5 Steps to Calculate and Report Your Organisation's Gender Pay Gap Data
Reporting gender pay gap statistics is a mandatory action for UK companies with over 250 members of staff.
This annual report should cover a litany of basic statistics, carefully collated from your HR documentation.
If you’re unsure of what should be included, or how this should be organised, this blog will take you through all the necessary steps.
Gender Pay Gap Reporting: The Basics
In case you’re unfamiliar with the concept of gender pay gap reporting, let’s start with the basics.
It’s a mandatory report, which should be submitted by all companies with more than 250 members of staff. Since the 6th of April 2017, eligible employers have been required by law to publish six types of figures annually, both on their own site and the government website.
This report should also contain a signed statement, which provides context and support to the data that you provide.
Employers aren't required to submit their report at the same time each year, but they do have to provide this before the 4th of April. Otherwise, employers face unlimited fines and reputational damage.
Step 1: Calculate Your Headcount
If you have 250 members of staff at the ’snapshot date’ then you must submit this data, regardless if you have had fewer members of staff for the majority of the year.
The definition of ‘snapshot date’ is a key marker in the year, which is also the date from which you have a year to publish your report. The important date is always the 31st of March for public authorities and 5th of April for all other employers. This means if you have a headcount of 250 on the 5th of April 2019, you have until the 5th of April 2020 to produce this report for the data related to 2018-2019.
There are a few different kinds of employees that you must include in this headcount, as the extended definition is taken from the Equality Act 2010.
Each part-time or job-sharing employee still counts as one employee, even if they’re only present for half of the working week. Agency workers should be reported by the agency that they work for, not the organisation that they carry out tasks in. Self-employed people may also be included in your headcount, if they are present to personally perform the work.
If you have overseas workers in your organisation, you may be stumped on whether or not they should be included. There’s no rule of thumb here, instead you should evaluate each overseas worker individually to decide if it’s appropriate to include their salary information.
Consider whether their contract is written in accordance with UK legislation, if they have a home in the UK and whether they pay UK taxes.
Acas suggests evaluating if their employment is subject to UK law, over that of another country, to determine if they should be included. They do offer the caveat that each of these cases should be considered under their own merit, and that professional help should be sought if you’re unsure.
Step 2: Collate Gender Identities and Salaries
Not every company keeps personnel files with their employee’s gender to hand, so you may have to fact find. This information can come from HMRC documentation; however, you may also want to allow employees to self-report their gender as this may differ from their assigned gender.
When dealing with this kind of conversation, it’s important to do so in a way that makes the employee feel comfortable. This may be face to face, or an email sent out to all staff to confirm their gender.
Don’t single out members of staff that are transgender or non-binary for this confirmation, as this may make them feel uncomfortable.
Don’t assume that a transgender or non-binary employee has a preference to be recorded as a certain gender. Instead, work to understand what their preferred mode of recording is, which may also prompt a useful conversation on how they would like to be known at work.
For those that are non-binary, Acas and the UK Government suggest that they should not be included in pay gap data.
This isn’t a perfect approach for organisations, as it means that no data will be kept or compared for employees without an assigned gender. However, you could also include figures on transgender, cisgender and non-binary pay gap data to prevent these employees from being excluded.
Combine this information on gender with the payroll of the employee to gain insight into their salary and bonuses. When working with this kind of data, ensure that it is kept securely as you’re creating a large file of personal information, otherwise you may face a serious data breach.
There are a variety of techniques that you could use to collate the information that you're going to need. Thinking outside of the box is likely to help you here. For instance, category management, a technique used in the retail industry, could actually help you to make the process more efficient and targeted.
Step 3: Do the Maths
With all of the required data collated, you should then move on to the calculations that form the majority of your report. To speed this up in future years, you can set up spreadsheets to do these calculations for you, then simply add the data to get the outcomes that you need.
Each year, you will provide the following figures:
Mean Gender Pay Gap in Hourly Pay
- Add together the hourly rates of all men in the organisation.
- Add together the hourly rates of all women in the organisation.
- Divide each group of figures by the number of employees in the sample – this gives the mean hourly rate for each gender.
- Subtract the mean hourly rate for women from that of men.
- Divide this result by the mean hourly rate of men.
- Multiply the figure by 100 to express the mean average as a percentage.
There are 100 people in your organisation, 60 of which are men and 40 of which are women. Within this sample, you calculate that women are paid £11 per hour and men are paid £13 per hour on average.
Subtracting the hourly rate of women from that of men, you have a £2 gap on average. You then divide this by £13, to give 0.15 and then multiply this by 100. This gives a final percentage of 15%; this is your mean gender pay gap.
Average Gender Pay Gap as a Median Average
- Use the hourly rate you have calculated for men and women. Organise each group from lowest to highest paid.
