CIPHR webinar: How to improve your gender pay gap reporting process

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Cathryn: Hello, and welcome to today’s webinar, “Pay Gap Reporting: What Have we Learned and What’s Next?” My name is Cathryn Newberry and I’m CIPHR’s Content Marketing Editor. With me today are Kerri Constable, Associate Director at RSM and Frankie Davis, HR Consultant at RSM. Welcome, Kerri and Frankie. It’s great to have you with us today.

Kerri: Hi, Cathryn.

Frankie: Hi.

Cathryn: Thank you. If you don’t know CIPHR, we’re a leading UK developer of HR recruitment and learning software that helps organisations to attract, engage and retain their workforces more effectively. Our solutions cover the entire employee lifecycle, from attraction and recruitment through to engagement, development, management, reward, and retention. If you’d like to find out more about CIPHR solutions, including our gender pay gap reporting tool, you can opt in to hear from us via the survey at the end of the webinar or email us using the address on your screen now. RSM is one of our strategic CIPHR connect partners. It is a global audit tax and consulting firm with specific expertise in HR consulting and outsourcing. Today, Kerri and Frankie will be exploring the causes of gender pay gaps, the complexities of the reporting process, and how to improve your calculations for the 2020 reporting round.

This webinar will last around 45 minutes with about 30 minutes from us and then time at the end to answer your questions. Do send in your questions, comments, and queries during the broadcast. You should see a small control panel on your screen. Just hit the orange arrow button to open the messaging window. If you miss anything or have to leave the broadcast at any time, don’t worry, everyone who is registered will receive a link shortly after this broadcast ends to an on-demand version that you can watch at any time or share with your colleagues if you think they’d be interested. I’m just going to hand over to Kerri and Frankie now who are going to take us through gender pay gap reporting.

Kerri: Good morning, everyone. Welcome to the webinar. As Cathryn said, my name is Kerri Constable. I’m head of HR delivery services here at RSM, and I’ve got particular expertise in gender pay gap reporting, having worked with many different clients and companies over the last two years.

Frankie: Good morning my name is Frankie Davis, and I’m an HR Consultant at RSM, and have extensive experience in gender pay gap reporting.

Kerri: Today, we’ll be sharing some of the lessons that we’ve learned when we’ve been working with clients, and give you a brief overview of what comes next on the agenda for pay gap reporting. Our experience spans many different types of organisations, private, public, branded, and non-branded SMEs as well. So just to give you a quick overview of what gender pay gap reporting actually is, the legislation came into effect in April 2017, and affects all employers in the UK with 250 or more employees on the snapshot date. The snapshot date in the private sector is the 5th of April, and in the public is the 30th of March. This legislation relates to all employers in the UK.

It’s no small task to actually undergo calculating your gender pay gap figures. But once an employer has done that, they need to report them on the government gender pay gap portal by the deadline. They also need to make sure they put them on to their organisations own website. A few of the headlines that we picked up this year are, that less than half of UK firms managed to narrow the gap. So that’s about 8 in 10 companies still paying their male employees more than females. It’s often thought that if a company has a gender pay gap, it also has an equal pay issue. But I think it quite important to set out at the beginning, these two things aren’t directly correlated. Equal pay is about the pay for similar, same types of jobs across gender, whereas the gender pay looks at differences in average pay between men and women across the whole organisation. So, they’re actually quite different.

Now just to go through very quickly with you the calculations, there’s four sets of metrics that employers need to actually report on. The first group of figures covers pay, and that should mean pay gap and your median pay gap. The mean pay gap is the difference in the average hourly pay between all men and women in the organisation. And the median pay gap is the difference in hourly rate between the middle male and the middle female in the organisation. It’s the median figure that’s typically referenced by the Office of National Statistics when they report on gender pay.

And then the second group of figures that we look at for gender pay covers bonuses, mean bonuses and medium bonuses. Same principles apply. However, when we’re looking at bonus figures, we’re looking at a much longer time frame. So, the legislation requires us to go back 12 months running up to the snapshot period.

So, in the private sector, we’re looking at April to March. And in the public sector, we’re looking at February to March. And this is a bit different from the pay gap figures that are just looking at a pay period where the snapshot actually falls. And for most organisations we work with this tends to be April, although it can vary. And the next group that we look at are the proportions. So, the legislation asked employers to actually look at the proportions of males and females receiving bonuses in that 12-month period.

