Why must employers base Gender Pay Reporting on pay after salary sacrifice deductions?
The legislation says that employers must base Gender Pay Reporting on pay after Salary Sacrifice deductions. This is not going down well with some employers who say it is easier to for employers to base it off gross salary, and fairer because it does not impact any decisions taken by employees to sacrifice pay or bonuses.
Frustration is is also rife in connection to bonus calculations under the legislation.
A few of the many comments on a LinkedIn discussion thread include:
“In my opinion I think it should be based off of Gross Salary as this is easier for employers to get hold of and is an even playing field as the company doesn't impact employee's decisions on sacrificing salary or not, but does impact the gross pay decision. I have contacted .gov.uk and they are pretty clear it is the amount after sal sac that should be used saying this is the easier figure to get hold of (it could be depending on how payroll and reporting is set up) and creates an even field for the analysis. I tend to disagree but wanted to see what ... thoughts might be on this. A few organisations I've spoken to based their analysis on the gross pay figure before and only realised it should be after sal sac when I mentioned it, which also leads me to believe that some organisations may well have already submitted based on the wrong data!”
“I too questioned this with them as it seems counter intuitive to use a figure which is not in the control of the employer. They couldn't explain to me why it had to be this figure and my explanation of how it would create 'non correct' reporting was met with an 'oh'. I even explained that the figures would be skewed because people salary sacrifice for things the government wants them to do - namely childcare and pensions - and that companies could be discouraged from offering if it made their figures looked bad but they weren't budging ! I really hope they see sense and revise - if this is about discovering / remedying pay gaps we should be measuring pay gaps not lifestyle or benefit decisions!”
“It was a concern for me too and something that I have highlighted in our (draft) narrative. Considering that the majority of staff in our organisation taking advantage of childcare vouchers are woman it could skew the numbers. The volume of employees we have it wont have much of an impact on the hourly rates for the calculations but I'd imagine in a small employer it really could.”
“I'm certain that there are a lot of organisations who have calculated the figures incorrectly. XpertHR has a gender pay gap reporting service and there are a number of organisations who ran their own analysis alongside ours only to find that their internal analysis was incorrect because they didn't correctly interpret and apply the legislation to their organisation or due to including or excluding the wrong individuals. There are lots of easy mistakes to make with this type of analysis and the repercussions can be significant.”
"I do agree that at the lower salary levels (esp with p/t retruners etc) more women than men take childcare vouchers for example. The other biggie which seems totally inconsistent and unhelpful to me is the way that bonus payments are reported - you can't pro-rate them for part-time like Ordinary Pay, which means that even if a man and woman get the same percentage bonus payment - if the woman works 4 days a week, her bonus will be lower. This is only adding to the bonus gap in most organsiations - far bigger than the base pay gap but is distorted by the calculation method. Personally, I think the dept gave the drafting of the regs to someone on work experience."
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