20% of large UK employers fail to conduct mandatory gender pay gap analysis

Despite legal obligations, a recent study reveals that 20% of large UK employers have neglected to conduct gender pay gap (GPG) assessments in the past year.

The research, a collaboration between the Chartered Institute of Personnel and Development (CIPD) and ADP, surveyed 832 decision-makers in businesses, uncovering that 17% of companies with a workforce of 250 or more—the threshold for mandatory GPG reporting—failed to analyze their pay disparities from October 2022 to October 2023.

Interestingly, companies with 250 to 499 employees were the least likely to comply, with 29% admitting to skipping GPG reporting within the same timeframe, as highlighted in the 2024 Pay Performance and Transparency Report.

Meanwhile, 79% of smaller organizations, which fall below the compulsory reporting size, also did not conduct GPG analyses, although they are not mandated by law to do so.

With the reporting deadlines for the 2023-24 GPG looming—March 30 for public sector entities and April 4 for private sector organizations—the findings stress the need for enhanced pay transparency.

The report advocates for businesses to be more open about pay scales and the variation of pay across different protected characteristics, including ethnicity, both internally with employees and externally.

Of the organizations surveyed, 44% had conducted a gender pay gap analysis in the past year. Additionally, 32% performed an equal pay audit, and 28% generated an ethnicity pay report.

Charles Cotton, the CIPD’s Senior Reward Advisor, emphasizes the importance of measuring and managing pay disparities, urging employers to not only calculate but understand and address the reasons behind their gender pay gaps.

The report also sheds light on the practices of large versus smaller firms and public versus private sector organizations in conducting equal pay audits and analyzing ethnicity pay gaps.

It highlights the challenges and barriers to conducting such analyses, especially concerning ethnicity and disability pay gaps, and suggests actions for improvement, including enhanced communication about pay and benefits, publishing pay information in job adverts, and exploring more flexible payment methods.

Sirsha Haldar, ADP’s General Manager for the UK, Ireland, and South Africa, calls for employers to utilize accurate payroll system indicators for identifying pay disparities.

Haldar emphasizes the importance of addressing pay gaps to prevent negative impacts on employee morale, loyalty, and the company’s reputation, especially among younger generations who value pay equality.

The report also advises on balancing transparency and confidentiality in sharing salary information to foster trust and collaboration within teams.

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