For the first time this year, the Gender Pay Gap Regulations will require large employers to report on the gender pay gap in their organisation. Their reports need to be completed and filed online by 4 April 2018, but with less than two months to go until the deadline, thousands of employers have not yet provided their figures. Is your firm ready?
The rules apply to all businesses which had 250 or more employees on the “snapshot date” of 5 April last year. “Employees” for this purpose has a broad meaning, covering many non-payrolled workers who are engaged directly by employers, such as consultants, independent contractors and casual workers. Crucially for the accountancy sector, this does not include partners or LLP members.
For gender pay reporting purposes, each company in a group structure is considered individually. It is not possible to aggregate figures across the group and produce just one report. Equally, it is not necessary to add up employees across different group companies to see if the 250-employee threshold has been met.
What is the gender pay gap?
Gender pay gaps are expressed as a percentage which reflects the difference between men’s and women’s pay. Employers are required to calculate their gender pay gaps for hourly pay and bonus pay. In both cases, both the median and the mean figure needs to be calculated.
The first calculation involves working out each employee’s average hourly rate at the snapshot date based on their ordinary pay (which includes basic pay, allowances and shift premium pay but does not include items such as overtime or benefits in kind). Most organisations which pay staff monthly will be looking at what was paid to employees during the monthly payroll run in which 5 April 2017 fell. If the April pay included an annual bonus, it is to be included in the ordinary pay figures, but on a pro rata basis.
The employer then needs to work through the data, dividing the pay received by each employee’s normal working hours, to determine their hourly rate. This is fairly straight forward for employees with standard working hours, but there are some more complicated rules where the working hours vary. Once these figures are available, the organisation can work out its mean and median hourly gender pay gap percentages.
The employer then needs to look at bonus pay, looking back at bonuses paid in the 12 months leading up to the snapshot date (5 April 2017). The employer needs to obtain figures for:
- The difference between men’s mean bonus pay during the 12-month period and women’s mean bonus pay in the same period.
- The difference between men’s median bonus pay during the 12-month period and women’s mean bonus pay in the same period.
- The proportion of men who received a bonus and the proportion of women who received a bonus during the 12-month period (all employees must be included, even if they have been on leave).
Finally, employers will need to work out their pay quartiles. They do this by putting all of their staff in order from lowest paid to highest paid and dividing that list into four equal quarters (i.e. the same number of employees in each group). The employer then needs to report on the proportion of men and women in each quarter.
The report itself
All of the calculations referred to above then need to be summarised in a gender pay gap report. The report must be accompanied by a written statement confirming that it is accurate, signed by a senior person such as a director, LLP member, or partner. Organisations will need to think about who is the best person to do this, and when and how to ensure they have appropriate information to enable them to sign it off. In the accountancy sector above all others, errors in the data will not reflect well.
The data must be published on the employer’s public website in a manner that is “accessible” to all employees and the public, meaning it must be relatively easy to find from the home page. The information must remain on the website for at least three years from the time of publication. Most companies are producing a report which slices and dices the data in different ways and seeks to apply some explanation and context to the bare figures.
The information must also be published on a government designated website, including all the required pay data and the name and job title of the person who signed the accompanying statement.
How is the accountancy sector doing so far?
In April 2017, the Office for National Statistics confirmed that the average gender pay gap for full-time employees in the private sector was 15.9%, and that it sits around 20% for high earners. Overall, the gender pay gap across all fulltime employees was 9.1% in 2017.
A few of the bigger accountancy firms have started to publish their figures. For example, KPMG has declared a mean hourly gender pay gap of 22.3%, compared to 19.7% for EY and 20.4% for Deloitte. PwC has reported for two separate entities; one with a 12% gap and one with a 33.1% gap.
The bonus gaps have been significantly bigger, which is likely to be explained, in part, by there being more women working part time. Examples of the mean bonus gaps reported so far include KPMG at 51.3%, Deloitte at 50.3%, EY at 43.5% and PwC at 33% and 58.6% across its two companies.
RSM UK has posted the most refreshing figures overall, with a 16.2% mean hourly gender pay gap, a 27.7% mean bonus gap, and a 0% median bonus gap.
A false picture?
Overall these figures to date appear to show that the accountancy sector is broadly in line with the national averages for private sector employees, but we should not forget that the highest earners – partners – are excluded from the figures. One can only speculate that the headline numbers would look significantly worse for the women of the accounting profession if partner pay had been counted too.
Karen Baxter, partner and head of professional services, Lewis Silkin LLP