Last year’s suspension of mandatory Gender Pay Gap (GPG) reporting by the UK government left many organizations wondering what could be next for UK Gender Pay Gap reporting. The recent announcement of the 2020-2021 deadline extension has provided some clarity, but the delayed reporting deadline still causes a severe blow to decades of work for gender pay equity progress. The pandemic has revealed further inequities that lie at the heart of our societies and workplaces, making the need for organizations to demonstrate their commitment to equality in the workplace more important than ever.
Many questions have come up about how to properly comply with the Gender Pay Gap Information Regulations as well as a desire to understand how the pandemic could impact reporting. To help organizations maneuver these uncertainties, a panel of CURO reward experts hosted a webinar to provide more clarity on what's next.
In this blog, Ruth Thomas, Co-Founder and Senior Consultant, Vicky Peakman, HR and Gender Pay Gap Consultant and Lucy Fordham, Compensation Consultant and HR, answer your questions from our recent webinar, where they covered your frequently asked GPG questions, top tips for calculating and submitting your metrics, and key learnings on the pandemic and its impact on GPG data.
Has the 2020 reporting deadline been suspended in the same way that 2019 reporting was?
RT: The Government Equalities Office and the Equality and Human Rights Commission suspended enforcement of reporting for the 2019/2020 period because of the COVID-19 pandemic. For the 2020/21 period they have now announced a 6 month extension, so enforcement 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.
When do you think the government will publish their ethnicity pay gap reporting guidance?
RT: The UK Government closed its consultation on Ethnicity Pay Reporting in January 2019. In response to the Black Lives Matter protests in June 2020, a public petition to the government to introduce mandatory ethnicity pay gap reporting reached over 130,000 signatories. In its response, the government committed to issuing a response to its initial consultation by the end of 2020 which did not eventuate. A private members bill was submitted on October 20, 2020 to the House of Commons by Labor MP Stella Creasy called the Equal Pay Information and Claims Bill 2020 (the EPIC Bill) calling to make it mandatory for companies with at least 100 employees to report both their gender and ethnicity pay gaps. This bill is awaiting a second reading. At this stage, our earliest estimate is that Ethnicity Pay Gap data might need to be submitted by April 2023, if any resulting legislation replicates the current GPG reporting regime.
Do you know if UK Government officials have discussed this approach with the Scottish Government?
VP: Gender pay gap regulations are UK wide and are not devolved powers. However, the Scottish Government launched a Gender Pay Gap Action Plan in 2019 to help businesses close their gaps and stated that they "call on the UK Government to improve or develop policies that can help tackle gender inequalities".
In 2018, they launched the ‘Fairer Scotland for Disabled People: Employment Action Plan’ and this month they also launched the ‘Fair Work: Action Plan’. As part of the action plans, the Scottish Parliament Corporate Body itself added ethnicity and disability pay gaps to their reporting in 2019.
With the government postponing GPG reporting, does this indicate that it is not actually a priority for them?
LF: The pandemic has caused the government to need to respond in a reactive, fast paced manner to the situation as it has unfolded, for example with the introduction of the Coronavirus Job Retention Scheme (CJRC). This has however meant they have had to juggle and shift priorities. This has sparked concerns regarding the impact to groups who are already marginalized and overlooked including women, where the labour market inequalities are already well understood. With the postponement of the 2019/20 reporting and now the 6 month extension of enforcement action for the 2020/21, questions are already being raised on gender inequality on COVID-19 response plans. The government now needs to start to look to reprioritize efforts to respond to the issue before the effects and gaps widen further.
Should we follow the GPG calculation rules when voluntarily disclosing ethnicity/LGBTQ+ pay gaps?
VP: At present we do not know what the reporting requirements will be. Therefore we recommend using the same data for any additional pay gaps. That ensures consistency in the calculations and makes it easier for you as you already have the data.
What do other organizations do to encourage people to give their DE&I information so that, particularly for ethnicity, we can report accurately?
RT: Our four tips in the webinar were:
- Be clear why you are collecting data and what you plan to do with it, who will have access to it and that all declarations are confidential.
- Collect data by the ONS ethnic groups (but up to 5 ethnic groups may be required for analysis to be meaningful) and again consider confidentiality with small numbers.
- Establish trust, open up conversations about race in the organization and demonstrate a commitment to tackling the ethnicity pay gap.
- Is the process of self-reporting on ethnicity easy and do you have processes in place to consider employee concerns?
For the ethnicity pay gap, how do you get around the fact that diversity data is not being properly provided or recorded?
