What is the Gender Pay Gap?

The Gender Pay Gap is the percentage difference between the hourly pay for male employees and female employees. The regulations prescribe hourly pay to include certain allowances and extra payments in addition to basic salary.

It is important to note that a Gender Pay Gap is distinctly different from equal pay. Equal pay is equality of pay between men and women for work of equal value - i.e. within the same or similar job role.

Reporting Requirements

The Gap is reported as a mean and a median:

• The mean is the difference between average hourly pay between male and female employees
• The median is the difference between the hourly pay midpoint value (50^th percentile) between male and female employees

Headlam UK* Gender Pay Results - 5 April 2021 (the snapshot date)

The number of people included in the hourly pay gap calculations on the 2021 snapshot date is significantly lower than in 2020 i.e. 1,286 full pay relevant employees in 2021 compared to 1,884 in 2020. This is predominantly because of the impact of COVID-19 and furlough on the snapshot date, with approximately 550 employees not being on their full normal pay on the snapshot date.

Gender Pay Results for individual reporting entities - 5 April 2021 (the snapshot date)

The Headlam UK* Gender Pay Gap has closed to 1.8%, significantly below the UK median pay gap of 15.4%. Comparing 2021 to 2020, male median hourly pay decreased by 5.1% to GBP 11.95, whereas female median hourly pay decreased by 0.6% to GBP 11.74, thus closing the median hourly gap.

Mean hourly pay in 2021 increased by 1.2% for both men and women to GBP 15.31 and GBP 14.18 respectively. The mean hourly pay gap remained static at 7.4%.

Bonus Participation and Bonus Pay Gap

Proportion of males and females receiving a bonus payment (during the 12 months up to 5 April 2021)

Bonus Pay Gap

The pandemic had an impact on both bonus participation and bonus pay-out.

Overall bonus participation decreased to 87.9% in 2021 compared to 93.6% in 2020, but with women (11.0% less bonus participation) impacted more than men (4.4% less bonus participation).

Proportion of men and women in each pay quartile

The chart below shows the female to male ratio in each pay quartile, lowest (Q1) to highest (Q4). The data highlights that there are fewer women in higher paid, senior roles than men.

Summary

2021 pay gap reporting has been significantly affected by the impact of furlough due to the COVID-19 pandemic.

However, it is positive to note that the Headlam UK* median gender pay gap has closed to 1.8% and remains well below the national average of 15.4%.

Bonus participation has decreased in 2021 compared to 2020, again due to the COVID-19 pandemic. The bonus pay gap both for median and mean bonus pay, although decreased versus 2020, remains significant.

Focus areas

It is clear that relatively low levels of female representation across the group, but especially at more senior levels, remain a key challenge for the Company.

The Company has a stated desire to create a truly inclusive workplace where everyone is being seen, heard and valued, and building a workforce that reflects the local communities it serves. Central to this is a belief in the principles of fair pay and progression, and that the workplace should be equitable for everybody. At Headlam everybody should have the ability to fulfil their potential, and make the best contribution they can to the success of the Company.

There are a number of near-term focus areas to operationalise and embed these beliefs, in turn making Headlam a more attractive employer to join and work for, especially for women and people from other minority groups:

• Capability Development and Culture
  • To support the desire to create a truly inclusive workplace, a comprehensive review of current diversity, equity and inclusion practices and processes is underway through a combination of a Companywide survey, focus groups and one-on-one interviews.
  • A leadership development programme (“Leading Through Change”) is being rolled out to over 250 senior leaders, with focus on helping them lead their teams during times of change and uncertainly in the best way possible.
  • At the same time performance workshops are rolled out to get better alignment around key priorities in the business.
  • During 2021, the values and behaviour framework within Headlam was refreshed. The new framework roll out started during 2021 with focus on having a dialogue with colleagues about how the values and behaviours underpin the Company’s vision. The roll out will continue in 2022.

• Recruitment
  • Whilst recruitment and promotion decisions are made on merit, it is important to further strengthen the mandate of having viable diverse shortlist during external recruitment, especially at more senior levels.
  • Exploring opportunities to improve better communicate the Company’s employee value proposition, as well as onboarding and induction processes.

• Pay and Reward
  • A common framework for management bonuses has been implemented, with a common framework for sales leadership roles to follow shortly. During 2022 a review of local bonus plans will take place to look for opportunities to align around the Company’s common objectives.
  • A new and common defined contribution plan is being implemented from April 2022, providing a more generous and flexible contribution structure, and creating consistency and fairness across the Company.
  • Enhanced holiday and equal sick pay policies have been implemented, with focus on providing common entitlements for all colleagues.
  • Development of a recognition programme is progressing, focusing on both monetary and non-monetary recognition.

• Working conditions
  • Further roll out of a Mental Health First Aid support programme.
  • Flexible working policies have been put in place, effectively formalising the experiences gathered during the COVID-19 pandemic in 2020 and 2021.

This Gender Pay Gap Report 2021 was approved by the Company’s Remuneration Committee, and the data for the HFD* and MCD* reporting companies published on the specified UK government website: https://gender-pay-gap.service.gov.uk/

*Headlam UK includes the three UK reporting companies HFD Limited (‘HFD’), MCD Group Limited (‘MCD’) and Headlam Group plc (‘PLC’). With fewer than 250 employees, it is not a requirement to publish PLC figures, however, in the interest of transparency the Company includes PLC data voluntarily. The legal entities of Domus and CECO are not included, both being below the 250