Pay gap reporting and why it’s important to I&D

Reporting data as part of your I&D strategy can enhance your agenda and help you to focus your efforts in the right places. Our Head of Inclusion & Diversity (North), Rosie Clarke, looks at the current legal requirements for pay gap reporting and gives her expert advice on how to approach reporting as an inclusive employer.

Pay gaps are indicators of embedded and systemic diversity and inclusion problems within organisations and many employers are now taking significant steps to identify and address the causes of the gaps. Some are motivated to act by the legal requirements for transparency (in relation to gender), but others see pay gap data as an important inclusion indicator that must be tackled if they are to achieve an inclusive and diverse workplace.

Pay gaps are different from equal pay. Equal pay is the legal requirement to pay two people doing the same job the same pay, whereas pay gaps are about the average pay difference between all men and all women.

Pay gaps in the UK

Currently, in the UK, organisations with more than 250 employees are required to report their gender pay gap annually. They must provide averages for pay and bonuses and a narrative and action plan to accompany the numbers. The government ask for the report to be uploaded to the government portal and also be available on the employer’s website.

However, there is no scrutiny or governance in place to close an organisation’s pay gap. Therefore, meeting the legal requirement is doing the bare minimum. Inclusive employers must go beyond the legal requirement and delve into the why of pay gaps. Ask yourself:

  • Are men and women treated differently?
  • Do men and women have the same development opportunities?
  • Do men and women get promoted at the same rate?
  • Are the differences widened by intersectional identities (i.e. disabled women, black women, etc)?
  • Do specific locations or departments have wider/smaller gaps than the average?
  • Are parental responsibilities impacting career progression and widening the pay gap?

By asking challenging questions you will be able to write an action plan to accompany your pay gap which drives change by being specific, measurable and time-limited. Another way to go beyond the legal requirements is to collect and report on pay gaps based on other protected characteristics, for example, race or disability.

Collecting pay gap data

Data collected from pay gap analysis is vitally important, but it relies upon good diversity data collection as if you don’t collect ethnicity/disability data, or you have lots of colleagues who choose not to declare then you will not get an accurate picture of your pay gaps.

Pay gap data can also help you to evaluate the success of your diversity and inclusion strategy and can be a key indicator to show what has worked and what needs to change. If you deliver a diverse leaders programme and in the next two years you see the attendee be promoted and the pay gap decreasing you have hard evidence to show why you should keep funding that initiative. This evidence of evaluating programs will also help you achieve silver and gold status in the Inclusive Employers Standard, as Pillar 4: Evaluate ask what quantitative and qualitative methods are used in your organisation.

Overall, pay gap reporting may sound a bit boring but it is an invaluable part of creating an sustainable inclusive culture.

If you need further support with pay gap reporting Inclusive Employers offer a pay gap consultancy service.