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Gender pay gap reporting: 5 reasons to take action

Posted on by from KPMG

Here are five reasons to take action on gender pay gap reporting sooner rather than later.

Gender Pay Gap (GPG)

If your organisation has more than 250 employees, mandatory Gender Pay Gap (GPG) reporting is heading your way. With the deadline for your first public report set for April 2018, it’s tempting to believe there’s plenty of time to prepare.

But this may be a dangerous strategy. It could leave you exposed to the danger of non-compliance and even put your reputation as an employer at risk.

 

1. The stakes are high

GPG reporting is not just another compliance procedure. Making your data public will have far-reaching consequences for your recruitment practices, remuneration policies, employee relations, talent retention and public reputation.

A high gender pay gap could suggest your organisation is not fully committed to fair pay, promotion and development opportunities for all employees. This could undermine your ability to recruit a diverse and talented workforce. In KPMG’s Think Future research published in April 2016, 55% of women polled said that a sector’s reputation on gender equality would influence their decision about working in it.

2. GPG reporting is everybody’s business

GPG reporting brings many challenges that fall beyond the typical remit of an HR manager or director. Implementing an effective reporting system, for example, could involve payroll and finance. If new software and time-recording devices are required, IT and operations could be drawn into the frame too. Similarly, decisions on the timing of report publication, the narrative that accompanies your data and the management of media scrutiny around your report will involve marketing, brand management, public relations and legal, and could also require C-level support.

In short, getting started with GPG now gives you time to seek input from the many stakeholders and get you to the starting line for GPG reporting in the best possible shape.

3. The April 2018 deadline is deceptive

The deadline for your first GPG report may be April 2018, but this report must cover pay and bonus data for the year 2016/17. Put simply, you should be collecting data already. 

Beyond this, calculating your gender pay gap could be a complicated affair. To make your report, you need to be able to calculate a gross hourly rate for each employee using a ‘snapshot’ date in April of each year. Your data needs to take into account sick pay, family leave pay and other allowances but must exclude over time, the value of salary sacrifice schemes, expenses and benefits in kind. It is a complicated process which requires detailed understanding of the regulations.  

4. You can put your house in order before you go public

Getting to grips with data collection and calculation now will give you time for a dummy run. This is a chance to check your systems are ready to report your gender pay gap in a way that is compliant with the new legislation. It also gives you a private snapshot of the current state of your organisation before you go public with your data.

If your dummy run reveals a larger-than-expected pay gap, this could point to issues around the way you recruit, develop, promote and reward employees. Far better to start to address these now than wait until your record comes under the scrutiny of the media, the public and the trade unions

5. You’ll get to tell your own story

Your GPG report is not just about the data but about the narrative that goes with it. This is where you have the opportunity to make sure your data is read in the right context, rather than leaving the public, employees and the media to make their own interpretations. Getting it right will take time.

In particular, the narrative gives you a chance to ensure that ‘gender pay’ and ‘equal pay’ are not confused, as they often are. Your narrative should also highlight factors that influence your pay gap but which you cannot control, such as the sector you operate in and the nature of local labour market. It’s also your chance to report on the initiatives already underway to reduce any issues highlighted in your dummy run.

 

Gender pay reporting is a great opportunity for organisations to start treating gender pay and workplace equality as seriously as other business issues – exactly the government’s intention. But if you plan to use this new legislation to your advantage, the time to start planning your strategy is now.

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Donna Sharp

By Donna Sharp

Donna is a member of KPMG’s Legal Services group, specialising in employment law. Donna has over 15 years’ experience advising employers on their employee issues. She previously spent 12 years an international law firm. Donna has a wide practice, with extensive experience in employment litigation, TUPE/outsourcing, advising on redundancy and reorganisation programmes.

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