And finally, and this is one of the cohorts that’s actually quite revealing, we look at the proportions of men and women in each of the four-quartile band. So, we end up with four bands, lower, lower middle, upper middle, and then upper. And we actually get an insight into what that organisation looks like by percentages of men and women in each quartile.

And typically, what we tend to find, and it’s not universal obviously, because every organisation is different. But what we often find is this glass pyramid. So, whereas we used to talk about a glass ceiling, now this is a glass pyramid, where what we often see is just fewer and fewer women represented towards the top of an organisation. I’m just going to hand over to Frankie, just to talk about some of the difficulties we have in attributing why we have gender pay gap.

Frankie: So, the reasons are varied and overlapping. Firstly, we have occupational segregation, and the gap has been partly attributed to this. It refers to the inequality in the distribution of women and men across the different occupational categories. It’s been reported that many poorly paid occupations are those traditionally carried out by women, typically seen to require feminine skills such as people skills or caring skills. They subsequently have an impact on opportunities for advancement in the labour market. Secondly, we have industrial segregation. An example of this would be where fewer women work in some professions. For example, STEM is an area often cited as being male dominated. This is similar to occupational segregation, but refers to segregation by industry or sector.

This can therefore result in less women choosing to enter certain industries when planning their careers. Thirdly, there’s the lack of well-paid part time or flexible work. It’s been argued that part time workers are less likely to progress up pay scales due to their part time status. Next, we have unconscious bias. This is unlearned, automatic, or unintentional judgment about others. It’s reported that some women who are often keen to move into senior or managerial roles are sometimes held back due to assumptions and stereotypes in relation to them being mothers or carers. There is also research that suggests that when recruiting new staff members, some managers are more likely to recruit individuals who are like them. Many organisations are now rolling out unconscious bias training to their teams in order to tackle this issue. However, there has been mixed [inaudible 00:08:13] reports on its effectiveness, and it’s difficult to measure the effect of training on such an intangible concept.

Next, there’s an ultimate that caring responsibilities are unequally shared, which influences the gender pay gap. It’s argued that women choose to care for children more and therefore naturally end up in jobs below their skill level when they return to work and therefore have fewer progression opportunities. Research suggests that by the time a woman’s first child is 20, the hourly wage will be a third below a man. There are also studies that show over half of young fathers would take a pay cut to work less and spend more time with their families. Finally, there’s also a growing body of speculation over other factors, such as career options and choices provided to girls when career [inaudible 00:08:56]. There’s also a theory that women are more reluctant to ask for a pay rise and a promotion in comparison to man despite their skill level, and this could also have a detrimental impact on their progression. Next, I’ll pass over to Kerri.

Kerri: So, what industries have hit the headlines? There’s been quite a few different companies that have made it into headlines this year again, for having a particularly large gap. For example, in education, universities have come under quite a lot of scrutiny. We actually work in this sector and in our own experience, we have found that the division between support and academic staff in terms of gender tending to work in those types of roles can actually have quite a significant impact on their gender pay gap. What you tend to find is that the support staff typically have been female and the academic, male. And that’s having quite a big impact. And that could be why we’re finding that more than 9 out of 10 British universities are still paying men more than women on average.

Another industry that’s come under some scrutiny is the airline industry. And EasyJet, again, this year, facing some criticism over their gender pay gap, and why it’s widened and not closed, even though more females have actually been recruited as pilots. So, EasyJet have made some good inroads into hiring more females last year into their cockpit than before, taking the proportion of female pilots up to, wait for it, a staggering 5%. So still very small. However, even though they’ve done this, the gap still stands at 54.1%, proving even if you put in some measures, it’s still difficult to close that gap. That could be because there’s still a very large proportion of cabin crew type jobs, and a lot of those are female faced, meaning the pay gap it still remains. The public sector, no surprise that they come under scrutiny. Their median pay gap was 14.1% in March 2018. This is below the national sort of average for combined sectors.

