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.

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

Globally, 33% of all companies still do not have any women in senior management roles. However there have been signs of positive, albeit gradual, change within the United Kingdom in recent years:-

  • the Davies Report was published in October 2015 and aims to have at least 33% of females on the Financial Times Stock Exchange (FTSE) boards by 2020;
  • in 2017 was there a 26% increase of female presence on the 100 companies on the London Stock Exchange (LSE), albeit this accounted for only 7 females in total;
  • as at June 2016 the FTSE 250 boards had 20.4% of female bosses. Additionally, five of the FTSE 250 companies had 50% of females on their boards.

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. 

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 often a lot of travel, including overseas work.

Our Strategy

SMS, and its wider corporate group, 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 practical solutions we need to tackle the varying challenges faced by our business, together with industry leading thinking that will diversify 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 and internal audit.

To that end, we aim to recruit an increasing number of females into both graduate roles within our workforce and experienced roles throughout our wider business. This aim will not be without its difficulties, given the low number of females choosing to enter into the engineering industry. However we will continue to proactively manage the recruitment process within our business to ensure that it is inclusive of all genders.

CH4 Gas Utility and Maintenance Services Limited

1. Hourly Rates

 

Woman's hourly rate is:

Median Hourly Pay

40.7%

Lower

Mean Hourly Pay

25.0%

Lower

2. Pay Quartiles

Quartile Reporting

% of Men in each Quartile

% of Women in each Quartile

Top

94%

6%

Upper Middle

97%

3%

Lower Middle

96%

4%

Lower

72%

28%

Total

90%

10%

3. Bonus Pay

 

Woman's bonus pay is:

Median Hourly Pay

0.0%

Higher

Mean Hourly Pay

42.1%

Lower

How many men and women received bonus pay:

 

Male

Female

%

46.6%

39.3%

Smart Metering Systems PLC and its subsidiaries

1. Hourly Rate

 

Woman's hourly rate is:

Median Hourly Pay

23.8%

Lower

Mean Hourly Pay

27.7%

Lower

2. Pay Quartiles

Quartile Reporting

% of Men in each Quartile

% of Women in each Quartile

Top

85%

15%

Upper Middle

81%

19%

Lower Middle

58%

42%

Lower

67%

33%

Total

72%

28%

3. Bonus Pay

 

Woman's bonus pay is:

Median Hourly Pay

0.0%

Higher

Mean Hourly Pay

19.0%

Lower

How many men and women received bonus pay:

 

Male

Female

%

64.9%

61.2%