Top tips for payroll tackling Gender Pay gap reporting

Since April 2017 it has become compulsory for organisations with 250 or more employees to publish and report statutory calculations with regards to the pay and bonus gap between their female and male employees. The Gender Pay gap should not be confused with Equal Pay. Equal Pay relates to paying men and women differently for the same or similar work whereas the Gender Pay gap relates to the difference in pay and bonuses across a whole organisation. It has been illegal to pay people performing the same role, or 'work of equivalent value', differently because of their gender since the Equal Pay Act 1970.

As organisations continue to grapple with running Gender Pay reports out of their payrolls and then calculating the relevant metrics, for a second time, here are a few key points to consider.

1. Know your payroll

Every payroll has varying pay components that they will use when paying their employees. When embarking upon Gender Pay reporting employers should review the Government’s legislation which provides guidance on which types of payments should or shouldn’t be included. A common problem we see is in the misallocation of pay elements. It is wise to fully review all components against the legislation. Often there will be grey areas, for example if a component is called ‘other’ it is important to think what types of multiple payments are being made through that component.

A worthwhile exercise could be to review all pay components and ensure they are up to date ahead of embarking on gender pay gap reporting. If pay components aren’t used or are not clearly described by their naming, this should be reviewed in order to make assigning easier. If there are any components that an employer is still unsure of it is always worth seeking advice to gain comfort that allocations have been made as accurately as possible. 

2. Allow enough time

In order to ensure that the correct workforce and pay components are being included in the snapshot reports, it is important to allow enough time to fully review. Deadlines for reporting are always March and April each year, however, many employers are caught out by leaving the reporting until the final months. Once the initial decisions have been made the snapshot report can be produced. This will then also need to be reviewed and checked before calculating the metrics required for publishing. Each step needs time and attention not only to ensure no errors are made but also to allow employers to consider the numbers and any narrative they want to put around them before publishing. 

3. Consider a narrative

It is not a requirement of the legislation to produce this, but it will provide context to be given to the reader as to why there may be a gap. Most employers will have a gap, even if only slight, and therefore reviewing the position could be very helpful. It could help to compare to other companies within the industry or geographical location for example. Is the trend found common in others in the sector? The narrative also allows employers to showcase the improvements they may be putting in place to reduce their gap. 

Gender Pay reporting is now an important part of an employer’s year and it should be given careful consideration in order to ensure the results are accurate and a true reflection on a company’s situation. If used effectively the reports and the results can be an excellent tool to showcase a company and enable management to ensure they continue to strive to make improvements where needed. 

If you have any questions regarding the above, including if you would like advice about calculating your Gender Pay Gap, please contact Simon Balaam or Kerri Constable.