How SMEs Can Help Close the Gender Pay Gap

The UK government is still working hard to reduce the gender pay gap. How do the recent changes impact your small or medium business, and what can you do to help?

New rules for big businesses

The gender pay gap in the UK currently stands at 14.3%, according to the TUC, and would take 20 years to close if it continues to fall at the same rate. Rachel Reeves, the newly appointed chancellor, has promised she will close the gender pay gap “once and for all”.

Since 2017, businesses with 250 or more employees must report their gender pay gap. This means they must share information on how much men and women are paid and make it public on a searchable website. They also need to send proof of this to the government.

While small businesses aren’t required to do this, the push for transparency is growing. Large firms have already made their data public for comparison, and these rules might eventually apply to smaller businesses too. It’s a good idea to start preparing now, especially if your business is growing.

Female representation in senior roles has improved over the years. As of 2024, 42% of board seats at FTSE 350 companies are held by women. Additionally, 11% of FTSE 100 companies have a female CEO, compared to just 4% in 2017. Though these are promising steps, there’s still a long way to go, especially for smaller businesses.

Why this matters for SMEs

The gender pay gap in the UK is closing, but there’s still a difference. Women in full-time work earn 7.7% less on average than men. For SMEs, closing this gap can help attract better talent, keep employees longer, and boost your company’s reputation.

By acting now, SMEs can show they are responsible businesses and help build a fairer economy. Plus, if reporting rules are extended to smaller companies in the future, you’ll be ready.

What can you do as an SME owner?

1. Treat all staff equally

This may sound obvious, but make sure your part-time staff, often women, are paid fairly compared to full-time employees.

Does the part-time female accountant receive the same level of salary as her male full-time counterpart? Whilst we don’t mean to suggest that you should pay full and part-time staff the same, the pay of your part-time staff should equate to that of a full-timer for hours worked.

• The Equal Pay Act of 1970 sets out that all employees, regardless of gender, have the legal right to equal pay and a cause of action against an unfair employer.
• The Equality Act 2010 sets out the equal treatment of all, ensuring that businesses are held accountable.

2. Be transparent

Why not set an example? Even if you don’t have to report your pay data, doing it voluntarily can make your business stand out as a fair employer. It can help attract the best talent and show that your business is serious about equality.

Although you are not obligated to do so as an SME, it’s worth considering the benefits of showing that you're responsible.

3. Be clear about pay

Make sure your employees know how they can increase their pay over time. Having an open salary policy builds trust and reduces any resentment about pay differences, prevents a culture of secrecy, mistrust and resentment among staff

4. Support women workers

Offering equal pay is just the start. Encouraging more women to stay with your business for the long term and helping them progress into senior roles after having a family is a great start.

You can support women by offering:

• Flexible working hours
• Remote work options
• Job-sharing to help them balance work and family life

Plan for the future

If your SME is growing, getting these best practices in place now will make things easier when the government starts paying closer attention. Even if your business doesn’t meet the reporting threshold yet, it’s wise to prepare for a future where transparency is expected.

We all benefit from gender equality, and all businesses have a role to play.