Introduction to Gender Pay Gap Reporting

The gender pay gap is the relative difference in the average pay of men and women across the labour market. It illustrates the divergence in terms of pay and progression between men and women. The most common reason for gender pay gap is occupational segregation – the distribution of men and women employed in different sectors or at different levels in the labour market, with women tending to be in lower paid sectors or roles. This can be exacerbated by systemic barriers that women face in terms of career progression, male-dominated networking environments or experiencing unconscious bias from line managers with regards to promotion.

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the “Regulations”) was introduced in an effort to reduce the United Kingdom’s gender pay gap which has reportedly decreased by only 3% over the last 10 years. The Regulations aim to increase pay transparency. Most employers will find they do have a gender pay gap.

The Calculations

From 5 April 2017, all employers with legal entities in the United Kingdom that employ 250 or more employees must report the gender pay and bonus pay gaps of their organisation. There are six reporting requirements:-

  • The difference between the mean pay of men and women;
  • The different between the median pay of men and women;
  • The difference between the mean bonus pay of men and women;
  • The difference between the median bonus pay of men and women;
  • The proportion of men and women who receive bonus pay; and
  • The proportion of men and women in each pay band.

The median pay is calculated by looking at all female employees of a company in order of highest to lowest pay. The same exercise is then carried out for the male employees. The median compares the pay of the female in the middle of the line and the pay of the male in the middle of the line. 

The median bonus is calculated by looking at all female employees of a company in order of highest to lowest bonus payments. The same exercise is then carried out for the male employees. The median compares the bonus payments of the female in the middle of the line and the bonus payments of the male in the middle of the line. 

The mean pay is the difference between the average hourly rate of pay of females and males within an organisation. The mean bonus is the difference between the average bonus paid to females and males within an organisation.

From the above, it is clear that gender pay gap is different from the concept of “equal pay”. Gender pay gap is a collective figure which does not compare individuals or groups in comparable jobs.

The figures for the previous year are included at the end of this paper for comparison purposes

Why a Gender Pay Gap Exists

Smart Metering Systems PLC (“SMS”) and its wider corporate group operate within both the domestic and industrial & commercial gas and electricity markets. Within the SMS corporate group, CH4 Gas Utility and Maintenance Services Limited (Company Number 07541243) (“CH4”) is the only company which falls within the remit of the Regulations. Our gender pay gap analysis of CH4 is included within this document. We have also voluntarily elected to provide a consolidated gender pay gap analysis for the entire SMS group.

The services provided by CH4, and SMS as a whole, involve the installation, ownership and management of utility metering assets and the provision of energy management solutions throughout the United Kingdom. Accordingly, the vast majority of our employees are gas and electricity engineers.

We have identified two reasons for our gender pay gap:-

  1. There are more men than women in senior roles; and
  2. There are more men than women within the engineering industry, from which we source most of our employees.

The above issues are not particular to SMS, but are prevalent throughout the United Kingdom and on a wider global level.

Senior Roles

Despite the recent decline in women in full-time executive roles, there have been signs of positive, albeit gradual, change within the United Kingdom in recent years:-

  • From 2007 to 2017, women’s board representation in FTSE 100 companies increased from 11% to 28%;
  • The percentage of women in senior leadership roles has remained low, slightly rising to 22% in 2018;
  • There are now just 30 women in full-time executive roles at FTSE 250 firms, down from 38 last year – amounting to 6.4% of the total;
  • However, at present, 32 FTSE 100 companies have reached their target of 33% women on their boards, set by the Government for 2020.

The increase in females taking on leadership roles should lead to an increase in the number of females being involved in the corporate decision making process and it is hoped that this will bring into operation different perspectives and thinking processes, allowing for the growth of businesses and the wider economy. 

Taking this on board, SMS, this year has seen the number of females in senior roles increase with appointments and internal promotions within our support functions and Operational departments. The roles as Head of Finance, Head of Call Centre, Operations Manager, Head of HR (Installations) are all now held by female executives.

