Gender pay gap reporting: going beyond the figures

Out-Law Analysis | 27 Mar 2018 | 2:58 pm | 3 min. read

ANALYSIS: As those large firms that have not already done so prepare to publish their gender pay gaps, the reports to date demonstrate how important it will be for businesses to explain their figures through expanded narrative reporting.

With just over a week to go until the reporting deadline, over half of employers, out of approximately 9,000, are still to publish their mean and median gender pay gaps; mean and median gender bonus gaps; proportion of men and women that have been paid a bonus; and percentage of women employed within each pay 'quartile'.

Among the more interesting results to emerge to date are:

  • retailer Phase Eight has reported the highest gender pay gap, at 64.8%, followed by various airline operators whose reported gaps are at 50% and above;
  • the highest gender bonus gap, reported by a contract cleaning company, is 3848.2%;
  • not every reported gender pay gap benefits male employees, as 225 companies have reported a zero gap or gap in favour of female employees;
  • employers in the public sector, manufacturing and education fields have the highest number of reports so far.

However, the figures alone do not tell the full story. For example, the dramatic bonus gap reported by the contract cleaning company resulted from the fact that the company only made three bonus payments: a small bonus payment to a female employee; and two large performance-based bonuses to senior male employees. While this is an extreme case, it certainly demonstrates the importance to businesses of being able to put the bare figures in context through effective narrative reporting.

Trade press in different business sectors have started to use the published figures to compile industry-specific gender pay gap 'league tables'. However, it is worth bearing in mind that the regulations require employers to publish both their mean and median gender pay gaps and it is not clear on which figure these league tables will be based. This is an important point, as the structure and make-up of different workforces may result in two very different figures. As an example, one employer that has published its figures has revealed a mean gender pay gap of 14.7% and a median gap of 39.1%.

This underlines the fact that the broad conclusions on gender pay cannot be drawn from league tables alone, or from one league table rather than another. It is the reasons behind the figures which are important.

Narrative information can be used to contextualise gender pay gap data, place it in its historical context and set out your action plan to tackle any problem areas identified by the exercise. The vast majority of employers that have provided narrative information to date have identified issues relating to the lack of female representation at senior management level; higher numbers of women in lower paid administrative and similar roles; and historical cultural issues, such as occupational segregation or the lack of women studying the so-called 'STEM' subjects as reasons for their gaps.

Most organisations have published action plans as part of their narrative reporting, which include details on how to close the gap at the 'in, on and up' stages: how to get more women into the organisation at all levels; how to retain female talent and not lose them when they start a family; and how to progress women throughout the organisation.

What will be important here is transparency, and a real commitment to carry through with any announced initiatives. Gender pay gap information must remain on an organisation's website for three years, so it will be obvious if plans have not been implemented or have had little impact. Any initiatives introduced to address the gender pay gap should be accessible to all staff to prevent the risk of alienation: programmes such as agile working, for example, should be equally accessible to men and to employees from BAME backgrounds.

There is of course no quick fix to tackle the gender pay gap, but even in their first year of operation the reporting requirements have shone a spotlight on gender representation throughout the organisation and forced employers to focus on where their problem areas lie.

Interestingly, by the time the reporting deadline of 4 April 2018 arrives, next year's figures will already be set and ready for calculation based on a 'snapshot' date of 5 April 2018. Initiatives that employers have identified and detailed in their action plans will therefore not impact on next year's figures. It will not be until early 2020, when figures based on April 2019 pay are calculated and published, that we will really begin to see the impact of employers' targeted efforts to close the gender pay gap.

Helen Corden is an employment law expert at Pinsent Masons, the law firm behind Out-Law.com.