But despite this, they are still heavily scrutinized. And banking, finance, the figures don’t make for easy reading. The ONS provisional figure in 2008 for the gender pay gap shows a median pay gap for financial services at 39%. And we’ve got some very well-known large banks reporting gaps up to, you know, 60 odd percent. Even that, despite the huge effort that they’ve put into trying to address their issues with many impressive interventions and initiatives being introduced to try and remedy it. I think showing that there are no quick fixes actually and a long-term approach is required to this. So, I’m just going to talk about some of the issues when we’ve been working with employers and the problems we’ve encountered when we’re trying to undertake the gender pay gap calculation process for them.

What we have found on a sort of a broad consideration level is there’s just many stakeholders in this, both internally, the staff in your organisation are looking at you to understand how you reward people, and externally as well as to how that’s going to be managed. We’ve also seen a great deal of board interest in this, quite a corporate governance approach to understanding why have we got to get…a genuine concern from senior stakeholders as to why there’s a gap, and can they do anything to change that. We’ve also seen private equity companies that we deal with paying very, very close attention to the companies they go into invested on a corporate governance, holistic view. And they tend to take the view that actually gender pay gap is part of having good governance. And having good governance is a future indicator of financial performance in terms of return and risk.

So, it’s quite high up on the agenda we found for many, many groups. And that whole concept of representation and having diversity at a senior level and within teams has been cited as increasingly important indicator of fairness and inclusion, helping us to mitigate things like groupthink and bias. And many organisations have started to track their performance in terms of diversity and inclusion so they can see how they’re improving. So, a real concern from the top and a dedication to understanding why the gap might exist, to see if there’s anything they can do to make it better.

And on the flipside, so the other issues and obstacles that clients have encountered in actually making the calculations themselves. It’s quite a large administrative burden. You need a very good understanding of your payroll and the makeup of your payroll in order to do this.

It can lead to having to liaise with many different parts of your own organisation, but also your outsourced partners such as your payroll bureau, meaning the task sometimes takes much longer than clients expect it to. It’s also been reported that up to 15% of the gender pay gap reports contain errors. And therefore, our advice to clients generally is, do take enough time to anticipate the possibility of you having to rerun your figures a couple of times. And for lots of people, it’s a new task suddenly upon them and they feel like it’s outside their role and not perhaps part of their normal remit. And therefore, we have sensed some reluctance in some organisations in terms of where this might fall, is it a finance role? Is it an HR’s job? Is it a payroll task?

So, lots of companies have looked externally for some sort of verification of their figures, one, in terms of making sure they’re using the correct methodology, and also because it’s sometimes difficult to decide internally who’s going to own it. Apparently, the most common pitfall for employers, though, is failing to provide that link to your gender pay gap report on your own website. And I think what that means is that people are loading onto the government portal but they’re not actually linking it to their website as well.

Cathryn: Okay. Thanks so much, Kerri and Frankie for that great overview of where we’ve got to so far with gender pay gap reporting and all those myriad issues that HR teams are faced with. And so, it’s time for our first poll now. I’m just going to launch that. The question is, when do you plan to start the calculation process for your 2020 gender pay gap reporting? Select one of the five options, in the next four to six weeks, sort of between July and September this year, October to December this year, January-February next year, or you’re going to leave it to last minute in March next year. Kerri and Frankie, from your experience of working with companies putting their pay gap calculations together, when do you expect our audience to be working on their calculations?

Kerri: I hope it’s not March 2020. I would say January-February 2020, potentially could be a hot favourite.

Cathryn: Okay, great. I’m going to close the poll now so get your votes in really quickly. I’ll share the results on screen. So, we have an equal quarter-ish saying in the next four to six weeks. Some of you also looking to do it in the summer this year. And a quarter roughly of you saying sort of January-February next year. And just 9% opting for March 2020. Do you take some kind of comfort in those results, Kerri?

Kerri: Very much. There’s nothing sort of more difficult than the rush we get at the end. So I’m really pleased that people are considering that if not now, that they timetabled it in when it sits best with them.

Cathryn: Yeah, absolutely. Great. Okay, now back to you, and Frankie is going to take you through a case study, I believe, next.

Frankie: Yep. So next we have a case study to demonstrate some of the challenges that organisations face. We were brought in by a borough council to review their figures at a high level, to check their methodology. Once we analysed their approach that they had taken, we found that they had made the calculation solely based on annual salaries alone. They had a large number of casual workers with variable hours and pay and a complex data extraction process involving third parties. This added a level of intricacy that they hadn’t anticipated and required significant input from RSM. This is just one example of how we’ve worked with an organisation and reviewed their process, their data, and come to a solution that works best for them and delivered their results.

