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The Gender Pay Gap Regulations: The story so far

The Gender Pay Gap Regulations: The story so far

By Ben Smith - 21 December 2017

As the year draws to a close, we take a look back at one of the biggest employment law changes of 2017: gender pay gap reporting. As some employers are choosing to release their pay gap data early we can already see some trends emerging.

The law

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the “Regulations”) came into effect on 6 April 2017. They apply to employers in the private and voluntary sectors who have 250 or more employees on 5 April each year. Public sector organisations are covered by Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017, which are substantively very similar to the Regulations.

The Regulations require that qualifying employers analyse their pay data, gathered on 5 April each year (the “Snapshot Date”) and publish a report setting out their findings within 12 months. As the first Snapshot Date was 5 April 2017, the first reports are therefore due by 4 April 2018. Qualifying employers must publish the following data:

  • The difference between mean hourly pay for men and women
  • The difference between median hourly pay for men and women
  • The difference between men and women's mean bonus pay over the 12-month period preceding the Snapshot Date;
  • The difference between men and women's median bonus pay over the 12-month period preceding the Snapshot Date;
  • The proportion of men and women who received a bonus over the 12-month period preceding the Snapshot Date;
  • The proportion of men and women in each of four pay quartiles.
  • A written statement, signed by a senior individual, confirming the accuracy of the published data.

Employers can supplement their data with an optional narrative which might explain the reason for any pay gaps and set out any steps the employer is taking to challenge their pay gap. We expect this to be a useful tool for employers to take the sting out of ostensibly negative statistics.

You can read GQ’s in-depth analysis of the Regulations here.

Data Gender pay data released so far

As of 17 December 2017, only 389 of the estimated 9,000 qualifying employers have uploaded their data to the government website. This small sample means we cannot draw firm conclusions – and the data is easily skewed by a few extreme outliers, such as one employer reporting a 467% bonus pay gap - but already we can see trends emerging. First, a slight caveat: the analysis below uses the data available as of 17 December 2017, new reports are slowly being added and the precise figures are likely to become outdated quickly. However, the broad trends they reveal are unlikely to alter significantly.

An average of the mean hourly rate of pay reported is 11.05% lower for women

  • These figures are low when compared to the Office of National Statistics’ most recent study on the national gender pay gap, which found a pay gap of 18.1% in 2016. This difference may be rationalised in many ways. Firstly, the figures released so far are disproportionately from public sector employers, who traditionally have less of a pay gap than private sector employers. Secondly, we are still months from the deadline and it may be that organisations with low pay gaps are more willing to publish early.

The average of mean bonus payments reported is 15.61% lower for women

  • Again, this figure is lower than might have been expected. However, bonus data is skewed by a considerable number of employers who report that they do not pay bonuses to either male or female staff. If we remove those outliers, the average bonus gap increases to 22.4%.

Gender representation in pay quartiles

  • If we look to the gender split across the pay quartiles, we see a broad trend that shows a disproportionate number of women in the lowest quartile (54.7% women) with the representation of men slowly increasing as we rise through the quartiles. On current statistics, women make up only 41.64% of the upper pay quartile.

No pay gap at all?

  • A surprising number of employers - 21 of 389 - report a mean pay gap of zero (of these 19 also report a median pay gap of zero). These statistics seem improbable, at best, as we would expect some variation in average hourly pay to be inevitable, particularly for large employers. This may be just a quirk of statistics, but it may indicate that the reporting obligations are not well understood by employers leading to calculation errors. It will be interesting to see if this remains a widespread phenomenon once all results are released.