What is the Gender Pay Gap and Why Does It Matter?

Certain businesses are legally obliged to share wage gaps between their male and female employees.

Being transparent about gender pay gap data helps promote equality and inclusion within a business. If you breach these legal duties, you could end up facing court orders and unlimited fines.

In this guide, we'll look at what gender pay gap reporting is, what the law covers, and how to publish reports correctly.

What is gender pay gap reporting?

Gender pay gap reporting is when you publish the difference in average earnings between males and females within your business.

There are countless reasons behind wage gaps differences. For example, part-time working, changing careers, and lack of promotional opportunities. Employers must be proactive in recognising any issues and work towards closing these wage gaps.

Gender payment is often confused with equal pay, but the two are very different. Equal pay is when men and women are paid equally for the same or similar work they do. But gender payment shows the average pay difference between the two sexes.

What is the law on gender pay gap reporting?

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 states certain employers must publish their gender pay gap report annually.

Reporting is compulsory if an employer has 250 employees or more (on the snapshot date). This legal requirement falls on organisations within England, Scotland, and Wales - but not yet in Northern Ireland. Failing to publish reports can result in court orders and uncapped fines.

The Government Equalities Office outline six gender pay gap calculations:

Percentage of men and women in each hourly pay quarter

This works out the hourly wage percentage of men and women. It's split into four equal groups: lower, lower-middle, upper-middle, and upper hourly pay quarter. To calculate percentages in hourly pay quarter

• Sort your employees from highest to lowest hourly payment.
• Divide the list into quarters.
• Check the gender distribution if your employees have the same hourly rate.
• Work out the percentage of men and women in each quarter.

Mean gender pay gap for hourly pay

This works out the average hourly pay for fully-paid relevant employees. To calculate mean gender payment:

• Add the average rate for all male employees and divide by the total number of men. (Do the same for female employees).
• Subtract mean hourly rate of men from women.
• Divide by average pay for men and multiply by 100.

Median gender pay gap for hourly pay

This works out the median hourly pay for fully-paid relevant employees. To calculate median gender payment:

• Sort your employees from lowest to highest hourly pay. Find the middle person and write their hourly pay. (Do this separately for men and women).
• Subtract the middle rate of men from women.
• Divide by the middle rate of men and multiple by 100.

Percentage of men and women receiving bonus pay

This works out the percentage of men and women who received bonus payments in the 12 months ending from the last snapshot date. To calculate percentage of men and women receiving bonus pay:

• Add together the number of male employees who received a bonus in the 12 months from your last snapshot date.
• Divide this by the total number of male employees. (Do the same for female employees).

Mean gender pay gap for bonus pay

This works out the difference in the average bonus pay paid to men and women. To calculate mean bonus gaps:

• Add the bonuses paid to male employees in the 12 months from your last snapshot date. Divide by the total number of male employees who received a bonus. (Do the same for female staff).
• Subtract the average bonus pay of men by women.
• Divide by the average bonus pay for men and multiple by 100.

Median gender pay gap for bonus pay

This works out the difference in median bonus pay paid to men and women. This list is used for all relevant employees, including their gender and bonus pay – it’s not just full-pay relevant employees. To work out median bonus gaps:

• Create a list of all male employees who received bonus pay in the 12 months from your last snapshot date.
• Sort them in order of highest to lowest bonus pay amounts. Find the middle person and write their bonus pay. (Do this separately for men and women).
• Subtract the middle bonus pay of men from women.
• Divide by the middle bonus pay of men and multiple by 100.

Is there a specific date for publishing gender pay gap reports?

There isn't a set-time for publishing these reports. It's all based on your payroll information from a specific date each year - also known as a snapshot date.

Employers must publish and report their gender pay gap data every year within 12 months of the snapshot date. This is based on the following criteria:

• Most public authority employers: The snapshot date is the 31st of March each year. So, employers must report and publish by the 30th of March of the following year.
• Private, voluntary, and all other public authority employers: The snapshot date is the 5th of April each year. So, employers must report and publish a written statement by the 4th of April of the following year.

How to publish a gender pay gap report

Employers need to follow these steps when it comes to publishing a gender pay gap report:

Step 1: Find out if you're legally required to produce reports

The first step is identifying if you're legally required to produce these reports.

Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, those with 250 employees or more must report and publish on their snapshot date. And this legal duty applies to organisations in the UK except Northern Ireland.

Step 2: Calculate your gender pay gap figures

The next step involves calculating your gender pay gap figures. In the report, you must include six gender pay gap calculations.

Make sure you know how many people you hire in total per year. If you have multiple payrolls, you should merge all data into one report.

Step 3: Report the date to the Government Equalities Office

The last step involves reporting the date to the Government Equalities Office. Make sure you:

• Submit all gender pay gap information through the government's service.
• Provide a written statement through the same service. (This only applies to private and voluntary sector organisations). The statement must be signed by the employer or chief executive.
• Publish the report and written statement on your website. It should be publicly accessible for at least three years from the publishing date.

Step 4: Consider creating a supportive narrative and action plan

Along with the report, you can create a supporting narrative which dives deeper into gender pay gap information. You can also include an action plan which explains how you plan to tackle your organisation's wage gaps.

These steps aren't legally compulsory, but they can help recruit more women into senior positions. 

Get expert advice on gender pay gap reporting with Peninsula

Being open about your gender pay gap data helps promote equality and inclusion within your business. If you breach these legal duties, you could end up facing court orders and unlimited compensation fines.

Peninsula offers expert advice on gender pay gap reporting. Our HR team offers 24/7 HR employment advice which is available 365 days a year.

Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.