So, moving on, what can happen if an organisation doesn’t report their gender pay gap figures? So firstly, there is possible reputational damage. It’s a consideration to many organisations in timely as employees seeing the company not complying and can go down badly. Secondly, external as well, that can have great impact. It’s more of a consideration for branded companies, listed companies, and those in the public eye. Secondly, it’s generally accepted many job hunters are now looking at that organisations to understand their approach to people and their development. And increasingly, we are learning that decisions about who to work for are moving into areas such as fairness and transparency.

This could have an impact on organisations that either don’t report or do report and have a large pay gap which they fail to explain. Apparently, two thirds of UK workers would consider looking for another job if they found out there was an unfair wage gap at their organisation. Sadly, this year we’ve noticed that employers are receiving warning letters from the government as a result of not reporting. The portal also identifies employers as late when they don’t meet the deadline. These measures are designed to make employers comply with the legislation, which doesn’t actually carry any defined financial penalties in non-compliance.

Next, the EHRC reports that there could be financial penalties attached to non-compliance. However, we’ve not seen any evidence of this actually occurring so far. And then finally, there’s been correspondence indicating that companies could face other enforcement actions for failure to report. At the moment, these threats appear to be attempts to persuade employers to comply rather than to penalize them.

Cathryn: Thanks, Frankie. And so, what can we do to improve the process?

Frankie: Well, I think one of the biggest problems is when organisations decide to timetable it. So, it was really reassuring to hear that people have started to think about this now because we have the data already. So, from the first of May this year, all companies will have their data backdated so you can start any time from now. Because as we do find, it can be underestimated just the scale of the task, you know, involved, and therefore leaving it last minute just can create quite stressful scenarios for everyone involved.

And another common issue we find is this over-reliance on your payroll data. Now, the payroll data is obviously a starting point and incredibly important and useful, but there’s a little bit of extra work that always needs to take place just to ensure that that data is ready for the calculations. So, in our experience, sometimes hours, you know, may not be pulling through as you anticipate. And that might be because the way your payroll configuration is set up, it doesn’t require you, as an organisation, to note down exact hours.

So, a sense check and a quality check in terms of that data that’s coming out is really important, we find. And there’s lots of brilliant software products available that link with your payroll and offer you, you know, terrific gender pay gap solutions. But in our experience, they’re excellent at calculating your results automatically. But there’s still…a manual intervention is really useful, really needed, and a human pair of eyes on that data just to ensure it is accurate. A bit of a sanity check, if you like, of your data before you move to calculation.

And so, just looking at how we could reduce our gap, really important to think about. So, what could we do going forward? And what are organisations doing to try and improve things? Well, we’ve seen lots of organisations create action plans to improve their figures. The Government Equalities Office, the GEO, suggests actually just focusing in on two or three key interventions. So not over committing and under delivering, but actually making the absolute focus and commitment, just a couple of things. And in their research, it suggests that creating a flexible working culture can be really important in terms of increasing opportunities for everybody.

And the organisations that offer some sort of support or mentoring to those coming back from maternity can find that the retention is better of these individuals. And we get some enhanced progression of women throughout the business. We recently saw Diageo, very large organisation, offer men and women the same family leave options. And this is something quite a few organisations have experimented with. And that gives people the opportunity to access leave programs and be paid for them. It’s widely thought that family leave options for men, if we look at what’s statutory, often prevents them from taking leave and caring for children, which inevitably means, in some relationships, that we have lots of women undertaking that role, because it’s more financially beneficial.

So, a change of commitment from the organisation in terms of making it an option is quite important and creating a sort of more equal inclusive culture. And then something else that GEO referenced in their research is focusing on skills-based interviewing. So, paying for the role, rather than actually asking someone what their salary was. That’s a good way of tackling bias in any sort of recruitment process. And then, some organisations choose to set themselves targets for having representation at a senior level. And this can be really excellent in terms of demonstrating your commitment to the gender pay gap. Promising in the future how many senior females you would like to have on your board, for example.

