We are going to delve into the common myths and misconceptions of gender pay gap reporting. You will learn how it differs from the concept of equal pay and discover how certain requirements may impact your organisation.
Our aim is to provide you with a clearer understanding of what this process looks like, and why it is an essential practice for organisations of all sizes and sectors.
1. Gender Pay Gap and Equal Pay Are Not the Same Thing
Clarifying the Difference
It may surprise you, but achieving equal pay does not necessarily mean eliminating the gender pay gap.
Equal pay is the concept of men and women receiving the same salary for doing the same or similar jobs. Conversely, the gender pay gap measures the average difference in salaries between all men and women across an organisation.
Why People Get Confused
Many people confuse these concepts because both can highlight salary disparities between genders. However, while equal pay tackles direct discrimination—paying men and women differently for similar work—the gender pay gap often stems from broader factors, such as the over/under representation of individuals from one gender in high-paying roles.
What This Means
Understanding this distinction is vital for effective gender pay gap reporting. Organisations with over 250 employees are legally required in the UK to report their gender pay gap under the Equality Act 2010, but this doesn’t mean they have to do anything about it.
On the other hand, equal pay is a legal requirement for every employee, no matter the size or sector of the organisation. Failure to provide equal pay can lead to fines, settlements or other sanctions.
For those that do want to address a gender pay gap, it requires comprehensive strategies, including tackling unconscious bias in recruitment and promotion processes. This approach can enhance workplace equality and diversity as well as ensure all employees are given equal chances.
2. Gender Pay Gap Reporting Goes Beyond Base Salary
What It Includes
Contrary to common belief, gender pay gap reporting can extend beyond base salary comparisons. When approached with a more in-depth process it encompasses bonuses, overtime pay, and other benefits, which collectively provide a more comprehensive view of earnings disparities across genders.
This broader perspective can help reveal deeper insights into structural inequalities that contribute to a gender pay gap.
Other Factors Affecting Gender Pay Gap
The gender pay gap can be influenced by several factors beyond base pay. These include occupational segregation, referring to the concentration of men and women in different industries and job roles and the fact that lower-paid roles such as nursing and HR are often filled by a female majority.
Examples of External Factors
For instance, part-time work, which is more commonly undertaken by women, often results in lower hourly wages compared to full-time roles. This not only affects women’s overall earnings but also their career progression and retirement benefits.
Moreover, the lack of flexibility in higher-paying roles can deter women from pursuing such positions or create a choice between career advancement and personal responsibilities, further exacerbating the pay gap.
3. We Don’t Need a 0% GPG
What It Actually Tells Us
It’s important to remember that having a 0% gender pay gap doesn’t necessarily tell us anything about the level of pay equity in the workplace. There may still be vast amounts of inequality, discrimination and bias.
On the other hand, we could have no pay inequity, discrimination or bias—yet still have a gender pay gap of 10%. There’s a perception that zero implies fairness.
This doesn’t mean we should ignore that 10%. We should still investigate and find out why the gap exists, but there might be justifiable reasons for it.
What Our Focus Should Be
Instead of aiming for a zero gender pay gap, we need to focus on creating equal opportunities and eliminating the pay inequities that exist now.
We need to, for example, create more flexibility in the workplace. While the vast majority of part-time workers are female, there is only a tiny proportion of part-time workers in senior leadership roles. Does working part-time limit career progression opportunities?
An enhanced approach will allow you to delve deeper into the contributing factors, as well as provide you with actionable strategies and recommendations.
4. GPG Reporting Benefits Smaller Organisations Too
Why it Matters For SMEs
You might be surprised to learn that in 2023, small and medium enterprises (SMEs) represented 99% of the UK business population. If these SMEs actively report and address their gender pay gaps, the ripple effect on equality and equity would be substantial.
Voluntary reporting not only showcases a commitment to equality but also boosts employee engagement and positions these organisations as leaders in fairness and transparency ahead of regulatory requirements.
Adopting Best Practice as an SME
Despite the current regulations applying to organisations with over 250 employees, those with fewer also stand to gain by voluntarily reporting their gender pay gaps.
Hundreds have already reported their data, demonstrating a proactive approach that not only attracts talent but also fosters a more inclusive work environment. In doing so, you can provide a clearer picture of the entire organisation’s commitment to fairness and diversity.
Not only does this prepare SMEs for potential future regulatory changes but also sets a benchmark for industry best practices.
Conclusion
As we move forward, it becomes imperative for organisations to not only engage in gender pay gap reporting with a deeper understanding but also to implement actionable, measurable strategies aimed at fostering equity.
This commitment towards transparency, accountability, and proactive change is essential in cultivating an inclusive work environment where every individual has the opportunity to thrive.