U.K. gender pay gap: What it means and what happens when you don’t report

Of the 10,328 U.K. organisations that reported gender pay gap data for the 2017-2018 year, some 1,500 failed to meet the reporting deadline. 

Technically speaking, there were two deadlines. The first, on 30 March, was for public organisations, while the second, on 4 April, was for businesses and charities. Enforcement action will start when the Equality and Human Rights Commission (EHRC) writes to all employers that have not complied with the law. The EHRC indicated that letters will be sent on 9 April and employers will be given 28 days to comply before an investigation takes place. If they do not comply, an “unlawful act notice is issued.” Failure to comply “will ultimately lead to an unlimited fine decided by the courts,” according to the EHRC.

Companies should “be prepared for serious reputational damage,” said Rebecca Hilsenrath, chief executive of the EHRC.  In fact, this may be all they have to face, as the the EHRC’s ability to enforce fines and other actions has been called into question. Mary Brassil of law firm McCann Fitzgerald said that “doubts have been raised as to whether the EHRC can legally impose such sanctions, however, and therefore it is likely that threat of reputational damage is still the most significant consequence of non-compliance for U.K. organisations.”

"This is not optional; it is the law and we will be fully enforcing against all companies that do not report. This legislation is in place to bring about better gender equality in the workplace and any employer not complying needs to ask themselves tough questions, re-think their priorities, be prepared for serious reputational damage, and be ready to face a very unhappy workforce."
Rebecca Hilsenrath, Chief Executive of the Equality and Human Rights Commission

While there are companies in non-compliance, the Guardian revealed that there was a last-minute rush in reporting, with more than 1,100 companies reporting their figures in the 24 hours before the deadline, “more than the total number of companies that had reported in the first 326 days of the scheme.” That leads us to the conclusion that while most organizations did not leave it until the absolute last minute, they left it to the last month. 

Figures from the government’s gender pay data Website, however, show that some 129 companies have reported for the 2018-2019 year already. Regulations require that the data be based on a snapshot taken on 5 April for private companies. Therefore, all the data could have been available for 2017-2018 a year ago. What was the cause of the delay in reporting? Was it the figures themselves?

Data that must be reported

All employers with 250 or more employees must calculate and publish the following data:
Their mean gender pay gap
Their median gender pay gap
Their mean bonus gender pay gap
Their median bonus gender pay gap
The proportion of men in the organisation receiving a bonus payment
The proportion of women the organisation receiving a bonus payment
The proportion of men and women in each quartile pay band
Private and voluntary sector employers (and public sector employers not exempted) must also publish a written statement on their own website. The statement must confirm that the published information is accurate and must be signed by an appropriate senior person. The name and job title of that person must be published on this website.
In addition, companies also report the lower, middle, upper and top quartile gender pay gap percentages.
Source: Gender Pay Gap Service

Analysis by independent company Staffmetrix—the government has not commented on the overall statistics as yet—shows that the median pay gap is 9.7 percent, while the average is higher, at 14.5 percent, based on data from a slightly smaller number of organisations than the government records. Companies also need to report on bonus gaps. While Staffmetrix found that broadly similar numbers of men and women received bonuses (36 percent and 34.5 percent, respectively), men’s bonuses were worth more at the median, by just under 6 percent. Overall, almost eight in 10 employers paid their male employees more than their female employees.

Although the data has been hailed as groundbreaking, no other country has recorded data to this extent—and its validity is already being called into question. The gender pay gap records the difference between men’s and women’s pay based on the average difference in gross hourly earnings of all employees. It does not compare the pay of men and women in broadly similar roles. It could, therefore, be a reflection of the fact that more men are employed in senior roles than women—another problem the EHRC is seeking to address. Or, indeed, that more women work part-time. The data is also incomplete due to exemptions allowed by the regulations, including high-level executives such as partners and contracted, typically low-paid workers.

Interestingly, Staffmetrix found that of the five companies with the highest average gender pay gap, three were football clubs: Millwall, Stoke City, and Burnley (159 percent, 92.5 percent, and 88.4 percent, respectively). But the companies with the highest median gender pay gap—the more representative figure as it is not skewed by a small number of highly paid employees—is construction company Rainham Industrial Services, at 95.5 percent.

The construction industry had the highest median gap overall, 24.8 percent, closely followed by finance and insurance at 22.1 percent. Those with the lowest gaps were industries that, traditionally, employ large numbers of women, healthcare/social work, and accommodation/food services (1.6 percent and 1 percent, respectively).