And companies with very well-structured pay banding, grades, or even just job families, can find themselves in a really strong position when calculating their gender pay gap. Even if they have a gap, even if those organisations, you know, are showing a disparity, they’re able to justify it more clearly than others by referencing these really good HR practices that have been in place. And we’ve got a lot of companies now also paying attention in that area, thinking about, “Okay, well, how can I dedicate resource to looking at my reward strategy?” And we’re seeing more companies have more dedicated remuneration committees, for example, where there is an HR presence. It all tells a very good story.

And there are lots of great stories. We see them in the gender pay gap narrative that we look at. And these success stories actually help to create really positive role models of what it’s like to be in management as a woman. And that helps to provide, you know, an insight and access for other people. And it can be really helpful also, we should say, have a male figure who’s also demonstrating commitment to this and pushing for some sort of change.

Cathryn: Fantastic. Thanks very much. I’m just going to jump in here with our second poll now. Do you publish a narrative alongside your gender pay gap report? Just one of the options please. So, select, yes, not yet but you [inaudible 00:27:15] for 2020. No, but you’re thinking about it for 2020. No, and you aren’t coming to do so. Kerri and Frankie, in your experience, what kind of proportion of the organisations are publishing a narrative alongside their reports?

Kerri: It really varies, Cathryn. For some organisations, it is a bit of a tick box exercise, you know, we just want to post our figures that fit…that’s at one end of the spectrum. At the other end of the spectrum, we’ve got organisations where we’ll have weekly meetings or monthly discussions about the figures, what they mean, how should we present them? And there’ll be task groups, you know, involved in terms of positioning. It varies massively. Our advice is do write something though because it helps provide context.

Cathryn: Yeah, absolutely. And thanks very much. So, I’m going to close and share the results now. So, again, some great comfort from our audience today. So, 64% of you said that you are publishing a narrative alongside your reports. And a further 11% are planning to do so next year. And that further 21% say that you’re considering it for next year. So, as Kerri just said, it’s really recommended as giving some context to your figures. And just the 3% who are not planning to do so, perhaps we might change your mind by the time we’re finished today. Okay, just going to hand over to Kerri and Frankie for a couple more slides and then we’re going to dive into your questions. We are getting a few through already. And do send them through using the question option on your screen and we’ll tackle them all at the end.

Kerri: Okay. So, this is a quote from Victoria Atkins, who’s the minister for women. She’s recently spoken out in Parliament about how the government is supporting businesses to diagnose the causes behind the gender pay gap. She discusses how the government appreciates you can’t necessarily change the structure and the makeup of your organisation overnight. But she emphasizes that government’s priority is to see organisations taking the right actions to support change in this area.

Okay, so what’s next for gender pay gap reporting? At the moment, there are no formal plans to extend reporting out to smaller companies. However, we do work with some smaller organisations with under 250 employees who are running gender pay gap calculations. This can provide vital insight into workplace diversity and inclusion. And organisations that are approaching this threshold with plans for growth may like to consider the benefits of running the calculations ahead of having to actually comply once they’re large enough, allowing them to undertake actions ahead of having to publish figures.

There have been debate about mandatory gender pay gap action plans, which will accompany the figures, but we are yet to have definitive instruction on this. However, it is best practice to state the types of actions the company is planning to take to address the gap. So, the poll results are demonstrating that that’s what organisations are doing, which is great news. If you do not currently have an action plan in place, the GEO have some helpful potential solutions for you to look at. This can include, including multiple women in shortlists. Using skill-based assessment tasks in recruitment and promotion in decision making. Encouraging salary negotiation by showing salary ranges, although this may not be applicable for all organisations. Introduce transparency, cooperation, pay and award processes. And appoint diversity managers and/or a diversity task force.

There is growing reason to think that the government will be analysing how companies have closed their gaps at the three-year anniversary of the legislation, should have provided companies with enough time to begin to improve their gaps. Calls have been made for improved guidance and a simpler calculation method from the government. As [inaudible 00:30:54] done, there is a fair amount of judgment calls and grey areas resulting in companies making discretionary calls in terms of how to treat certain aspects of their calculation and their awards strategies. This may affect those especially with overly complex pay structures and pay components.

