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How to prepare your firm for gender pay gap reporting

Soon all large companies in the UK will have to report the gender pay gap in their business. How will this affect construction and what do you need to do to get ready?

By 30 April 2018, companies in the UK with 250 or more employees will be required to report publicly the gender pay gap in their businesses.

Typically a confidential matter, the information will have to be made available to the public via the company’s website.

It seems likely that the information will be collated into gender pay gap league tables, which will be published on a government website.

While the government’s stated intention is not to name and shame specific employers, it is likely that employers who fail to publish or have large discrepancies will be highlighted by unions and employee groups.

Companies have up to two years to investigate and begin to improve upon any pay inconsistencies before disclosure is required.

They must be proactive and take advantage of the opportunity to improve their position now to avoid the inevitable negative attention that will come with publishing a poor report.

What must be included?

The final regulations aren’t expected to come into force until 1 October 2016; however, little change is expected to the draft regulations, which require affected companies to publish:

  • Overall gender pay gap figures calculated using the mean and median hourly gross pay;
  • The numbers of men and women in each of four pay bands;
  • The difference between men and women’s mean bonus pay over a 12-month period;
  • The proportion of male and female employees who received a bonus in the same period.

Employers can chose to add narratives offering explanations for any pay gap when publishing the data and can detail any measures they plan to introduce to close the gap.

What impact will this have?

Some see pay gap reporting as a positive step towards increased diversity and transparency.

Others doubt the usefulness of the information, with many arguing that it could increase workplace stereotypes and discrimination by deterring women from entering sectors where they are already under-represented.

“Reviewing any disparity in pay needs to be undertaken in advance to ensure companies have enough time to deal with the issue”

The disclosure of information to the general public is expected to affect a company’s public image and thereby its recruitment, retention and ultimately its reputation.

The media will more than likely use the information to highlight discrepancies between employers, which could lead to brand damage and negative publicity.

What about the construction industry?

Gender diversity in the construction industry is still startlingly poor, with women making up just 11 per cent of the entire workforce. Such a large deficit of female employees inevitably leads to a continuing pay gap.

Recent surveys have highlighted a continuing disparity, with the current pay gap at 22.8 per cent. This is higher than the UK average of 20 per cent and will come under increased scrutiny in light of the new regulations.

The intention is that employers will address pay inequality and look at pay parity throughout peoples’ careers.

For the construction industry, this could present a bigger challenge than other sectors. On the positive, it will give the impetus for the sector to look at its practices to cater for greater equality of opportunity.

How should we prepare?

Businesses must act now.

The first challenge for employers will be reviewing the resources needed to produce a pay gap analysis. Putting HR and IT systems in place to collect this data will involve an upfront cost. Putting it in place will also take time.

Equally, reviewing any disparity in pay needs to be undertaken in advance to ensure companies have enough time to deal with the emerging issues. One recommendation is for companies to run a “practice” review to discover why the pay gap exists and also to consider how the real review will be managed.

“For many, whole system change will be the only way to make real progress but such wholesale change will take time and organisation”

Where pay gaps exist, it is important for companies to consider the wider picture and identify the principal causes.

Rather than focusing on one year’s data, we recommend companies expand the timeframe and analyse trends to identify key action areas. This continual monitoring of progress must be effectively communicated in each annual report.

Proactivity means any unjustifiable pay gaps can be addressed in advance of April 2018. For many, whole system change will be the only way to make real progress, but such wholesale change will take time and organisation.

Starting early will not only ensure compliance with the regulations but will also allow companies to tell a positive story and ultimately show a long-term commitment to fairness.

Melanie Stancliffe is employment partner at Irwin Mitchell

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