Mind the gender pay gap

Finance departments need to be aware of the requirement to publish their organisations' gender pay gaps before the deadline of April 2018

Despite great strides being made in the past two decades, the gender pay gap remains stubbornly in place in the UK. Women in full-time employment earn on average 9.4 per cent less than their male counterparts. Once part-time employees are included, the figure jumps to 18.1 per cent, although that is still a significant decline since 1997, when the pay gap was 27.5 per cent.

To address the situation, the government has introduced gender pay reporting, which will require all organisations of more than 250 staff, including charities, to publish a series of pay statistics on a new government website and their organisation's own website by April 2018. As of 1 September, 63 organisations had published their data on the government's website, seven of them charities. The government estimates that about 9,000 will need to report, although it's not clear how many are charities.

So what do charities need to report? The Government Equalities Office says charities will need to base their gender pay gap calculations on data from a "snapshot date", in this case 5 April 2017. Charities will need to record all staff working for the organisation on that day, all who were paid their usual full pay during the period covered by the snapshot date and the gender of each employee.

Anyone paid less than their usual rate on the snapshot date - such as those on unpaid leave, sabbaticals, sick leave or maternity leave - should not be included as a full- pay-relevant employee. Anyone who has not got their full pay for reasons other than leave - such as being on strike - should still be included as a full-pay-relevant employee.

Once this is done, charities will need to record the bonuses paid to each relevant employee for the pay period that includes the snapshot date, and also in the 12 months to the snapshot date. Bonus data should reflect the value of the bonus before tax or any deductions, such as pension contributions. Overtime or any payment following termination of employment should not be included in the bonus figures.

Then the ordinary pay of each relevant employee will need to be calculated for the pay period that includes the snapshot date. This includes allowances, such as car allowances and location-related payments, and the figures should be before tax and pension contributions are made but after any deductions for salary sacrifice.

The weekly working hours for each employee will also need to be calculated. For those who do not have regular hours, an average number of hours for the 12-week period prior to the snapshot date should be calculated. Hours on-call, awake and available should be included. An hourly pay rate will also need to be recorded.

Once this data is collected, charities will be able to work out their pay gaps. This will mean publishing the mean and median gender pay gap in hourly pay and in bonuses, and the proportion of men and women receiving a bonus and in each pay quartile.

What next?

According to guidance from the CIPD, the professional body for HR and people development, the mean and median, when taken together, should show whether a gender pay gap exists at the organisation. The guidance advises that charities with pay gaps can address the situation by monitoring recruitment and progression, checking flexible working take-up and impact, and monitoring how employees are rewarded, such as through bonuses.

Charles Cotton, reward and performance adviser at the CIPD, says the most important thing for any employer is to use the reporting requirement to examine why the gap exists in the first place and address it. For example, charities should look at the supply of labour or working patterns and see if any changes could reduce or remove the gap.

"What is important is that employers have a narrative for employees, donors and the media to explain what actions they're taking, why and how they think this will help," Cotton says. "The concern is that some employers will become defensive and look at technical ways to reduce the gap, such as employing a few more men in lower-paid jobs."

Anjelica Finnegan, policy and research manager at the Charity Finance Group, says that although gender pay reporting will highlight existing discrepancies between the wage packets of men and women, it will not single-handedly address the structural issues that keep women in lower-paid work, such as being left to carry out most of their families' caring responsibilities.

"Gender pay gap reporting will help all employers to consider how they can better support women and ensure that their policies or recruitment practices do not artificially keep women in lower-paid roles," she says. "But more than this, I hope it will further demonstrate to government that more needs to be done to change societal expectations and attitudes towards women beyond simply asking large employers to publish gender pay figures."

Finnegan points out that many charities have had to cut investment in staff development because of funding cuts, something that will need to be addressed to tackle the gender pay gap.

"Statutory and non-statutory funders alike must ensure that their funding covers essential core costs and ensure that they do not discourage charities from investing in staff development," she says. "This will enable charities - and give them the confidence - to ensure that they have the right policies and support in place to ensure that women have the opportunities to progress."

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