Currently, the calculations are presented in percentages but there has been some discussion about whether this could be changed to include or to be replaced by the actual value in monetary terms. At this stage, it remains unlikely that this would occur as it would impact comparisons across years. However, it has been presented as a possibility.

Frankie: So just a quick look to the future then in terms of what comes next. And we’ll just run very, very quickly over a couple of things that are either being consulted on at the moment or being talked about by government and various think bodies.

Kerri: Okay. So firstly, we’ve got ethnicity pay gap reporting. This has been a hot topic recently as the consultations close in January 2019. There are a number of issues relating to this in terms of the challenges on how to report when there is no legal obligations individuals display in this area. We do typically see, “I prefer not to say” option on equal opportunity forms so this may present a difficulty. There’s been a lot of deliberation of how this will be reported, as there are different categories and classifications, various standard ONS classifications. Some employers have expressed concerns about how they would go about collecting this data and whether or not it is too intrusive. We remain to see what legislation materializes in this area.

We’ve also got the executive pay gap reporting coming up. There’s a new legislation that’s been brought in for companies to report on exec pay, so companies with more than 250 employees in a financial year. This is only for companies quoted on the stock exchange. So about 900 publicly listed companies will be affected by this in the UK. The reporting will… I mean, they have to divulge and justify the difference in exec pay with average annual pay for employees. The publishing of this starts in 2020 and there’s no government portal as per gender pay. It will form part of a company’s remuneration report.

And finally, we’ve got disability pay gap reporting. The TEC reports the disability pay gap was 15.2%. And it also worsens for those with mental illness such as depression. The gap for mental illness and depression is around 25% to 30%. There was a voluntary code released last year to gather information in this area. In our experience with employers, this has not yet widely been adopted. The benefits of reporting in this area can include setting an industry example, increased transparency, connecting with disabled customers and communities, and engaging in open conversation with employees to reach their full potential at work.

Cathryn: Fantastic. Thank you so much, Kerri and Frankie, for sharing your expertise. As I suspected, our audience have quite a lot of questions for you. So, we have about 10 minutes of our scheduled time at the moment. We’re going to try and answer as many of your questions in that time as possible. But if we’re not done, we might just run over a little bit. First, quite an interesting query here from Claire. Currently, employee numbers at her organisation are below 250, but they are likely to hit this number by May 2020. For what period do they need to report from, at this point? Would it be at that point or would it be May 2021? And she says, they may also dip below and above the 250 number for a period and would that matter? Quite a complex question there.

Frankie: Okay. So, if Claire’s organisation is below 200, it doesn’t have a reporting requirement right now. The important date that she needs to think about, if she’s in the private sector, is the 5th of April. So, when does she hit 250 because that’s the snapshot day. So, if she hasn’t hit it already, she won’t have a reporting requirement for 2020. If she’s saying by May 2020, she’s going to get 250, and she still has 250 by the following April, so the 5th of April 2020, then actually that’s when her reporting requirement will start. So, it’s the all important, what’s your employee numbers on the snapshot date? So, you can fluctuate in between that but what the government asks us to do and the legislation insists upon, is that we look at our employee numbers on the 5th of April each year to assess whether or not we have a reporting requirement for the following year.

Cathryn: Okay, great. And Claire, hopefully, that answers your question. We have a similar question from Sue. Currently, her organisation is around the 240 number. However, do they need to include any agency workers they will have on their books on the 5th of April each year?

Frankie: No, they don’t. Agency workers belong to the agency. What I would say to these employers that are falling just below, the likelihood is, you know, you’re going to get there at some point, especially if you’ve got a great strategy. And therefore, you could consider running anyway because until you know what it is, you don’t know what you’re dealing with. And you could, you know, HR best practice put in some interventions or even just gain an understanding about what your pay structure looks like ahead of time. So, my advice would be, if you’re getting close to it, consider running it. And you might not…you won’t publish it because there’s no compliance requirement but, you know, information is key for you as an organisation.

Cathryn: Yeah, I think that’s really valuable advice. You kind of get into the rhythm and the habit of doing it, so that when it becomes a requirement, it’s not such a shock to the system, and you know what you’re doing.

Frankie: Exactly.

