2020 marks 60 years since the Equal Pay Act became law in the UK, and 55 years since this law came into force. It was replaced by the Equalities Act 2010.

Despite this legislation having been around for over half a century, women are still paid less than men. What’s more, women of colour are even more likely to be paid less than men doing a comparable job.

Is it unfair? Absolutely. Is it easy to fix? It would seem not… just look at the many high-profile employers who have fallen foul of this legislation and have published a large gender pay gap.

In this article, we'll explain what the gender pay gap is, why SMEs should care as well as some practical steps you can take to tackle the common issue. 

What is the gender pay gap?

The gender pay gap – often abbreviated to GPG – is a calculation that shows the difference between average hourly earnings of men and women as a proportion of average hourly earnings of men.

It excludes overtime and measures all jobs in the UK. It is not a measure of the difference in pay between men and women doing the same job.

Since 2017, organisations employing over 250 employees must publish their gender pay gaps.

And it’s thanks to this that we’ve learnt the UK has one of the largest gender pay gaps in Europe.

At a staggering 17.3%, for each 40-hour week a woman works, she’s giving – on average – nearly seven hours of work for free to her employers.

Currently, SMEs do not need to publish their gender pay gap. Because of this, it’s easy to assume that shrinking your gender pay gap is not necessary if you run or manage an SME.

But that couldn’t be further from the truth.

Why is the gender pay gap an issue for small businesses?

Currently, businesses with fewer than 250 employees don't need to publish their gender pay gap.

While this means you’ll avoid the admin involved in calculating and logging any gender pay gap, your small business will still suffer if you have a gender pay gap. Here’s why:

  • You may be breaching equal pay laws. If it’s proven that you pay a woman less than a man for an equivalent role, you'll face fines. You will also need to compensate your employee for lost earnings. What’s more, this can open the floodgates for claims from other employees.

  • You’ll see lower performance. Studies have repeatedly shown a business is more successful if it has higher numbers of women in management roles. If you’re paying the women in your organisation less and do less to promote them to senior roles, you’ll pay the price with your profitability.

  • Poor retention. Women leave roles for the same reasons that men do – if they can do a similar job for more pay elsewhere, why wouldn’t they?

  • A toxic culture. A toxic culture thrives in businesses that discriminate between their staff. What’s more, a culture of pay secrecy is shorthand for telling employees they’re not being paid equally.

  • A weaker employer brand. Gender disparity and pay secrecy is bad news if you want to attract new employees. Tools such as Glassdoor make it impossible for you to hide disgruntled employees. And this makes it difficult to hire the bright new talent you need to grow your business.

How can small businesses tackle the gender pay gap?

Commit to take on the gender pay gap and you will benefit your business in the long term. But it’s not easy, especially if you have limited HR support. Fortunately, there is a list of things you can do to help steer your business in a more equal direction. Here are our recommendations:

Prioritise equality

The gender pay gap is a consequence of inequality. Make equality a priority within your business, and you set the ground for fairer pay and a more inclusive culture. And as we’ve seen time and time again, businesses who are more inclusive are more successful.

Monitor and measure pay data

Don’t guess or assume your gender pay gap data; measure it. Using a cloud-based HR tool will let you spot trends and track metrics without cumbersome spreadsheets. You can use this data to identify areas for improvement and to publish your gender pay gap, which leads nicely onto our next point…

Publish your Gender pay gap data

While there’s no obligation for SMEs to publish their gender pay gap, doing so sends out an important signal that you are committed to improving it. Don’t think that publishing your information is the end of the story. Publish a gender pay gap action plan at the same time to show how you will address any gaps in your business.

Get professional support

Minimising your gender pay gap isn’t a quick task – and for some industries it can be especially challenging. If you don’t have the benefit of a large HR team, getting professional support will make the task much easier. The Breathe HR Partner network is a good place to start; you're sure to discover a friendly and helpful HR consultant within a stone's throw of wherever you're based. 

Or, you may prefer to reach out to bodies such as the Fawcett Society or Close the Gap. Both have resources and guidance to help you tackle the gender pay gap successfully.

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