How To Calculate and Report on The Gender Pay Gap in Your Organization
Since April 2018, businesses with more than 250 employees are required to report on their gender pay gap to the government and publish it on their website. Reporting Deadline Approaching: 30th March Public Authorities and 4th April Private and 3rd sector
Need Help? Try our: Gender Pay Gap Consulting Service
What is the first step?
The first step of the process is to collect and organize the following raw data, which is a list of :
- Relevant employees, full-pay relevant employees and their gender
- Bonuses
- Ordinary pay
- Weekly working hours
- Hourly pay rate
This data MUST be gathered according to specific criteria which you can find here: https://www.gov.uk/guidance/gender-pay-gap-reporting-data-you-must-gather . It should also be drawn from a particular date each year, known as the snapshot date.
5 April is the snapshot date for businesses and charities.
31 March is the snapshot date for public sector organisations.
This data should ideally be gathered in an excel file and should look something like this:
Once you’ve gathered this data, you’re ready to calculate your organisation’s gender pay gap figures.
If you need more guidance, download the Acas guide to gender pay gap reporting.
What next? Calculating Your Gender Pay Gap
You must publish and report your organisation’s:
- mean gender pay gap in hourly pay
- median gender pay gap in hourly pay
- mean bonus gender pay gap
- median bonus gender pay gap
- proportion of males and females receiving a bonus payment
- proportion of males and females in each pay quartile
The first 5 calculations are pretty straight forward and the government gives you guidance on how to calculate each specific area here: portal: https://www.gov.uk/guidance/gender-pay-gap-reporting-make-your-calculations
Proportion of males and females in each pay quartile
This final calculation listed above is a little more complicated and we have summarized this below for your convenience. To do this calculation, you need to take the list of hourly pay from your data set and divide it into four quartiles, with an equal number of employees in each quartile.
- upper quartile
- upper middle quartile
- lower middle quartile
- lower quartile
You’ll also need to do a bit of data cleaning, in particular:
“If there are employees on the same hourly rate of pay crossing between quartiles, make sure that males and females are split as evenly as possible across the quartiles.
For example, you have 322 full-pay relevant employees and have split the list into quartiles. 40 staff all have the same hourly rate of pay – 36 are female and 4 are male. Of them, 10 have fallen into the lower quartile, while 30 have fallen into the lower middle quartile.
To evenly distribute these staff by gender, you can see that for every 9 females listed, one male should be listed with them. You should list 9 female employees and one male employee in the lower quartile, and 27 female employees and 3 male employees in the lower middle quartile.”
Once you have prepared and cleaned the quartile data you can now work out the percentage of males and females in each quartile.
Reporting on Your Gender Pay Gap
You can find a full write up on where you need to report your data and what you need to report at this location: https://www.gov.uk/guidance/gender-pay-gap-reporting-what-employers-must-publish.
I have summarized the main reporting requirements below for your convenience.
- Your gender pay gap report must be published within one year of your organization’s snapshot date.
- 5 April is the snapshot date for businesses and charities.
- 31 March is the snapshot date for public sector organisations.
- You must report your gender pay gap data to the government using this online service: https://www.gov.uk/report-gender-pay-gap-data
- You must publish your gender pay gap data on your organization’s public facing website.
- Also, if your organization is a business or charity, you must also provide a ‘written statement’. This statement must confirm that the published information is accurate and be signed by an ‘appropriate person’ .
- You can also provide a ‘supporting narrative’, which could explain why a gender pay gap exists and outlines what steps you are taking to close the pay gap.
You can find advice on, ‘Preparing a supporting narrative for your gender pay gap’ below
If you are reading this, you are probably considering whether to add a ‘supporting narrative’ to your gender pay gap report. It isn’t mandatory, but I think it is probably advisable, especially if you have a significant gender pay gap. ACAS have provided a guide on ‘Managing Gender Pay Gap Reporting’ which can be found here.
Just because an employer has a gender pay gap it doesn’t automatically mean that discrimination has taken place, and the supporting narrative can help to explain this.
A narrative lets the reader know the organization’s opinion on why a pay gap is present and what the organization is planning to do to address it.
Below, are some tips on how to structure your supporting narrative, based on the ACAS advice.
- Outline what you consider to be the key reasons for the pay gap
- Outline what steps you are taking to reduce the pay gaps which could include steps you have already taken and are planning to take, such as: analysing bonus awards, analyzing performance appraisals scores, auditing starting/hiring pay levels, analysis of pay on promotion increases and post-maternity analysis.
- Talk about existing actions already in place which have yet to show an effect but will begin to make an impact in the coming years. Not all actions will lead to an instant correction.
- Show how the pay gaps has reduced over the years
- Benchmark your pay gap against other in your sector or in broader industry.
A good supporting narrative should give confidence to your employees and stakeholders that you have acknowledged your pay gap and are committed to reducing it.
Need Help? Try our: Gender Pay Gap Consulting Service
Reporting Deadline Approaching: 30th March Public Authorities and 4th April Private and 3rd sector
