Tech companies – Is gender pay gap reporting on your radar?

As we approach the gender reporting deadline of 4 April 2018, less than 1200 companies out of approximately 9,000 have published their data.. Why is this number still so low? Claire Taylor-Evans, Senior Associate solicitor looks at the factors involved and why holding off on reporting is a risky strategy.

As many technology firms approach the end of their financial year, their focus will inevitably be on maximising profits and planning next year’s big product launches.

However, another important matter for technology employers is to ensure they are aware of the new gender pay gap reporting obligations, which requires employers of 250 or more employees in the UK, to analyse and report on their gender pay gap by 4 April 2018.

The legislation came into force in 2017 and attempts to highlight – while seeking to reduce – the current gender pay gap, namely, the gap between male and female’s average pay. It is important to note that the gender pay gap is not the same as equal pay, paying males and females the same for doing the same job or job of equal value. It is simply the gap between what males and females are paid on average, across all roles. Currently the gap stands at 18.1% and the latest reports suggest it is not expected to close until 2117.

Why is there a gap?

The gender pay issue is complex with many causes. Factors include the educational and employment choices that women make with statistically not as many girls taking up subjects such as computer science beyond their GCSEs.

Highly paid sectors such as engineering and technology are failing to attract significant numbers of females. Childcare and caring responsibilities often fall predominately to females, and career breaks and part-time working can have a detrimental effect on promotion opportunities and career progression.

In the technology sector only 43 companies have published their data so far. One of these is, BAE Systems Applied Intelligence Limited, whose report shows that its upper quartile (highest earners) consists of 89% males and just 11% females. Citrix R&D Limited has f 96.7% males and just 3.3% females in the top quartile. This is likely to be true of many organisations in the technology industry, with males occupying more senior roles than females.

What must employers do?

Employers must calculate and publish their gender pay gap information on their own website and on a designated Government website. The report must be based on employee data on a snapshot date of 5 April 2017.

A series of six calculations are required which include: the percentage difference between the median and mean gender pay gap based on hourly rates of pay, the business’s pay distribution over four quartiles, and the number of males and females in each one of these (shown as a percentage). Employers must also publish the difference between their mean and median bonus payments to male and female employees and the proportion of males and females who receive a bonus.

Why is it important?

As the information must be published on the organisation’s own, and government, website, it will be seen by clients, competitors, existing employees and prospective candidates. If the calculation reveals a significant gender pay gap, this can have a detrimental impact on recruitment in an increasingly challenging talent market. It could also generate negative publicity, affect client and employee relations and expose employers to discrimination and equal pay claims.

What should employers be doing now?

As of 22 February 2018, only 1154 employers out of an estimated 9,000 affected employers had published their data on the Government website. Out of these, only 43 companies describe themselves as being in the ‘Information and communication’ category. This suggests that many technology companies are delaying the process until closer to the deadline.

This is a risky approach. Carrying out the calculations is an onerous and complex task and will, on average, take an employer 68 hours to complete. The method of carrying out the calculations and what to include is complex, and given that the sector can rely on a number of casual and part-time workers, care should be taken on which individuals are ‘relevant employees’ for the purposes of the data.

There is an option to publish a narrative to contextualise the data and employers are advised to use this opportunity to explain how disparities have arisen and importantly, what is being done about these (recruitment drives or developing talent, for example) to reduce the gap and mitigate any adverse reputational consequences.

If we don’t employ 250 employees can we ignore this legislation?

You are not obliged to publish a report but you may still wish to undertake the exercise and analyse your data. With increased focus on gender pay in the media, employees and prospective candidates, any steps you take now to analyse and address any gap will stand you in good stead in the future.

We can help!

Boyes Turner can prepare your gender pay gap report and help you to address any pay gap revealed. Contact Claire Taylor-Evans for further information on ctaylor-evans@boyesturner.com

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