The enforcement of the gender pay gap regulations was suspended last year because of the pandemic, but positively, a high proportion of employers continued to report their calculations in any case. With the next calculation date just around the corner we outline new challenges employers will face when they prepare their next round of reporting
The suspension of GPG enforcement
The one-off reprieve that was hastily announced by the government last year applied to gender pay gaps relating to data from the 5th of April 2019, which had been due to be reported within the year. Although initially well received, there has been criticism of the government decision, particularly as the pandemic seems to be having a more negative effect on women, from an employment and pay perspective, than men.
From a legal perspective, the regime has now been revived, and by the 4th of April 2021 employers must report their gender pay gaps calculated using data from the 5th of April 2020. However, due to the continuing impact of Coronavirus, the Equality and Human Rights Commission (EHRC) have announced that enforcement of gender pay gap reporting for the 20/21 reporting year will not begin until 5 October 2021. The EHRC is encouraging employers to report ahead of the usual deadlines (30 March 2021 and 4 April 2021) wherever possible, but no enforcement action will be taken providing they report by 5 October 2021.
It is worth highlighting that a significant portion of employers went on to publish their figures last year regardless of the fact that enforcement was suspended. By November 2020 nearly 6,000 employers had published their gender pay gap data for the 2019/20 year on the government website, compared with almost 11,000 the previous year. Others may have chosen to run the calculations for internal purposes without reporting externally, allowing them to track changes against previous years and adapt their action plans if appropriate. Notwithstanding the important moral arguments for pay equity, multiple studies and research have shown there is also a very strong business case for putting equality issues at the top of your business agenda, so it is perhaps unsurprising that so many employers continued to report despite not being required to.
The Furlough Effect
The Government Equalities Office has confirmed that for reporting purposes, employees on furlough and reduced pay on the 5th of April 2020 do not count as ‘comparable full-pay employees’ when looking at pay levels to report. Given the situation in April 2020, this could constitute a significant proportion of the workforce for many employers. Take-up of the government’s furlough scheme was widespread, and it only covered up to 80% of pay. In addition, many employees who were unwell or self-isolating may have been on reduced company sick pay or statutory sick pay on the calculation date.
This means that April 2020 is likely to be an atypical month, from a pay perspective, for many employers. Gender pay gaps are calculated from averages, and so the pool of people to be included could be much smaller. For example, a manufacturing firm that stopped production and furloughed its operatives may be calculating gaps from just the few head-office employees who were left and were able to work from home. This could skew results with positive, or negative, effects.
What is next?
Looking forward, a Private Member’s Bill before Parliament may introduce changes in reporting obligations. The Equal Pay (Information and Claims) Bill, has only had a first reading so far but key measures include expanding the scope of reporting obligations and provisions that would extend greater rights to employees to know about the pay of their colleagues. The EPIC Bill has cross-party backing, but unfortunately it lacks government support. Without that support it is unlikely to become law. However, the government has committed to undertake a review of gender pay gap reporting in 2022. Depending upon the result of that review, the EPIC Bill may give us an idea of the future direction of the law surrounding equal pay and employers pay reporting obligations.