Guest Post: Gapsquare's view on salary sacrifice and the gender pay gap

To round off #NationalPayrollWeek our friends over at Gapsquare have provided us with this insight piece on the impact of Salary Sacrifice Benefits when it comes to calculating your gender pay gap, as well as some suggestions for how to balance closing the gender pay gap with providing these valuable employee benefits.

Salary Sacrifice Schemes - Why It Matters That Men Are Not Taking Up Childcare Vouchers

You’ve got it sussed, your salary sacrifice schemes are in place and having an impact on wellbeing and retention, your childcare vouchers have a high uptake rate, your cycle to work scheme is weaving through traffic and your pension plans are up-to-date. But there’s a piece missing in this puzzle – you’ve forgotten to think about how all these amazing schemes will impact the gender pay gap.

The Gender Pay Gap Regulations came into force in the UK in April 2017 and required all private and voluntary-sector employers with 250 or more employees to publish data on their gender pay gap. Though this has been positive step to tackling inequality in the workplace the regulations still have some way to go when it comes to looking at diversity and inclusion. You might have come across the fact that the regulations require you to report ‘after any deductions for salary sacrifice’. This omission from the regulations, whilst it initially seems harmless, is something that we should be considering as we talk about lowering the pay gap in our companies.

What’s the Problem?

Under the current gender pay gap regulations employees who take up your salary sacrifice options will be considered to have lower remuneration rates than they would have without them. Your salary sacrifice savvy employees are going to shift your pay gap numbers when their data is analysed alongside those employees who do not take up salary sacrifice schemes. This means you need to think about how these schemes can have a wider impact on your data - because if your schemes are not being taken up in a gender-balanced way your hard work to close the gap could get lost after salary sacrifice figures have been deducted.

Salary Sacrifice and the Pay Gap – What’s the connection?

As we mention above, when you calculate the gender pay gap you use the employee’s pay after salary sacrifice has been deducted. This means that the numbers are impacted by who is taking up salary sacrifice schemes and the cost of schemes they are taking up. To give an example, childcare vouchers tend to have a higher annual value than a cycle-to-work scheme – which means employees buying childcare vouchers sacrifice more pay than those buying a bicycle, and have a lower final pay amount used for gender pay calculations. At present, women are over 50% more likely to use childcare vouchers. With this in mind, women are therefore more likely to have a large deduction taken from their salary through salary sacrifice for childcare and this has a knock-on effect to the gender pay gap calculations.

You may already have noticed in your workplace that there is a gender disparity in uptake of salary sacrifice schemes. Gapsquare’s own analysis through our software repeatedly reveals that there is bias in how schemes are taken up. Tackling this bias will ultimately lead to a fairer pay structure within your company or organisation, and it will most definitely reveal enlightening facts about your teams.

When You Know Better, Do Better

At Gapsquare, we are aware of the various issues that arise with balancing your salary sacrifice numbers with the overall GPG. There’s no need to panic and remove schemes from your employees to balance the numbers. If women are taking up childcare vouchers more often than men this is something that can be managed in your company to promote the benefit more to your male staff. After all it is 2018, why shouldn’t men be making the most of childcare discounts too? Encouraging men to do so will help re-balance the system in terms of your pay gap and will show your employees that you are forward-thinking and proactive around employee benefits.

An important thing to consider is how you communicate with your teams about these numbers. It’s important to communicate effectively around the pay gap when it comes to sharing the numbers with your team.

The good news is that you have the capacity to deal with the issue of imbalanced uptake of salary sacrifice benefits. Our VP Growth and Partnerships puts it as follows: “It can sometimes be about making sure that you have buy in from the top. If you see your male CEO take up childcare vouchers, this can have a real impact on company culture. It’s about building salary sacrifice programmes that all of your staff are excited to be part of.” The great news is that tackling inequalities in the uptake of salary sacrifice schemes can have a huge boost on morale and that the pay gap regulations give you a way to reconsider how you are promoting them. We have seen clients really impress their employees with their ability to reflect on how people are investing their salaries and we’ve seen company culture around these schemes transform as a result.

How Can Gapsquare Help?

Gapsquare provides a software solution that allows you to play with your pay data, looking at the pay gap arising from actual and potential salary sacrifice take up.

Gapsquare’s unique software allows you to instantly analyse, track and produce shareable reports around your gender pay gap and pay disparity data, leaving you to focus on what is important – closing the gap in your company for good.

We process your HR and Payroll numbers and give you in-depth knowledge around your pay gap, helping you to both comply with, and go beyond government regulations. The Gapsquare tool produces crucial recommendations, that are already supporting our clients, working with hundreds of thousands of employees, to lead on equality and diversity in their industry.

PS. PayDashboard clients get a 10% discount on Gapsquare’s services. Email support@paydashboard.com for details on how to claim this offer.