On 24 March 2020 the Government announced that, for this year, companies are not obligated to report their gender pay gap data. Alex Christen and Tom Jones consider its impacts.
Since 2017, all organisations with 250 employees or more have been obligated to publish and report specific figures about their “gender pay gap”, i.e. the difference between the average earnings of men and women in their organisation, expressed as a percentage relative to men’s earnings (e.g. women earn 10% less than men per hour).
Employers that fall into this category are obliged to publish their gender pay gap data and a written statement on their website, and report their data to the government by midnight on 30 March or 4 April annually (depending on the type of organisation). Employers who fail to report on time or report inaccurate data risk court orders to comply with the regulations, and following that unlimited fines. The reporting obligations were initially met with some resistance for being over-complicated and cumbersome but the intention of exposing (and thereby reducing) pay gaps was a welcome start.
This year though, the reporting deadlines have been suspended. The government cites COVID-19 as the reason for the suspension, the logic being that it is one less regulatory burden for businesses to worry about, and allows them some extra breathing space to focus on more pressing issues. The Chartered Institute for Personnel and Development (CIPD) who represent the human resources profession welcomed the measure as another mechanism to reduce the strain on large company HR departments who are already working hard to mitigate the effects of the coronavirus.
However, given that the reporting deadlines are just days away, most companies will have already assessed and collated their data and prepared their reports. The CIPD has encouraged such companies to publish their figures as part of the Government’s overall commitment to reduce inequality in the workplace, and to demonstrate that, despite the COVID-19 crisis, their commitment to fairer workplaces remains an important consideration. The CIPD also notes that while businesses should welcome this temporary slackening of regulations to allow them to concentrate on managing the effects of the coronavirus on their business, they should be prepared to turn their attention back to their reporting obligations once the crisis abates and things return back to normal.
The effects of COVID-19 on next year’s figures remain to be seen, particularly where large numbers of staff on furlough leave will see a cut in pay. If a larger number of women compared to men are placed on furlough leave as at the snapshot date, although they won’t be included in the pay gap data (as employers are only required to report on employees who receive full pay on the snapshot date), their absence from the reports will impact pay gap figures. If women are requesting furlough for childcare reasons, and they would ordinarily work part time, this means a large chunk of the part time workforce will not be included in the pay gap reports, potentially leading to an increased pay gap between men and women who work full time.
Gender pay gap reports aside, the effects of the coronavirus will undoubtedly widen the true gender pay gap picture across the UK, whether this is because more women are furloughed or more women face redundancies and are forced to re-enter the job market at a time of recession. Most likely it will be a combination of all of these factors and we will be faced with a pay gap that will take many more decades to close.