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Despite being legally required to report on gender pay gap figures, it has been revealed that one in five large employers has not conducted gender pay gap analysis in the past year.

Understanding the equality pay gap

The CIPD’s 2024 Pay Performance and Transparency report revealed that 17 per cent of organisations within the scope of the UK gender pay gap reporting regulations had not conducted any analysis between October 2022 – October 2023.

With the upcoming deadlines for the 2023-2024 gender pay gap reporting being 30 March for public sector employers and 4 April for private sector firms, the report also revealed that public sectors were more likely to have analysed ethnicity pay gaps. The introduction of the new EU Pay Transparency Directive will place even greater pressure on employers.

Organisations will need to balance transparency in the work environment with confidentiality when it comes to salary information. This can only be achieved by monitoring the data. Audits are not just a data collection exercise to calculate your gender pay gap – they involve a commitment to put right any unfair pay inequalities.

What could we do to improve diversity, equity and inclusion?

 Almost half of available leadership appointments in the FTSE 350 need to go to women to meet the 40 per cent of women in leadership target by the end of 2025. The FTSE Women Leaders Review focuses on increasing female representation on boards and leadership teams of the UK’s largest listed and private companies.

Among the 50 largest private companies, progress is lagging. Women hold 36 per cent of leadership roles and 31 per cent of board positions. This is in spite of the target set for 2020 – of 33 per cent female representation at board level. The UK has also fallen from 13th place to 17th place on PwC’s Women at Work index, monitoring the track record of countries’ gender pay gap. The UK widened the gap from 14.3 per cent in 2021 to 14.5 per cent in 2022.

What is the business case for diversity?

Whilst in 2017 there were 54 all-male executive committees in the FTSE 350, this has reduced to nine. This signals the commitment to reducing the gap and has been welcomed as beneficial by all organisations who understand the benefit of diversity of thought and experience.

Diversity and inclusion are at the heart of business growth plans for many. Recent figures from McKinsey show companies in the top quartile of ethnic representation showed a 39 per cent better chance of outperformance in contrast to those in the bottom quartile. Companies with an executive team representation of women exceeding 30 per cent are significantly more likely to outperform those with 30 per cent or fewer.

Upskilling existing talent

A variety of experiences can help build a strong workplace culture. Culturally diverse teams are also culturally aware teams, crucial for making genuine connections with customers around the world. Therefore, ensuring that diverse teams are cultivated through recruitment and retention practices is key.

A diverse pipeline of talent is crucial to future-proofing businesses. Skills strategies can align with the existing learning, content or talent strategies followed by an organisation. Upskilling current employees can ensure that everyone has the opportunity to map out their journey to leadership, with different demographics equipped and given the ability through learning and development to access these roles.

What are the benefits of an equal pay audit?

Equal pay audits can help to identify any discrepancies across the whole organisation to ensure that the system of pay operates as fairly as possible. By identifying the drivers behind discrepancies, and whether the exceptions carved out are objectively justifiable, grievances in relation to pay can be circumvented from the outset and pay practices can be understood throughout organisations.

Pay may vary by a range of factors, including between regions. Salary benchmarking can help to ensure that those who are performing the same role and who have the same responsibilities, are remunerated equally.

What is the best way to close the gender pay gap?

The exercise involved in calculating the gender pay gap does not take into account whether the average woman’s hourly rate in a workplace compared to a man’s is reflective on very different levels of seniority or roles with very different remits. It is a blunt tool.

An equal pay audit is a better place to start to ensure that your organisation is meeting its legal duties under the Equality Act 2010. The results tell a more complete story, identifying areas that need addressing as part of a wider pay review. Create an environment of equal pay for equal work by:

  1. Determining the scope of the audit and the data required. Identify your project team that will include HR, payroll and communications.
  2. Analyse employees who are doing comparable work. Job evaluation schemes can help identify and group those employees doing ‘like work’ which is defined as work of equal value. This may involve comparisons between completely different roles, but will take into account the effort, skill and decision-making responsibility involved, and the relative value placed on this by the organisation.
  3. Compare pay and total reward data to identify any gaps and any inequality of pay.
  4. Conduct a detailed review of the results to establish any gaps and assess whether these are discriminatory or whether they can be objectively justified. Factors such as geography, length of service, market forces on recruitment and retention would all be considered.
  5. Prepare the audit report and the action plan. Map out how drivers behind unequal pay are going to be addressed and remedied in the short, medium and long term. Current policies and practices may be adapted moving forward to uphold pay transparency and fairness moving forward.

Get in touch

Contact us to discuss where to begin with undertaking an equal pay audit. When you undertake an audit to ensure that you are fulfilling your equal pay obligations, it ensures that you are being objectively fair in your pay practices for existing and prospective employees. Consider your approach to equal pay across your whole organisation. This will ensure you are protected against claims of discrimination in the future by bolstering your practices and policies today.

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