What is the Gender Pay Gap, and what changes are there for 2022?

The Gender Pay Gap is the difference between men's and women's mean or median earnings across the workforce. It is defined as the relative difference in the gross average earnings of women and men within the economy.

Generally, statistics show that women take home fewer earnings than men.

In April 2017, data showed that women earned  9.1% less than men. To address this, the UK government introduced an obligation for firms to publish data on the salaries of male and female full-time employees, in particular demonstrating the gap between male and female pay. In addition, since April 2018, it has been mandatory for organisations with over 250 staff to submit annual reports on the overall earnings of men and women in their organisations.

In April 2019, the gender pay gap was 9.0%, in April 2020, it was 7%, and most recently, in April 2021, the difference was 7.9%. The increase in 2021 can be attributed to the pandemic when many employees were furloughed.

The gender pay gap should not be confused with Equal Pay regulations. Equal pay regulations came into effect in 1975. As result, by law, men and women must get equal pay for doing 'equal work' (e.g. work that equal pay law classes as the same, similar, equivalent or of equal value). This means someone must not get less pay compared to someone who is both the opposite sex and doing equal work for the same employer.

We still see issues of unequal pay arising. Whilst there can be situations where female employees are being paid less than men illegally, in which case they maintain the right to take action against their employers, this can also happen when roles predominantly done by women are compared to other roles predominantly done by men. Therefore, an employer might technically be facilitating unequal pay and not even be aware of it.

Significant pay discrepancies remain, and there are reasons for this. Generally, men are more likely to hold high-level positions, making their hourly pay much higher than women in middle management positions.

Gender pay gap reporting differences for 2022

The following must be calculated and included in the gender pay gap report:

  • the difference between the mean hourly rate of pay for male and female employees
  • the difference between the median hourly rate of pay for male and female employees
  • the difference between the mean bonus pay paid to male and female employees
  • the difference between the median bonus pay paid to male and female employees
  • the proportions of male and female employees paid bonus pay
  • the proportions of male and female employees who were in the lower, lower-middle, upper-middle and upper salary quartile bands based on hourly rates of pay

Firms can choose to produce a narrative explaining why they have found a gender pay gap and their actions to analyse it and close the gap. Creating an action plan as a result of the analysis will increase an organisation's ability to address it and does not automatically mean the organisation has acted inappropriately or discriminatorily.

Producing an action plan

For organisations actively addressing the gender pay gap, there are many benefits.

Publishing an action plan with targets and clear actions sends a strong signal about your commitment to gender equality in the workplace. It can assist in attracting a wider pool of potential recruits for vacancies and develop a reputation for being a fair and progressive employer

Enhanced productivity can come from a workforce that feels valued and engaged in a culture committed to tackling inequality.

Failure to report

Employers failing to report on time may be investigated by the Equality and Human Rights Commission (EHRC), who monitors human rights, protecting equality across nine grounds - age, disability, sex, race, religion and belief, pregnancy and maternity, marriage and civil partnership, sexual orientation and gender reassignment.

The EHRC can serve a notice to the company to require them to provide the information and documents as part of this investigation. Failure to comply with this notice is in itself an offence.

If the investigation concludes that the organisation has breached the regulations, the EHRC can issue an unlawful notice, which can require the organisation to produce a plan to tackle any gap presented within 14 days. Failure to comply with this can lead to a court order requiring compliance, with additional failure potentially resulting in an unlimited fine and summary conviction.

Taking Action

Organisations can also use their findings within their recruitment strategies to enhance their reputation. For example, in response to the demonstration of a gap, businesses have released varied reasons why clear gaps are occurring. These include sectors with a predominantly male environment that can give rise to claims of a 'lad culture', encouraging female workers to consider a different place of work.

In 2016, the Institute for Fiscal Studies research showed that average wage gaps are smaller between men and women before a decision is made to start a family. However, it also showed that, once female workers become mothers, the gap widens for the 12 years after their first child is born. By this point, women can be earning as much as 33% less pay per hour than men.

A possible explanation for this is that working mothers are more likely to take lengthy periods away from their careers to have children, or reduce their working hours overall, therefore missing out on opportunities for progression or wage increases.

In numerous organisations, it is often the case that women tend to gravitate towards lower-paid roles, such as administrative or caring roles, while men tend to be attracted to higher-paid positions.

Studies have also shown that women tend to be less confrontational in negotiations over employment benefits and pay, asking for less money than their male counterparts and being more likely to accept initial offers. This can lead to situations where men in senior positions in other parts of a company earn far more than women in similar roles. Whilst this is not true for all female workers, it is a worrying trend that could lead to costly unequal pay claims.

Outline how all employees in the company are paid

In job interviews, show the pay structure to all job applicants so they can see how they may progress. Use pay transparency, family-friendly policies and female focussed initiatives.

Consider also collecting data on ethnicity pay gap reporting to increase inclusivity and diversity.

If you need any support with your gender pay gap reporting, get in touch with the team at IHRS. Email HRhelp@ihrsolutions.co.uk, call 01604 709509 or visit the website.

About the author

Laura is a HR professional with 20 years’ experience with Financial Services, the majority of which has been within insurance. In her role with UKGI Group, Laura provides objective support to firms on employment law and HR issues. She uses her interpersonal skills and knowledge to work with firms to help them develop strong and resilient HR strategies and establish healthy organisational cultures. Laura’s clients receive personalised support with a real can-do approach.

Laura is an Associate of the Chartered Institute of Personnel and Development (CIPD). She holds a Diploma Professional Development Scheme.

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