Cathryn: We have a couple of questions from Natasha around the payments that count under bonuses. And she asked, how would you categorize a bonus? And they actually have a large casual workforce which means they process time sheets for hours. However, they also process additional ad hoc payments, which covers payments for incentive schemes. Will those kind of schemes need to be included in gender pay gap reports?

Kerri: [inaudible 00:37:37] everything that’s for performance, productivity, incentive pay [inaudible 00:37:45] the bonus. So that is not called bonus, doesn’t mean it won’t fall into the category of bonus as there’s quite a broad description that we get from Acas and the legislation on that. Also, elements such as first aid and health and safety come from [inaudible 00:38:02] allowances, but they can also sometimes be bonuses, it depends in what manner they’re paid. So those sorts of elements, we tend to look at more closely, check whether they fall under the classification or not.

Cathryn: Okay, great. And I have a related question from Rebecca. She asked, “Does overtime need to be included in the calculations?”

Kerri: No. No overtime is included at all in any of the calculations. It can be completely excluded.

Cathryn: Okay, great. Nice [inaudible 00:38:30] there, Rebecca. And we touched on the numbers of employees that you would have in your organisation on the snapshot date. So, Sarah has some piecework employees who are paid a high hourly rate that don’t work every month. Does she just need to report on those who work in April or should they take an average over the year for all of them?

Frankie: Yeah, the question Sarah needs to ask herself is, are they employed in that snapshot period? And are they being paid in that period? And if they are, she’ll need to calculate them. If they are piece workers, casual workers, and they’re getting variable hours and variable pay, there’s a requirement in the legislation to go back a bit further and work out an average. So, my advice would be take advice professionally in terms of how to do that, or go on the Acas website and pick up the really helpful guidance notes that they provide as there is a requirement to go back a bit further for those individuals sometimes.

Cathryn: Okay, thanks very much. And Jack who’s also watching had a similar question around casual and hourly paid staff. Should they include everyone who worked within the last 12 months, or just those who remain working with us at the time of the report? And it feels like the same advice applies in that case too.

Kerri: Exactly right, Cathryn. It’s that all important snapshot pay period. What’s going on in that month? Who’s being paid? That’s what we need to look at. And it’s not surprising that there’s lots of questions about casual workers. It often gets us sort of scratching our heads as well, what to do with certain people and how to treat it. Because those arrangements are often a lot more complex than, you know, for those monthly salaried workers. So, anyone grappling with that, we do feel your pain.

Cathryn: Yeah, I think there are quite a few people on the broadcast who are in that kind of boat. We’ve got other questions coming in around contractors and temp workers, casual staff, people classified into IO35. Are all these people pulling under the employee numbers? Seek advice, seek expertise. I don’t think we’re going to be able to solve that for you for definite on today’s webinar.

Kerri: No, definitely, not Cathryn. Because employee status is another great big topic, isn’t it, in terms of, who’s classified as an employee? Although, I think I can say the legislation [inaudible 00:41:04] you to report anyone who is employed. So, you know, who’s running through your payroll, e.t.c. So, you should say, expert advice on those categorizations, if you’re not sure whether or not to include them, is essential.

Cathryn: Great. And just one more question on this before I close this kind of portion of the Q&A. And Adrian asked, “Should apprentices who are paid on a snapshot date be included?”

Kerri: Yes, they will be included. They will be running through your payroll. They are employed under their contract. So yes, they will be included in the calculation.

Cathryn: Okay, fantastic. Just got time for some more sort of general questions around pay gap reporting itself, whether it’s effective, whether it’s the right thing to be doing. And Ruth asked, “What can companies do to encourage employees to take up the shared parental leave to alleviate the career penalty for women who have children? It seems that this is a large contributor to gender pay gaps, because it’s slow uptake so far.”

Frankie: Yeah, I think, you know, if you look at companies like Diageo and many others, they recognize that shared parental leave is available, but it’s not available on an equal playing field for people. So, if you’re offering it, you say, “Oh, but you won’t get paid, or you’ll only get paid statutory paternity or family leave.” Then people are going to be reluctant and find it difficult to take that. So, by offering it at an enhanced rate, an equalizing map between men and women in your organisation, you’re actually helping the issue alone. Because lots of gender pay, you know, if we get into the context away from the minutia of the calculations, it’s a societal issue as well. So, it’s a big sea change that we’re sort of looking towards. So yeah, equalizing shared parental leave could help.

