Welcome transparency about the gender pay gap

Today Section 78 of the Equality Act comes into force, which requires that all businesses with over 250 employees conduct and publish a gender pay audit. These changes are important because they mean that for the first time, large employers have to be transparent about their gender pay gap.

The WI has been campaigning for equal pay for equal work since 1943, so we welcome these changes which will bring more openness about the pay gap between women and men. The gender pay gap now stands at 9.4% for full time workers and 18.1% for all types of workers/contracts. This means that women will earn significantly less than men over their entire careers, so more openness about this important issues is long overdue.

Yesterday was the final date by which eligible employers had to take a snapshot of their pay data and they now have until 5 April 2018 to publish their gender pay gap figures.

Companies will have to report their pay gap in a number of ways, including average pay gaps and bonus pay gaps. All this information must be published on the employer’s website for at least three years.

The ultimate goal of these changes is to make employers aware of their gender pay gap, urge them to take action to close it, and shed light on rates of pay so that employees are better informed.

Throughout 2015 and 2016, the NFWI contributed to government consultations and participated in talks with the Government Equalities Office on how to best implement these changes. We used that opportunity to highlight issues affecting women in work, such as: maternity discrimination, up-skilling for older women, and the need for well-paid, part-time roles. 

For gender pay audits to be effective, employees need to understand what the data actually mean. We’ve had look over the finalised regulations to find out how you will be able to access data from your own employer (if they’re eligible) and how you should interpret the figures.

How to access the information

The rules mean that employers with more than 250 employees must publish their results on their own website in an easily accessible way and on a dedicated website (which has yet to go live). The information must be published on the employer’s website for at least 3 years. The government website hub will allow employees to compare their employers with equivalents in the field with greater ease and will shed light on which businesses are underperforming. 

How to interpret the information

According to government guidelines, employers will have to produce data in a range of ways that will allow a fair picture of pay practices across the board to emerge. It is crucial that employees understand how to unpick this data, so we’ve provided an explanation below. 

The two most important sets of data that employers will need to publish are:

1) The difference in mean pay between male and female employees and

2) The difference in median pay between male and female employees

Both figures will give an average of the difference in pay between male and female employees, however they will do this in very different ways:

The mean pay will use all female employees’ salaries added together and divided by the number of female employees, and all male employees’ salaries added together and divided by the number of male employees. This will calculate the average difference between pay for men and women.

The median pay will take all the salaries for women, list them from lowest to highest and take the salary that falls exactly in the middle, doing the same for male employees, and using the two figures to calculate the pay difference.

As a result of this, organisations will publish mean and median figures that are quite different from one another. For example, if an organisation employs 4 women earning £10 an hour and 1 woman earning £40 an hour, and also employs 5 men earning £12 an hour, the median pay for women will be £10 while the median pay for men will be £12. Using the same data, the mean pay for women will be £16, while the mean pay for men will be £12. Despite the fact that only one woman is earning more than 5 other men, the mean figure would suggest that women are being paid, on average, more than men, when in reality the majority of women are being paid less.

Being able to distinguish between these figures will be vital for continuing the campaign to close the wage gap for all women.

Employers will also need to publish the difference between mean bonus pay paid to male and female employees, the proportion of male and female staff that were paid bonuses, and proportions of male and female employees in quartile pay bands. 

The NFWI will be monitoring the introduction of these rules, and will continue to push for more action to tackle the gender pay gap so that women are paid fairly.