Engineering Roles

Traditionally, the field of engineering has been dominated by men. In 2017 only 6% of the Fellows of the Royal Academy of Engineering were female and approximately 9% of the engineering workforce in the United Kingdom was female. The United Kingdom had the lowest percentage of female engineering professionals in Europe, at less than 10%, with only 15.8% of engineering and technology undergraduates being female.

For the gender pay gap within the engineering industry to narrow there must be encouragement from an earlier stage in the educational process for females to take up subjects such as engineering, mathematics and technology and to pursue them into higher education. Challenges to this are that such professions can involve shift-work and a considerable amount of travel, often overseas.

Whilst SMS increased its head count over the year, this was in large part TUPE acquisitions and not direct hire with little movement achieved. 3.5% female and 96.5% male joined SMS through this route.

Our Strategy
  • SMS supports and encourages a culture of gender diversity amongst its workforce. It is through the contributions from people of all backgrounds that our business will succeed, as only innovative thinking will produce the solutions we need to tackle the varying challenges faced by our business and industry leading thinking that will diversify and transition the energy market.
  • SMS has over the last year recruited a number of senior female staff, particularly in our group services areas such as finance, legal, human resources, business development and procurement.
  • We aim to recruit an increasing number of females into both graduate roles within our workforce and more senior roles throughout our wider business. Our ambition will not be without its challenges, given the low number of females choosing to enter into the engineering industry. We will continue to manage proactively the recruitment process within our business to ensure that it is inclusive of all genders.
  • Full review of benefits to attract and retain our employees regardless of gender.
  • Higher paid positions often require extended working hours, so many females settle for lower paid jobs for the regular working patterns. Promoting the benefit of the tax free childcare scheme, encourages women to get access to better and more flexible childcare, enabling them to achieve promotion to better paid roles.
  • Encourage more fathers to take paternity leave to allow mothers to return to work sooner. Enhance on Statutory Paternity Pay and offer Company Pay as well as Shared Parental Leave.
  • Review of pay structures and banding, including our entry level roles by increase the minimum wage for all roles to the Real Living Wage.
  • Proactive recruitment to promote the role of an Engineer in Schools/Colleges and Universities by encouraging young females to consider a career in engineering. Build relationships with further and higher education establishments.
  • Provide apprenticeship and graduate opportunities. Organise or take part in career days with local schools – senior female leaders in SMS talk about their career history/progression to encourage the ambitions of young females.
  • Implement an in-house training programme that encourages, supports and enables more females to benefit from formal management training resulting in an equal spread of ready successors. Target to only provide training to 50% females and 50% males.
CH4 Gas Utility and Maintenance Services Limited

1. Hourly Rates

 

Woman's hourly rate is:

Median Hourly Pay

43.5%

Lower

Mean Hourly Pay

32.1%

Lower

2. Pay Quartiles

Quartile Reporting

% of Men in each Quartile

% of Women in each Quartile

Top

97%

3%

Upper Middle

98%

2%

Lower Middle

83%

17%

Lower

52%

48%

Total

83%

17%

3. Bonus Pay

 

Woman's bonus pay is:

Median Hourly Pay

38.4%

Lower

Mean Hourly Pay

37.5%

Lower

How many men and women received bonus pay:

 

Male

Female

%

65.4%

21%

Smart Metering Systems PLC and its subsidiaries

1. Hourly Rate

 

Woman's hourly rate is:

Median Hourly Pay

33%

Lower

Mean Hourly Pay

28%

Lower

2. Pay Quartiles

Quartile Reporting

% of Men in each Quartile

% of Women in each Quartile

Top

85%

15%

Upper Middle

91%

9%

Lower Middle

63%

53%

Lower

47%

53%

Total

72%

28%

3. Bonus Pay

 

Woman's bonus pay is:

Median Hourly Pay

33.3%

Lower

Mean Hourly Pay

74.1%

Lower

How many men and women received bonus pay:

 

Male

Female

%

75.8%

64.7%