What is the gender pay gap?
The gender pay gap is the percentage difference between average hourly earnings for men and women across all jobs within the UK. The gender pay gap also considers labour market and workplace disadvantages such as occupational segregation, and the role of women as the primary carer of children and other dependants.
Data from the Annual Survey of Hours and Earnings (ASHE) conducted by the Office for National Statistics (ONS) is used to calculate the gender pay gap. The ASHE is the key source of information used in calculating the gender pay gap within the UK. The ASHE is based on a 1% sample of employee’s jobs that is taken from the HMRC Pay as you Earn records and the results from the survey are broken down by gender, age, occupation, geographic location and by the public and private sectors.
The gender gap can be measured in many ways and it is usually expressed as a positive or negative measure. A positive gender gap shows whether women on average earn less per hour than men and a negative gender pay gap shows whether women on average are earning more per hour than men.
What has caused the gender pay gap within the UK?
According to the Chartered Institute of Personnel Development (CIPD), gender pay gaps are a result of economic, cultural and educational factors such as:
- Childcare costs and responsibilities – The Modern Families Index 2017 report by The Working Families shows that childcare costs are considered as a significant portion of family expenditure. Additionally, the costs of childcare influence whether parents choose to continue working or reduce their working and this decision often affects women more than men.
- Undervaluing work carried out by women – Women tend to earn less than men for doing similar jobs due to their skills and work being undervalued by some employers. The promotion rates within an organisation also show how women’s work is undervalued as research shows male managers are 40% more likely than female managers to be promoted into higher roles.
- Part-time working hours – The hourly rates of pay for part-time work are usually lower than the rate of pay for full-time work. As more women tend to work part-time compared to men, their part-time hourly rates of pay mean that the gender pay gap for all employees is greater than that of full-time employees.
- Occupational segregation – Despite the many legislations that have been introduced to boost equality within the UK labour market, men tend to dominate certain job types while women dominate others. In 2018 22% of women were employed in professional occupations such as nurses, teachers compared to 19% of men being employed within these occupations. Men were more likely to work in skilled trades, associate professional and technical occupations. Occupation segregation continues to exist within the labour market due to the way the jobs carried out by each gender are valued. For example, the pay for male-dominant jobs may be higher than the pay for female-dominant jobs and vice versa. This is known as Horizontal segregation.
- Discrimination – Horizontal segregation can contribute to inequalities in pay and impact how bonuses are given to men and women. Employers should focus on addressing horizontal occupational segregation as one of the ways of closing the gender pay gap and preventing equal pay claims.
How has the gender pay gap changed over time?
The gender gap appears to be declining within the UK and since the last decade, it has decreased by almost a quarter amongst full-time employees and by approximately one-fifth among all employees. The ONS report a decline in the gender pay gap amongst employees working in smaller and larger companies that employ 250 or more employees since 2016. However, the gender pay gap is higher for full-time employees compared to the gender gap percentage for full-time employees or part-time employees. This percentage is higher as more women tend to work part-time in comparison to their male counterparts and part-time jobs have a lower hourly median pay.
The ASHE survey from April 2020 shows the gender pay gap for all employees was 15.5% in 2020 which shows a decrease as the gender pay gap percentage in 2019 was 17.4% for this group. Additionally, the gender pay gap has also decreased to 7.4% for full-time employees which was previously 17.4% in 2019.
Employers guide to gender pay gap reporting
Are all businesses required to follow gender pay gap reporting regulations?
Gender pay gap regulations were introduced by the government on 6th April 2017 in the UK. Employers that have 250 or more employees are required to follow the gender pay gap regulations by publishing their gender pay gap data every year. The data must be published on the employer’s own website and through the government’s gender pay gap reporting website.
There are two separate regulations designed for businesses within the public and private sectors to follow:
- The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 apply to business in the public sector in England, Scotland and Wales.
- The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 apply to private, voluntary, and all other public authority employers in England, Scotland and Wales.
Some companies may be exempt from following the gender pay gap regulation if they are:
- Based overseas and employ very few employees within the UK.
- Subsidiaries of a parent company with their own legal identity and have less than 250 staff.
The duty of public bodies that employ more than 150 employees
Public bodies that employ less than 250 employees are exempt from the gender pay gap regulations. However, in England, organisations within the public sector have a duty to publish information on the diversity within their workforce. Each public body with more than 150 employees must publish objectives they believe they should put in place to eliminate discrimination, promote equality of opportunity and good relations within their workforce.
Public bodies with 150 or more employees are encouraged by the Government Equalities Office (GEO) and the Equality and Human Rights Commission (EHRC) to publish their gender pay gap data although this is not a mandatory requirement under the duty to publish workforce diversity information.
Employees working overseas
Employers based in England, Scotland or Wales that send employees to work abroad may be required to count some or all of these employees in their gender pay gap data. The same will apply for multinational organisations that have employees working partly or entirely in England, Scotland or Wales.
What is the deadline for businesses to publish their gender pay gap figures?
The gender pay gap reporting deadlines were originally 30th March 2021 for public sectors organisations and 4th April 2021 for the private, voluntary, and all other public authority employers. However, The Equality and Human Rights Commission (EHRC) recently extended the deadline for employers to report their gender pay gap information due to the impacts of the Covid-19 pandemic. All employers will now have until 5th October 2021 to publish their gender pay gap figures. The EHRC is still encouraging employers to report ahead of the usual deadlines (30 March 2021 and 4 April 2021) wherever possible, but no enforcement action will be taken providing they report by 5 October 2021.
What are employers required to report on?
An employer must publish six calculations:
- average gender pay gap as a mean average
- average gender pay gap as a median average
- average bonus gender pay gap as a mean average
- average bonus gender pay gap as a median average
- proportion of males receiving a bonus payment and proportion of females receiving a bonus payment
- proportion of males and females when divided into four groups ordered from lowest to highest pay.
For more information regarding gender pay gap reporting read the ACAS guide.
What happens if an employer doesn’t report on their gender pay gap?
An employer must comply with the regulations for any year where they have a ‘headcount’ of 250 or more employees. The EHRC has the power to take enforcement action against any employer who does not comply with their reporting duties. The EHRC enforcement policy sets out the approach used to enforce this.
It is crucial for employers who are required to do so, to publish their gender pay gap information in order to help the government breakdown the gender pay gap. Closing the gender pay gap can benefit the economy by encouraging gender equality and economic growth. In 2016, The Women’s Equality Committee (WEC) reported that the UK’s gender gap percentage which was 19.2% at the times shows a loss in UK productivity. Closing the gender gap will lead to an increase in productivity, help address skills shortages and improve the overall performance of individual workers within businesses.
Promoting gender equality is considered good practice for employers. Transparency around gender pay gaps within workplaces may increase employee confidence for their employers. Employers will also be able to improve processes around rewards and pay.