Your guide to pay gap reporting: explanations, calculations and insights from our pay gap legislation specialists. We hope you find this useful, but if you want to ask us something that's not covered, then please get in touch.
To help you understand the major terms associated with pay gap legislation, analysis and statistics, we have created this guide to pay gap reporting with links to supporting documentation. We are in the process of converting our complete knowledge base into a searchable resource on it’s own page, but in the meantime these terms can be explored.
This is the Advisory, Conciliation and Arbitration Service.
They work with millions of employees and employers every year to improve workplace relationships.
ACAS (in conjunction with the GEO) have produced detailed guidance on GPG reporting.
The acronym stands for Black, Asian and Minority Ethnic and is defined as all ethnic groups except White ethnic groups. It does not relate to country origin or affiliation.
Benefit in Kind
Non-cash benefits not usually included in wages and usually found in the form of ‘perks’ or ‘fringe benefits’ for example company cars or private medical insurance. These are also excluded from the calculations.
There are two different types of bonus according to the GPG Legislation:
- Bonuses paid as part of an employee’s pay within the Relevant Pay Period; and
- Bonuses paid within the Relevant Bonus Period.
These are two very different bonuses. For example: Snapshot Date = 5 April 2018 – Jane is paid £17,000 in her April payroll – £5,000 Ordinary pay and a £12,000 bonus for her performance during the last 12 months. This is used to determine Gender Pay Gap and NOT Gender Bonus Gap.
The Equality Act 2010 defines this as: Employees (those working under a contract of employment), workers & agency workers (those with a contract to do work or provide services) & some self-employed people (where they have to personally perform the work).
This concerns the pay differences between men and women who carry out the same or equivalent work. It is unlawful, under The Equality Act 2010, to pay people unequally because of their gender and/or other protected characteristics.
Ethnicity Pay Gap (EPG)
This is the pay gap between White and other ethnic groups in a sector, organisation or function.
There is no legislation covering this at present.
Full-pay Relevant Employee
Any Relevant Employee who is paid their usual full basic pay (or pay for piecework) during the Relevant Pay Period. If they are paid less due to leave they do not meet the criteria; If however, they are paid less for reasons other than Leave (i.e. being on strike) then they are counted.
Gender Bonus Gap (GBG)
This is exactly the same methodology as gender pay gap, but it uses pay data from bonuses paid in the 12 month period ending with the Snapshot Date.
Gender Pay Gap (GPG)
This is the difference between the average (or middle) man and woman. The values for each can be calculated by either adding up every man or woman’s pay and dividing it by the number of men/women (Mean); or it can be calculated by ranking all the men/women in order from highest pay to lowest pay then choosing the middle person in each list (Median). The gender pay gap can be described as either (a) a percentage or by (b) a more intuitive description of the relationship between the two values. To calculate (a) the legislation says to use the formula: (male-female)/male where male and female are the average pay values described above.
Gender Pay Gap Report
This is the report required by the legislation. As a minimum it should contain:
- gender pay gap (median and mean)
- pay quarter figures
- bonus gap (median and mean)*
- percentages of men and women who received a bonus*
- signed declaration stating that the above figures are thought to be accurate (not required for Public Sector)
* if bonuses are paid during the Relevant Bonus Period
Any loan from an employer to an employee such as season ticket loan are not included in the calculations.
This includes: Annual leave, maternity, paternity, adoption, parental or shared parental leave, sick leave, special leave and any other form of leave (e.g. study leave or sabbaticals).
This stands for Limited Liability Partnership. These types of organisations are typically associated with legal firms.
This is the sum of all values divided by the total number of values. The Mean can be heavily affected by employees who earn either a lot more or a lot less than most. i.e. a CEO who earns 10x the normal wage will increase the mean average pay when looking at all employees.
This is calculated by listing all employees in order from highest to lowest paid and picking the value which is physically in the middle of the list. The median is not affected by a few employees who get considerably more or less than the majority.
