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Gender pay gap reporting is a vital tool for promoting workplace equality and pay transparency. By preparing and implementing a comprehensive action plan, organisations can address the underlying causes of pay disparities, set measurable goals and create a more equitable work environment. This commitment not only enhances the company’s reputation but also fosters a culture of inclusivity and fairness, benefiting both employees and the organisation as a whole.

What’s the gender pay gap?

The gender pay gap represents the difference in average earnings between men and women within an organisation. It is a critical indicator of gender inequality in the workplace. However, please note that the gender pay gap is different from equal pay. Equal pay is covered by the Equality Act 2010 and requires employers to pay men and women the same for work of equal value.

For the reporting obligations to apply, the employer must employ 250 or more employees on the snapshot date (5 April for private and voluntary sectors and 30 March for public sector employers) in the year to which the required information relates. 

For the purposes of calculating the gender pay gap, employers must identify which of their employees are "relevant employees" and which are "full-pay relevant employees". They must also base their gender pay gap calculations on pay data from a specific pay period – the pay period in which the snapshot date falls. The bonus pay information must be based on data from the 12-month period preceding the snapshot date.

Having collected the pay data details, employers are required to report on:

• The difference in the mean pay of full-pay men and women, expressed as a percentage.
• The difference in the median pay of full-pay men and women, expressed as a percentage.
• The difference in mean bonus pay of men and women, expressed as a percentage.
• The difference in median bonus pay of men and women, expressed as a percentage.
• The proportion of men and women who received bonus pay.
• The proportion of full-pay men and women in each of four quartile pay bands.

Employers are then required to publish their gender pay gap information on their own website and on the government’s website. 

Equality action plan

On 10 October 2024, the government introduced the Employment Rights Bill. The Bill will require employers in the private sector with 250 or more employees to publish an equality action plan that sets out the steps they are taking to narrow the gender pay gap.

Employers will be required to publish the plan alongside the publication of their gender pay gap report.

Why businesses need an action plan for gender pay gap

Identifying root causes

An action plan helps employers delve deeper into the reasons behind their gender pay gaps. By analysing data and identifying patterns, employers can pinpoint specific issues that need to be addressed, such as unconscious bias, discriminatory practices or structural barriers that contribute to the gender pay gap.

Setting measurable goals

An effective action plan includes clear, measurable goals for reducing the gender pay gap. These goals provide a roadmap for progress and allow organisations to track their success over time.

Implementing targeted strategies

Action plans enable organisations to implement targeted strategies to close the gender pay gap. This might include revising recruitment practices, offering mentorship programs and ensuring equal opportunities for career advancement.

Monitoring and reporting progress

Regular monitoring and reporting on the progress of the action plan ensures that organisations remain accountable and can adjust as needed. This ongoing process helps maintain momentum and drive continuous improvement.

Transparency and accountability

Gender pay gap reporting requires organisations to publicly disclose pay disparities between male and female employees and outline the actions they propose to take to close the gap. This transparency holds companies accountable for their pay practices and encourages them to take corrective actions to address any disparities.

There are consequences for an employer if it fails to comply with its gender pay gap reporting obligations. Employers will receive a “late badge” if they fail to report and publish their data, which is visible to the public. Additionally, the Equality and Human Rights Commission (EHRC) will begin enforcement six months after the deadline, contacting employers who have not submitted their data.

The EHRC has the authority to investigate non-compliance.

Ethnicity and disability pay gap reporting

The government’s Make Work Pay Plan had indicated that ethnicity and disability pay reporting would be introduced during this new parliament. However, government has now confirmed this will be part of its’ next steps programme, with no clear timeline for implementation. Some commentators believe this could be kicked further down the line given the complexity of actually implementing these further reporting requirements.

If you would like more information on any of the topics discussed above, please get in touch with Kerri Constable or your usual 91̽»¨contact.