The gender pay gap is the term used to describe the difference between the hourly earnings of men and women. It is determined by calculating the overall pay of women as a percentage of that of men. The pay gap is the difference between this and 100 per cent. So, for example, if women’s pay is 80 per cent of men’s, the pay gap is 20 per cent.
There are different ways of calculating the gender pay gap. If calculated using the mean (average) hourly pay, women’s pay (excluding overtime) was 17.1 per cent less than men’s pay in 2008, showing an increase on the comparable figure of 17.0 per cent for 2007.
At present, private sector employers are only under an obligation to disclose gender pay information if requested to do so as part of a questionnaire under the Equal Pay Act 1970 or during Employment Tribunal proceedings. However, the Equality Bill contains a power to require employers with more than a specified number of employees to report on the gender pay gap. The original provision was for those with more than 250 employees to provide this information but a reduction in the
number to 100 has been mooted.
Initially, organisations with more than the specified number of employees will be ‘encouraged’ to volunteer information on the average hourly pay of male and female workers. To this end, the Equality and Human Rights Commission will carry out a consultation in order to develop a system of pay reporting for the private sector. If by 2013 it is clear that a voluntary reporting system has been ineffective in narrowing the gender pay gap, legislation will be brought forward to force disclosure. The Equality Bill also bans secrecy clauses which prevent staff from disclosing their salaries to colleagues.
A recent survey of senior Human Resources professionals revealed that only 29 per cent of organisations had conducted gender pay audits and only five per cent had actually reported their findings. Employers would therefore be well advised to carry out an audit sooner rather than later and to ensure that any discrepancies are remedied so as to reduce the risk of equal pay claims in the future.
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