In a nutshell
The Gender Pay Gap is a measure of the difference between male and female employees average hourly earnings. It is expressed as a percentage of male earnings.
This is different to the statutory duty to pay equal pay for equal work under the Equal Pay Act. It is a more complex issue. It compares pay among a whole workforce, regardless of the type or level of work they do.
Taking positive action to reduce the gap in overall pay between men and women – as well as improving gender equality in the workplace – is beneficial to your business. It ensures you attract and retain the best talent, giving you better opportunities for innovation and greater diversity of thought. Increasing the gender balance in leadership roles can have a range of benefits, including better decision making, improved performance and higher profitability.
What's the business benefit?
- Competitive Advantage through increased productivity and profitability;
- Reputational Advantage, as both potential employees and customers look to the performance on gender pay gap of the business they choose to work with or patronise;
- Motivated & Productive Workforce as employees feel valued and more committed, which reduces turnover and recruitment costs;
- Strong Corporate Performance since businesses with gender-balanced boards can see a greater return on investment and total shareholder return.
Why is this included in the Scottish Business Pledge?
In an increasingly complex business environment, harnessing the talent of a gender-balanced workforce will help you adapt and survive in constantly changing environments.
In a small country like Scotland, it also means we’re all making the best use of the talents and experience of our people. And that’s good for business.
Find out if you're ready to make your Scottish Business PledgeCheck here
Why is this good for Scotland?
Research has shown that narrowing the gender pay gap could contribute up to £17.2 billion to the Scottish economy.
Taking steps to improve gender equality will support women to reach their potential. This not only benefits the individual, but also businesses who are able to tap into under-utilised female talent.
By supporting women to participate in the workplace on an equal basis to men, businesses become more productive and more profitable, which in turn contributes to Scotland’s sustainable economic growth.
What should I do now?
We will recognise your Business Pledge if you are taking actions and putting in place progressive policies and practices to address the gender pay gap in your business. These are:
- Calculating your gender pay gap using the calculation:
A is the mean hourly rate of pay of all male full-par relevant employees; and
B is the mean hourly rate of pay of all female full-pay relevant employees
- Commit to understanding any identified gap, and
- Commit to drafting a plan of action to consider what actions you may take over time, dependent on the number of employees your business has, as noted below:
- Over 250+ workers – you will be complying with the legal requirements on equal pay, and the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 by reporting your gender pay gap. We will recognise your Business Pledge if your business also commits to publishing an action plan to address any identified gender pay gaps.
- 50-249 workers – in addition to meeting legal requirements on equal pay, you will have initiated data collection on your workforce composition, and we will recognise your Business Pledge if you commit to identifying any gender pay gaps, explaining the causes and producing an action plan to address these within 12 months from making your commitment.
- less than 50 workers – in addition to meeting the legal requirements on equal pay, you will have initiated data collection on your workforce composition, and we will recognise your Business Pledge if you commit to identifying any gender pay gaps, explaining the causes and producing a plan of actions within 18 months from making your commitment.
If you are a business with over 250 employees you should also be reporting your gender pay gap on the UK Government portal to comply with the regulations.
Having the full picture on your workforce composition will help you to develop actions to address your gender pay gap and take steps where it’s most likely to achieve results.
Every business is different, and potential actions range from simple, to more long-term work. Example actions include:
- introducing a flexible working policy;
- ensuring that everyone has equal access to training and development opportunities;
- reviewing recruitment and promotion processes;
- making changes to how you support employees through pregnancy and maternity.
To take the most effective action for your business, you could complete the Think Business, Think Equality toolkit that could help you to assess any areas in which there is opportunity to improve workplace policies.
For more information see the FAQ.
What help is available if I can't make the commitment right now?
Close Your Gap is a free online tool, developed by Close the Gap, which supports businesses to calculate their pay gap and provides businesses with tailored advice and guidance which identifies small changes that can be made to help reduce pay gaps.
You can get information and advice on board diversity from Changing the Chemistry.