Cathryn: Okay, fantastic. We have another question from Renata who asked, “With variances on gender and not just male, female in terms of non-binary, or gender fluid people, what measures have the government put in place in terms of companies reporting on this? Or what approach should companies take regarding reporting on these members of staff?”

Kerri: And there are no…we talked a little bit, didn’t we, about what comes next. And the next focus for the government will be ethnicity, is ethnicity, hence the consultation paper. But we’re still deliberating over how that would work in practice. I think [inaudible 00:43:46] is a priority for the government working out, you know, who’s paid at the top versus what the average is. And as Frankie said, we probably think in terms of sort of thought bodies on this and thought leadership would be disability in the focus. But we haven’t got any other information on any other types of areas to be looking at yet. So, our advice is, if you’re wanting to move to the next level, then it’s to be explored. But perhaps ethnicity is something to review because the likelihood is that consultation will work its way through, and we’ll get more advice on that, we think, going forward.

Cathryn: Okay, great. And I have a couple more questions on who’s in and who’s out of the gender pay gap reporting, so to speak. And Vicky asked if we must include non-executive roles in gender pay gap reports?

Kerri: We get asked this a lot. This comes up a lot. And if they’re being run through your payroll, and they’re on a contract of employment, and they’re carrying out work personally to do the job on the snapshot, then yes, they need to go in.

Cathryn: Okay, great. I had a couple of questions about people with…who are working in international organisations with more than 250 employees, but they only have a proportion of that, less than 250 within the UK, do they have to report their numbers?

Kerri: No, this is a UK piece of legislation. The only bit to be careful of is the condiment. So for those types of organisations, if people are…if there’s complex working arrangements, and they feel like they’re getting close to that 250, and they’re unsure about some of those types of arrangement, i.e., they’re sending a lot of people around the world, they might want to take a legal view on that.

Cathryn: I have a couple of questions about car allowances and phone allowances. Are they included in the pay reports?

Kerri: Allowances are included in the pay calculation. So typically, anything that is referring to as an allowance, so yes, car allowances, shift premium pays, any sort of other types of payment like that will be included. So typically, we do find, yes, anything with the word allowance in as an element will be included.

Cathryn: Okay, fantastic. And I have an interesting question from Molly here. She asked, “Is there any guidance on how to work out…” Oh, no, sorry, the question is not what I thought it was. I thought she wants to know how to become qualified in gender pay gap reporting. But I think she’s asking how you actually do the calculations. We have a couple of people asking exactly how you work out each of the figures. And I don’t think that’s…answering it in this scenario is probably not going to be the most effective way of demonstrating that.

Kerri: No, it’s too complex. Yes, so it’s so difficult. You know, I would suggest either talk to your payroll provider or your software company…your payroll software company or your HR software company for support because most people on the call are going to…probably have those outsourced providers. They will be able to be your starting point, if you like.

Cathryn: Yeah, absolutely. And just to mention, again, CIPHR has a tool within it, which facilitates the reporting on gender pay gap calculations. And as Kerri and Frankie rightly said, it always needs a human eye but it can be that first step in producing output for you to review and then you can go and check the quality of your data linking through with payroll, such as RSM’s payroll. And so, if you want to find out more about the tool that we offer through our HR system, either check the box as you exit the webinar, or just write in your question box to me now, “Yes, I want to know more” and I will pass that to somebody who can get in touch with you to show you how that works.

And I think that’s come to the end of our time for questions today. Thank you so much Kerri and Frankie for sharing your expertise. Definitely much needed. Loads of queries still coming in from our audience about doing this, even though we’re a couple of years down the line. If you want to find out more about how RSM can help you with gender pay gap calculations or other aspects of HR, again, just check that survey as you exit the webinar to say that you want to find out more information, and a member of our team will be in touch with you. We appreciate your attendance today and being so engaged in our question and answer session. And we hope to see you again for another CIPHR webinar soon. Thanks very much. Bye.

Kerri: Thanks a lot.

Frankie: Thank you.

Kerri Constable and Frankie Davis from RSM join CIPHR’s Cathryn Newbery to explore lessons learned from gender pay gap reporting so far, how to improve the quality of your reports, and what other pay reports might become mandatory in the future.

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