This includes elements of basic pay, allowances, pay for piecework, pay for leave and shift premium pay. It only includes money payments, so anything that is not money (such as benefits in kind or securities) is excluded. Gross amounts should be used after Salary Sacrifice.
For the purposes of Gender Pay Gap Legislation, this is an employee who would expect to receive performance/profit-related remuneration rather than a salary. Think of partners of in law firm, accounting firm or a professional services organisation who are not under a normal contract of employment, but whom receive a share of the profits of the organisation.
For the purposes of the legislation a Pay Quarter is one of four pots into which each employee must be placed. This is accomplished by:
- listing every employee from highest to lowest paid; then
- Identifying the middle of the list; then
- further identifying the middle of the two lists formed above and below the middle
The result is four pots each containing 25% of the Full-pay Relevant Employees. Insights can then be drawn about the ratio of men and women in each of the four pot vs the overall ratio.
For example, to have a 0% median pay gap, you would expect to find the same ratio of men and women in each of the four pots as well as in the overall ratio.
Relevant Bonus Period
This period is 12 months long ending with the current Snapshot Date. So: Private & third sector = 6 April – 5 April in same year as Snapshot Date | Public sector = 1 April – 31 March in same year as Snapshot Date.
This is an Employee who is employed by the Relevant Employer on the Snapshot Date. This is the first level at which the employee population is filtered when determining those eligible to be featured in Gender Pay Gap Reports. A Relevant Employee cannot be a Partner of a Firm (i.e. LLP).
This is any employer who has 250 or more employees on a Snapshot Date.
Relevant Pay Period
Any period (usually a week, fortnight or month) during which the Relevant Employer pays the Relevant employee Ordinary pay and in which the Snapshot Date falls.
In practice, if an employee recieves Ordinary pay for the month of April and the employer is private sector then the Snapshot Date of 5th April is covered by this period and the conditions are met; for Public sector it's 31st of March, so this would most likely be the March payments and not April.
Usually an agreement between an employer and employee to change the terms and conditions of employment to reduce the employee’s entitlement to cash remuneration – usually in return for some form of non-cash ‘fringe benefit’, perk or benefit in kind that is not reflected in their salary or wages. Ordinary pay is calculated after any Salary sacrifice is taken off. Examples could be: Cycle to work; Childcare vouchers or even certain pension contributions.
This key date is the basis for many calculations: to be relevant an employee has to be employed on this date, the Relevant Pay Period must cover this day and it’s the date from which a Relevant Employer has one year to publish their Gender Pay Gap Report.
Stands for Science, Technology, Engineering & Maths - STEM subjects or occupations are areas whose core focus is in one of these four areas.
Term-time only employee
This is typically an employee who doesn’t work for every month of the year, but who gets paid in 12 equal instalments. Because of the missed months their adjusted hourly rate of pay would be lower because it would reflect a whole year and not the reduced period they were actually paid for. By supplying actual weeks worked and leave weeks paid for, the software calculates a representative adjusted hourly rate of pay.
The Equality Act 2010
This Act legally protects people from discrimination in the workplace and in wider society.
It replaced previous anti-discrimination laws with a single Act, making the law easier to understand and strengthening protection in some situations. It sets out the different ways in which it’s unlawful to treat someone.
Weekly working hours
These are the hours that an employee would normally work each week. If there is a contract of employement stating the weekly hours then this can be used for the calculations. If one does not exist then the Relevant Employer should use the hours each employee would normally work; however, if there is no pattern the last 12 weeks hours can be averaged. If no pattern can be derived then the employer must make an educated guess using a similar employee as a benchmark.
If an employee gets a set hourly rate then this can be used and the calculation need not be carried out. However, if this methodology is to be used then this specific employee cannot have any further pay modifications such as: Allowances; Salary Sacrifices; Bonuses paid in Relevant Pay Period.
Benchmark your data
If you would like to find out how your organisation, your peers and your broader sector has been performing with the gender pay gap legislation then please check out our web app.
We have created it to simplify the viewing and comparison of all reports submitted to the Government Equalities Office under the current UK legislation.