay Gap Regulations came into force on 06 April 2017.

There appears to be confusion in some quarters regarding what the Gender Pay Gap Regulation figures will show. Some (including several politicians) have equated a high gender pay gap with an employer having an equal pay problem. This is wrong. Whilst a high gender pay gap might be caused by an employer paying men and women different levels of pay, this is not necessarily the case.

What is the gender pay gap and how is it calculated

Essentially the gender pay gap takes the average hourly wage paid to women and compares it with the average hourly wage of men. However, it is a pay comparison across all levels of seniority within an organisation, which means that the women whose wages you are considering could be doing very different work from the men. By way of an example (albeit rather an extreme one), if in a law firm you have ten female secretaries earning £10 per hour and ten male lawyers earning £30 per hour, you would have a pay gap of 67%. This would not be due to an equal pay issue, but rather would be caused by the lack of female lawyers in this firm and it is precisely this type of information that the gender pay gap is likely to show.

What can the gender pay gap data show us?

The gender pay gap figure, if taken in conjunction with the quartiling data, can highlight where there are less women, than men, in senior roles. This means that it can be a key metric in considering female career progression within a workplace. However, what it does not tell you is the cause (or causes) of this, or possibly more importantly, if the aim of the legislation is to address gender balance issues, what the employer is doing to address the lack of female progression.

The key role of the narrative

Alongside the obligation to publish the mandatory gender pay gap figures, employers also have the opportunity to publish a narrative. This gives them the opportunity to seek to explain the figures (which might include challenging the appropriateness of the calculations that they are required to use under the Regulations - see below) and to detail what measures they have put in place to address gender balance issues, including, but not limited to: diversity and inclusion policies, mentoring/sponsorship initiatives and talent identification programmes specifically targeted at women.

Possible challenges to the calculation methods

Employers with large numbers of part-time workers may wish to highlight, in their narratives, that the figures that they are required to publish in respect of bonus disregard whether an employee is part-time or full-time, the former presumably being likely to receive lower bonuses than their full-time colleagues. Similarly, where employees have only worked part of a year, the calculations do not allow an employer to take this into account and, for the purposes of the calculation, scale up the bonus to what would have been received had the employee worked for a full year.

What figures can we expect to see?

This is very much likely to depend on the sector in which the employer operates. Whilst the national gender pay gap is currently 19.2%, the financial services sector’s gap is significantly greater at 39.5%. As such, we can expect considerable differences between different sectors and it is important that individual employers’ figures are seen in the context of their sector if there is to be any degree of effective benchmarking.

What next?

Employers must publish their figures by 04 April 2018, although some may choose to publish in advance of this, so data may start to become publicly available any time from May 2017.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.