- Select the figure in the middle of the sample size, so in a group of 100 you would select the hourly rate in the 50th position on the list; this is the median.
- Subtract the median figure from the women’s sample from the men’s.
- Divide the result by the median men’s pay.
- Multiply the result by 100 to express this as a percentage.
Within the sample size you have collected, you have 60 men’s salaries and 40 women’s salaries organised from lowest to highest. The 30th figure from the men’s category is £12 and the 20th figure from the women’s category is £10.50.
By subtracting the women’s median salary from the men’s, you have a figure of -£1.50. You then divide this by the men’s median of £12, to give 0.125. Then, you multiply this by 100 to give a percentage of 12.5% and this is your median average gender pay gap.
Proportion of Employees Receiving Bonuses by Gender
- Divide men into two categories; those who received bonuses in the year preceding the report and those that did not.
- Divide the number of men who received bonuses by the total sample size and multiply this result by 100 to express as a percentage.
- Follow the same formula to calculate the percentage of women that received a bonus.
You have 60 members of staff that identify as men, with 43 of them receiving bonuses within the past year. There are 40 women within the workforce, and 26 of these employees received a bonus.
By dividing 43 by 60, you get a figure of 0.72. Then, you multiply this by 100 and this means that 72% of men received a bonus. Following the same steps, you can determine that 65% of women received a bonus.
Average Bonus Gender Pay Gap as a Mean Average
- Add all of the bonus payments received by men in the organisation for the last year.
- Divide the figure by the number of men given the bonus to gain the mean amount of bonus pay for men.
- Follow the same calculation to discover the mean figure of bonuses paid to women.
- Subtract the mean bonus pay for women from the mean bonus pay for men.
- Divide this figure by the mean bonus for men, then multiply the result by 100 to show the average percentage difference.
Bonuses paid to the 60 men in your organisation amounted to £6000, with the 40 women receiving a total of £3500. By dividing the bonus by number of men, you learn that each man received £100 of a bonus on average. Doing the same calculation for women showed that they received £87.50 each on average.
By subtracting the average bonus for women from the average bonus for men, you get a £12.50 difference. Then, you divide this by £100; the mean bonus amount for men. Finally, multiply by 100 and this gives a mean gender pay gap in bonus pay of 12.5%.
Average Bonus Gender Pay Gap as a Median Average
- Arrange the bonus pay amounts from lowest to highest, segmented by gender.
- Select the middle figure from each set of data to give the median for men and women.
- Subtract the median bonus for women from the median bonus for men.
- Divide this figure by the median bonus for men, then multiply by 100 to give the median gender pay gap for bonus pay as a percentage of men’s pay.
Lining up the bonuses of your 60 male employees and picking the 30th gives you a bonus of £95. Doing the same with 40 female employees and selecting the 20th number results in a bonus of £82.
Subtract the median bonus for women of £82 from that of men, £95, and this gives a figure of £13. Divide this by the median figure for men of 95, to give 0.14 and then multiply by 100. This gives you 14%, which is the median average bonus gender pay gap.
Gender Pay Gap Quartile Figures
- Divide the total number of employees into four quartiles, based on salary. There should be an even number of employees in each quartile.
- If your headcount isn’t divisible by four then balance the remainder as fairly as possible, splitting them between upper and lower quartiles.
- Divide the number of female employees in each quartile by the total number of employees, then multiply this by 100. This gives you the percentage of women in each quartile.
With 100 members of staff, you break down each into four groups of 25 employees. In the upper quartile, you have seven female employees. Therefore, you divide seven by 25, giving a figure of 0.28.
By multiplying this figure by 100, you can conclude that just 28% of the upper quartile of earners are female, with 72% of them being male.
Step 4: Craft Your Written Statement
Alongside these figures, organisations should also provide a written statement to add context to their figures. Some organisations use this as a platform to discuss future changes they’re planning to address a gender disparity, but you should only include achievable goals.
This can also offer a section to celebrate a positive outcome and goals that have been met within the past year. This is an area within the report to provide a narrative that makes sense of the data.
Different organisations will task this written statement out to different members of staff. Most companies should appoint a director to sign off on their gender pay gap report. The signatory is also not just checking a box here, they’re also verifying that the information therein is correct.
Step 5: Publish Online
The final step is to publish your data online; this must be placed on the government portal and on your own website. Many organisations choose to place this is a similar fashion to their Modern Slavery Statement, in an area for corporate achievements, information and reports.
You can register for and use the government’s self-reporting tool to submit your data here. Ensure you do this by the deadline, or you face unlimited fines.
Gender pay gap reporting isn’t just a legal requirement, it’s another way to harness data that impacts your workforce. Investigate gender disparities in your workplace to create an inclusive workforce, in which all employees are equally represented.
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