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Early learnings from Gender Pay Gap reporting
23 February 2024
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On 27 February 2024, the Workplace Gender Equality Agency (WGEA) will publish the first set of private sector employer Gender Pay Gap (GPG) data as part of the Closing the Gender Pay Gap Bill (2023). This legislative reform encourages employers to design and deploy workplace policies and practices and build a culture that supports workplace gender equality, creating meaningful shifts in Australian working life.
The published data will include median organisational GPGs as well as the gender composition and average remuneration per pay quartile. Additionally, from 2025 WGEA will publish average organisational GPGs. These changes represent a significant shift for WGEA, which has previously only reported industry aggregates, and for employers, who have previously been provided GPG information in a confidential report. In this article, we explore some of the most frequent questions.
Why is our self-calculated GPG different to WGEA’s?
For 2024, the WGEA GPG calculation includes all employees and employee types and is calculated as follows:1
However, many employers find that WGEA’s GPG calculation differs from their own. There are several reasons for this.
- Organisations confuse the GPG for equal pay.
Under the Fair Work Act (2009), men and women must be paid equally for ‘work of equal or comparable value’ – also known as equal pay. However, pay comparisons for various roles do not paint a nuanced picture and can hide latent GPGs. For example, senior leaders tend to be the highest paid employees of an organisation. If the gender balance of the senior leadership team skews towards men, there will be a GPG.
The same is true of higher paying, non-leadership roles. Likewise, overrepresentation of women in lower paying roles will exacerbate the GPG. Therefore, organisations need to address the gender balance of roles and levels in an organisation to minimise their GPG. - Organisations calculate their GPG using base salary only.
The WGEA GPG calculation is based upon total remuneration including, but not limited to, base salary, performance payments, allowances, and bonuses. These additional sources of remuneration are often informed by performance review outcomes and are provided at the discretion of line managers. As such, they are liable to various forms of unconscious bias and discrimination. Exclusion of these payments in organisational calculations can hide structural and procedural issues that contribute to the GPG. - Organisations exclude non-full-time employees from their calculation.
The WGEA GPG calculation is based upon annualised and full-time equivalent earnings data for each employee. Women are often overrepresented in part-time and casual roles, resulting in potential negative impacts to remuneration and career progression. Failure to include these employees in calculations tends to diminish the true extent of the organisation’s GPG, and potential contributing factors.
Organisations need to carefully consider how they can align their calculations to WGEA’s methodology to prevent any unexpected outcomes.
What policies should we be putting into place to address our GPG?
Closing the GPG is not simply a matter of paying women more. Talent attraction, retention, performance review and promotion processes, and organisational culture are some of the important enablers in addressing this balance at every level of the organisation.
From April 2024, WGEA requires employers with 500 or more employees to have a policy or strategy that addresses each of the six Gender Equality Indicators (GEIs), to be reported via the annual WGEA questionnaire. The GEIs are:
These GEIs paint a more nuanced picture about workplace gender equality and can help to support sustainable change reduction in the GPG.
How do we monitor our GPG throughout the year?
Regular monitoring and evaluation of the GPG throughout the year is critical to determine the root cause of the GPG. This is not always an easy task. Relevant data sources can be disparate, and analysis can be cumbersome. GPG calculation tools should help employers answer the following important questions:
- What is our GPG?
- What is the gender balance across roles and levels in our organisation?
- Is gender a factor in our performance review, promotion, and bonus outcomes?
- Is gender a contributing factor in talent attraction and retention outcomes?
- Are we collecting the right data to support WGEA GPG reporting, or do we have a gap?
- On what basis have we set remuneration within our pay bands (if applicable)? Do we need to assess gaps in the remuneration model to ensure there is no bias?
The Closing the Gender Pay Gap Bill (2023) also requires CEOs to declare that they have complied with the legislative requirement to provide WGEA reports to the organisation’s Board or governing body. Investing in tools to monitor GPG allows senior leaders to visualise complex data sets, observe trends and identify contributing factors. These tools assist Boards and Executive Leadership Teams to understand the drivers of their GPG and actions needed to remediate.
How do we strategically communicate the reasons for our GPG and the actions we are taking to address it?
Leading organisations are thinking beyond regulatory compliance and are using the publication of their GPG as an opportunity to promote their approach to gender equity, pay transparency and diversity and inclusion – helping to differentiate their offering to employees, customers, and the wider community. Without a strategic narrative, GPG numbers may paint an incomplete, or even an inaccurate, picture of the organisation’s commitment to gender equity. This strategic narrative is critical at multiple points, including:
- Positioning and alignment of key messaging for internal and external communications;
- Responding to potential questioning from staff or external stakeholders once the GPG is publicised; and
- Providing senior leaders with an opportunity to articulate their commitment to workplace gender equality.
In our experience, sunlight is the best disinfectant and framing the message is critical. Leading organisations need to be transparent about their results, the reasons driving any gap and how they intend to address them in the future – while also highlighting the progress that has been made. This requires balancing accountability, reflection, and future focus – and a genuine commitment to gender equity.
Conclusion
Public GPG reporting creates an opportunity for organisations to invest in driving change. Organisations with a clear understanding of the drivers of their GPG, an evidence-based action plan, monitoring and evaluation tools, and a transparent communications approach will be well positioned to differentiate themselves in the market as leaders in the drive to accelerate progress to gender equality.
If you have any questions or want to know more about GPG reporting, please contact one of PwC’s Diversity, Equity and Inclusion specialists.
1 The 2024 calculation does not include: 1) the CEO or CEO equivalent; 2) non-binary employees; and 3) any employee given ‘0’ for their income on the profile. From 2025 onwards, CEO or CEO equivalent pay will be included in the calculation.
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