As a result of the COVID-19 pandemic and the impact on businesses, last year the Government opted to suspend mandatory reporting of gender pay gap data for 2019/2020, which for private sector employers would have been reported by 4 April 2020.
Whilst many employers had already reported their figures by the time the reporting suspension was announced, there are a large number of employers who chose not to publish their figures - just over 6,000 employers published their gender pay gap figures on the Government’s website as at April 2020, as compared to over 10,000 employers reporting figures for the prior two reporting years. There will be no requirement for employers to report data for the suspended year at a later date, although obviously employers can choose to do so.
In March and April 2020, in the early days of the COVID-19 pandemic, businesses will have understandably felt severe strain in multiple areas. It is unsurprising that gender pay gap reporting would not have been top of their agenda at that time. For those employers that did not calculate and publish their figures for 2019/2020, undoubtedly feeling that the suspension of reporting gave them much needed breathing space, this decision may however have wider reaching consequences than businesses might have envisaged at the time.
For the reporting year 2020/2021, the figures for which are due to be published by 4 April 2021, the Equality and Human Rights Commission (“the “EHRC”) announced last week that enforcement of this obligation would now not be pursued for six months after the deadline, giving employers until 5 October 2021 to report their data on the Government website.
Whilst this does provide additional respite for employers, the crucial question must be about the impact of this extended hiatus on the gender pay gap generally in the meantime?
On announcement of the delay in enforcement of the gender pay gap reporting last week, the CBI’s Chief UK Policy Director, Michael Fell, stated that “the Covid crisis cannot be allowed to undermine companies’ commitments to tackle all forms of inequality, so resuming mandatory gender pay gap reporting is the right thing to do.”
Certainly without visibility of the figures that would otherwise have been reported as at 4 April 2020, employers will find it challenging to make a meaningful comparison to earlier years and determine whether their pay gap is reducing, static or increasing. Without relevant insight, it will then be difficult for employers to make appropriate and informed policy changes to effect a reduction in the gender pay gap.
The CBI went on to say “Furlough could have a significant impact on pay gap data. So it’s even more important that companies explain changes to their pay gaps and what prompt action they will be taking to close them.”
There will indeed be a significant added impact from COVID-19 when looking at the hourly gender pay gap figures that become reportable in 2021. As at the snapshot date of 5 April 2020, many employees would have already been placed on furlough under the Coronavirus Job Retention Scheme. Guidance offered recently by the EHRC indicates that if these furloughed employees are on receipt of less than full pay, they should be ignored when performing certain pay gap calculations. So unless an employer has ‘topped up’ an employee’s salary to 100% of its normal rate, then there may be a large proportion of employees who may need to be excluded from the hourly pay gap calculations of an employer. This could have a significant bearing on the gender pay gap figures as at 5 April 2020 and result in inadvertently distorted figures, dependent on a number of factors including the proportion of furloughed employees to the overall workforce and also the make-up of the population of employees excluded under the regulations - i.e. lowest paid vs. highest paid, part-time vs. full-time, female vs. male.
There is certainly a concern that the COVID-19 pandemic could widen the gender pay gap, with evidence that during the pandemic a greater burden of childcare has fallen on women, with women workers being more likely to take part-time roles, reduce hours or take unpaid leave. However, it is not all doom and gloom. If flexible working becomes more embedded in society post pandemic, as many expect, then with more fathers working flexibly as well as mothers, this could reduce the ‘motherhood penalty’ that many female employees experience and reduce the gender pay gap.
Given the multi-faceted impact of COVID-19 on the gender pay gap, it’s clear that the figures reportable in 2021 are unlikely to be straightforward and will likely require greater analysis by employers to understand and explain the full impact on their organisation’s gender pay gap and what progress they are making against their figures published last year (if published), the year before and indeed their targets over the coming years.
Despite the potential negative impacts of COVID-19 on an employer’s gender pay reporting, businesses should see this as an opportunity to work on effective strategies to reduce the gender pay gap.
BDO can assist with all aspects of Gender Pay reporting and so get in touch if this is something we can help you with.