VP: The only thing that you can do is explain to employees why you are collecting the data and the necessity for it to be as accurate as possible. Then report on what you get. It might be that, once they see the report and subsequent action plan, those hesitant about providing data will feel more comfortable about doing so.
Do you think that the flaw of the legislation to focus primarily on hourly pay masks an even bigger pay gap based on actual take-home pay due to the disproportionate numbers of women in part-time work?
VP: This is an important issue, particularly when it comes to wealth inequality, as more women are in part time roles which also have lower median hourly rates than full time roles. In April 2020, 26.1% of the working population worked part time. However, 40.7% of working women were in part time roles compared to just 12.8% of working men. This means that the median male gross annual earnings was much more than the median female gross annual earnings. The ONS gender pay gap calculation uses hourly rates in an attempt to compare like with like. In April 2020 they calculated it to be 15.5%. If they had used gross annual earnings instead, the pay gap would have been 34.8%. Organizations’ bonus gap calculations often reflect this disparity as they are calculated using actual bonuses rather than trying to reduce them to an hourly rate, and bonuses are often a percentage of salary. We thoroughly recommend investigating the situation in your organization as it is important to understand the full picture and not just what is required by legislation.
What working world or 2020 events have led to the sharing of ethnicity pay gap reporting within organizations?
RT: In 2020, we saw the immediate consequences of the crisis only serve to underline society’s inequalities for ethnic minorities. These, combined with global protests against systemic racism, have all led to renewed calls for action and many employers committing to tackle the issue.
Is the measurement an average of the 12 months of a snapshot taken at 1st March 2021?
LF: You are required to collate payroll data from a specific ‘snapshot’ date each year (31 March for most public authority employers and 5 April for private, voluntary and all other public authority employers).
Once you have identified your full-pay relevant employees (employed and receiving full pay during the specified pay period), you will need to calculate your statutory metrics by reporting the following payroll data based on your relevant snapshot date:
- Ordinary Pay and Bonus Pay - these are the amounts paid in the payroll period within which the snapshot date falls, these will be combined to calculate an employee’s hourly pay.
- Total Annual Bonus – this is the total of any bonuses paid in the 12 months up to the snapshot date.
- Working Hours - the employee’s working hours are used to calculate their hourly pay figure.
What have been the most impactful actions that organizations could employ to positively impact the Gender Pay Gap?
VP: The UK Government Equalities Office published some research into this in 2018, which showed that the most effective actions included:
- Using skills-based assessment and structured interviews when recruiting and promoting.
- Including multiple women in shortlists.
- Transparency of salary ranges and reward / promotion processes.
- Appointing diversity managers and / or diversity task forces.
Other actions, such as flexibility, shared parental leave and targets, were ‘promising’. It would be great if the researchers could repeat the study as many more companies have been working to reduce their pay gaps.
How do we take account of furlough payments within gender pay reporting?
VP: The regulations state that, if an employee was furloughed on less than full pay, they are not ‘full pay relevant’ and are therefore excluded from the hourly pay gap calculations. They are included in the bonus pay calculations. If they were topped up to 100%, they are included in all calculations.
If you have a large proportion of your employees furloughed, we advise that you also run your calculations as if they were topped up to full pay, and with them included on their furloughed pay, in order to understand the changes year-on-year and the impact that furlough has had on your pay gap.
Is there any data about an increasing number of candidates looking at an organization's DEIB aspirations and data? (Glassdoor, women and BAME on the board, etc?)
RT: A 2018 report by Equality and Human Rights Commission (EHRC) has found that almost two thirds of women look at a prospective employer's gender pay gap before applying for a job with that employer. A 2017 PWC survey indicated that 86% of women consider an employer's policy on diversity, equality and workforce inclusion as important when deciding whether or not to work for them.
Without doubt candidates increasingly want an accurate and honest impression of an employer’s workplace experience and culture before making a decision on whether to join them. As employers increasingly volunteer to disclose their DEI data, candidates will search this out and also ask why other employers have not disclosed data.
It's time to start your 2020-2021 GPG reporting.
Now is the time for organizations in the UK to start GPG reporting for the 2020/2021 period. Our self-serve Gender Pay Gap software helps support teams who need to comply with GPG reporting and address pay inequities to help create a more productive, happy culture while stimulating the UK economy now and in the future.
Calculate statutory figures, produce professional reports and analytics with your own branding, and run comparisons to better understand your gender pay gap challenges. If you would like to do your part to help close the gender pay gap, sign up for your CURO GPG account here. Our GPG technology makes reporting fast and easy, so you can commit to fair pay on your own team.