Key takeaways learnt from last two years’ reporting in advance of 2024 requirements.
Now that the dust has settled on the second year of mandatory Gender Pay Gap (GPG) reporting, and with the reporting threshold due to expand to organisations of 150 or more employees in 2024, now is the optimal time for organisations to review the key takeaways from the first two years of reporting with a view to improving calculation practices for those who have already reported and to assist those preparing to report for the first time in 2024.
Clarification on bonus pay
For organisations that pay bonuses to their employees, interpretation of the guidance around how to report bonus pay during the GPG reporting period has proved challenging. The guidance states that where an employee receives bonuses and the bonus period is not the same as the reporting period being used for the calculation (e.g. July to June), then only bonus pay relevant to the twelve-month reference period should be included. If a bonus is paid within the twelve-month period but includes a payment in respect of a period of time greater than twelve months, that element should be excluded.
For example, where a bonus is paid in December for the period January-December (€12,000 for example), only payment for July-December (€6,000) of that year would be included according to this interpretation. However, bonus pay from January-June would not be included in this year’s GPG calculation, nor would it be captured in the following year’s calculation, representing a continuous gap in reporting bonus pay if this approach were to be utilised.
However, the legislation provides a more accurate, robust and fair approach to calculating bonus pay whereby the bonus pay within the reporting period of (e.g. July-December, €6,000) should be divided by the length of the bonus period (182.5 days) and multiplied by the length of the relevant pay period (365 days), equating to €12,000 i.e. the full bonus amount paid in December.
The importance of narrative
One of the key lessons organisations must learn from the first two years of reporting is the importance of contextualizing their GPG data and building a narrative to explain their position. While a reporting system is expected to be introduced in the future which will standardise GPG reports in a central database comparable to the UK’s GPG reporting website, the absence of this system for 2022 and 2023 has resulted in organisations having the freedom to determine their own GPG reporting structure.
To be considered a leader in EDI, organisations must demonstrate clear and considered actions to address their gap. For the past two years, many organisations simply provided the minimum legislative requirements. In contrast, those who have been able to provide detailed context and narrative on their GPG data have been able to stand out amongst their peers and comparators as a champion of EDI in their sector or industry. To achieve this, organisations must understand the employee lifecycle within their firm, including the barriers that exist for women in the workplace, as well as identify what has already been done to address these barriers and what is planned to address gender representation issues in the forthcoming period.
Furthermore, contextualising GPG data enables organisations operating in sectors or industries with historic gender representation challenges to demonstrate that whilst they are taking appropriate action to improve GPG at a local level, further progress is needed at a sectoral or industry level to achieve balanced gender representation.
For organisations entering their third year of reporting in 2024, there is an increasing opportunity year-on-year for organisations to benchmark their own GPG progress. Many organisations choose to report against the minimum requirements, and while they are compliant, they are missing an opportunity to demonstrate if their GPG has reduced from the previous year and if so, outline what has driven this change.
Organisations who have capitalised on this opportunity have been able to demonstrate to the public, including prospective employees, that GPG and wider EDI are issues management are taking seriously and have taken demonstrable action to further improve their EDI frameworks over time. By comparison, those reporting on the minimum requirements are not able to express the positive work and actions they may have delivered. Demonstrating such progress can also be beneficial internally, with employees getting a better understanding of what their employer is doing to enhance EDI whilst also recognising and publicising the positive work delivered by EDI champions, committees and resources.
GPG figures tend to be slow to change over time, however, the more data that becomes available year-on-year, the more employers will be able to demonstrate the positive journey they are on in improving gender equality in their organisation.
One of the most common pitfalls arising in both 2023 and 2024 is organisations initiating the calculation process too close to the reporting deadline. The legislation provides a deadline of December, however, the data for that reporting period will be fully available to employers from 1 July at the latest, meaning that proactive organisations have nearly six months to analyse their data and prepare a report. This lead-in time is significant compared to other types of organisational reporting and is not being taken advantage of by employers.
In our experience, too many organisations are beginning their GPG analysis and report too close to the December deadline. This puts unnecessary pressure on completing the report in time, with many organisations therefore happy to just meet the minimum legislative requirements rather than taking the time to robustly assess and understand their data and produce a detailed report with a detailed narrative and summary of the progress made from the previous year(s).
With six months until the reporting deadline, organisations have plenty of time to get ahead, analyse and understand their data and develop stronger GPG reports that fully articulate the EDI journey the organisation has been on, highlighting the progress made over the previous twelve months.
How can we help?
Mazars has been supporting organisations across the public, private and not-for-profit sectors with GPG reporting since 2018, four years prior to the introduction of mandatory reporting. During this time, we have supported our clients through a variety of different solutions, from running GPG calculations on their behalf, validating GPG figures for previous years, providing advice, guidance and training on how to calculate GPG, as well as reviewing and designing practices, activities, frameworks and strategies to address GPG and wider EDI.
Should you require any support, advice or guidance with your GPG calculation for 2024, please do not hesitate to get in touch with a member of the People Consulting team in Mazars.