Less than two weeks before the deadline in 2020, the requirement to publish gender pay gap statistics for 2019-2020 was suspended due to COVID-19, and employers were not required to report these statistics at a later date. Whilst the government has indicated that the reporting requirement for 2020-2021 is under review, at present private businesses with more than 250 employees must submit their gender pay gap statistics by 4 April 2021.
Despite this, the latest submission figures indicate that many employers may miss the deadline. The government has received far fewer reports than the number usually submitted at this point in the year. By the end of February 2019, 776 companies had reported, and by 10 February this year, only 484 companies had reported.
There has been much commentary about the impact of COVID-19, and in particular furlough, on gender pay statistics (see our recent articles published in the Employment Law Journal and Executive Compensation Briefing). In December 2020, the government released new guidance to clarify how furloughed employees should be dealt with for the purposes of gender pay reporting. The key takeaways are:
- When determining whether or not a business meets the reporting threshold of 250 employees, furloughed employees should be counted.
- Furloughed employees will be excluded from gender pay gap and salary quartile band calculations if their salary has not been "topped up" to full pay. This is because these calculations cover "full-pay relevant employees" only.
- Furloughed employees will be included in gender bonus gap calculations.
If employers furloughed employees and paid them less than their full salary on the "snapshot" date of 5 April 2020, those furloughed employees will be excluded from gender pay gap and salary quartile band calculations, and the results will not be representative of the entire organisation. In light of increasing evidence that the pandemic has disproportionately affected women in the workplace, this may distort these results yet further. It is widely accepted that gender pay gap reporting throws gender pay disparity into sharp focus, and creates opportunities for data comparison across reporting periods, businesses and sectors. However, this relies on the statistics being available, and the reporting suspension last year created a black hole in the gender pay gap statistics of many businesses. If the government decides to suspend reporting again for this year, this will be a further blow to pay transparency and will hinder attempts to eradicate gender inequality in the workplace.
Employers should consider carefully whether to run their forthcoming calculations based on the hypothetical scenario that employees had not been furloughed, and either include those results in their report or in a supplementary update on their website. Whilst ethnicity pay gap reporting is not currently mandatory, employers may also wish to voluntarily publish these figures on their website, alongside their gender pay gap report.
We are continuing to monitor the situation regarding gender pay reporting requirements for 2021. If you would like assistance with preparing your gender pay gap report, or to discuss ethnicity pay gap reporting, please get in touch with your usual Mishcon contact or with a member of the Employment team.