HR 2 March 2017

What small employers need to know about the gender pay gap

gender pay gap
It could take until 2041 for the gender pay gap to close in the UK

Even though opportunities for women at work have considerably improved, new research has suggested decades more progress will be needed to close the gender pay gap.

Here, head of advisory at law firm Peninsula, Kate Palmer, explains what employers need to know about “the gap” and suggests some ways to reduce it.

Recent research carried out by PwC’s Women in Work index found that it will take until 2041 for the gender pay gap to close in the UK. Employers first need to understand what the gender pay gap is before they can go on tackle this.

The gender pay gap is the difference between pay received by men and women represented as a percentage of men’s income.

The overall gender pay gap in the UK stood at 18.1 per cent in 2016, this means that a woman earned 81p for every £1 paid to a man. When only taking in to account full-time employees, the gender pay gap is 9.4 per cent.

It’s often assumed that the sole reason for the gender pay gap is discrimination. Since the Equality Act was introduced in 2010, paying different amounts for the same, or similar work, because of the gender of the person is unlawful.

Whilst some of the gender pay gap might be attributed to discrimination, there are numerous other factors which lead to the difference in pay for men and women. The PwC research suggests that one of the most significant factors is job differences between men and women, both across industries and job roles.

Other factors contributing towards the gender pay gap are that women are more likely to work part-time than men, part-time workers work fewer hours and are paid less per hour, and that some sectors are still typically seen as gender specific roles such as caring and administration.

From April 2017, larger companies will be required to calculate and report on the gender pay gap within their business. Calculations are required on a mean and median basis for hourly pay and bonuses with reports published every year on the company’s website.

It is hoped that creating this legal requirement will help to highlight working practices which are contributing towards the gender pay gap and are restricting women moving higher within large organisations.

Under this requirement, employers can choose to publish a narrative explaining the results in the report. By doing so, employers are provided with the opportunity to carry out an intensive review in to the results, assess their practices and then set out their plans to address and reduce their particular gap.

Publishing a report with a lower pay gap, or publicly announcing plans to reduce the pay gap, will help smaller businesses recruit and retain staff, as they will stand out as a business aiming to improve the pay imbalance between genders.

Although the reporting requirement is only for larger employers, all employers can take steps to help reduce any gender pay gap. This includes ensuring all employees, regardless of gender, are treated fairly and equally when looking to work flexibly or less than full-time hours and to ensure no unconscious discrimination is taking place when making decisions regarding training, recruitment and promotion opportunities.

Kate Palmer is head of advisory at Peninsula.  

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