Gender Pay Gap Reporting – Impact of COVID-19
Gender Pay Gap Reporting – Impact of COVID-19
As a result of the COVID-19 pandemic and the impact on businesses, in 2020 the Government opted to suspend mandatory reporting of gender pay gap data for the 2019/2020 year and for 2021 (where the 2020/2021 figures were reported) decided to delay enforcement by six months from April to October 2021 to provide greater time for employers to calculate and report their figures.
Throughout those two years 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. However, this may now give rise to greater challenges in those organisations being able to draw meaningful comparisons in the data that their gender pay gap reporting shows.
Some employers may have chosen to take advantage of the hiatus in reporting for 2020 and only have revisited gender pay gap reporting again in autumn 2021. Others may have found that their figures are significantly skewed by the exclusion of employees under the Coronavirus Job Retention Scheme (‘CJRS’). Whichever issue it is, there is no doubt that meaningful and comparable gender pay gap statistics are another casualty of the COVID-19 pandemic.
In 2021, in relation to the announced delay in enforcement for the 2021 reporting year, the CBI stated that “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.”
How will the pandemic affect 2023 reporting?
As is the case with the figures reportable in 2021, by reference to the snapshot date of 5 April 2020, in April 2021 there will have been some businesses where employees would have still been on furlough under the CJRS. Therefore, we saw the continued impact of COVID-19 into 2022 in terms of reporting figures. This means that, with both the suspension of reporting in 2020 and likely distorted figures in 2021 and 2022, a total of three out of the first five reporting years have therefore have been significantly affected. The snapshot date of 5 April 2022, reportable in April 2023, will be the first year since 2019 that the COVID-19 pandemic should have a lesser impact on the reported gender pay gap figures. Going forward, following suspension of the CJRS in September 2021, there will be no employees on furlough that could impact the figures calculated in April 2022 and to be reported in April 2023. However, the lasting effect of the pandemic could still mean it is difficult to discern meaningful gender pay gap figures when looking at and comparing current and prior year figures.
Since the prior two years’ figures will have been impacted by the CJRS, this will likely result in inadvertently distorted figures which render an unrepresentative picture of an organisation over those prior two years. With a return to a more typical employee population, this year will be the first year in the last three where the figures will be more representative of the real picture. However, when making a comparison to prior years, an employer will not really be comparing apples with apples and so it is likely to be hard to tell whether the gender pay gap is truly reducing or increasing.
One possible option for employers whose gender pay gap reporting was significantly impacted by furloughed employees was to generate a set of gender pay gap figures either by reference to a different date before the use of the CJRS, or by re-stating figures including employees who were ‘officially’ excluded due to furlough but utilising the normal pay figures at the snapshot date. We previously highlighted that such figures, although they would not have been reportable on the Government’s website, could have then been referenced in the supporting narrative and published on the employer’s website alongside the official statistics to give a more rounded picture.
If employers did not take the time to generate representative figures that ignore the COVID-19 anomalies, they will find it difficult to accurately detect the root cause or the pay gap or appropriately analyse it. Following the reporting of new figures in April 2023, will likely be a lack of understanding for the core reasons for changes in the figures, and therefore the inability to create a specific action plan that takes informed steps to address an organisation’s gender pay gap and its root causes.
Did your organisation utilise the CJRS? Your gender pay reporting figures may have been affected. Get in touch to find out how we can help make sense of your data.
Did the pandemic widen the gender pay gap?
There is certainly a concern that the COVID-19 pandemic could have in reality widened the gender pay gap, with evidence that during the pandemic a greater burden of childcare fell on women. Women workers were more likely to have taken part-time roles, reduced their hours or taken unpaid leave. Analysis undertaken during the pandemic highlighted that a significant proportion of those placed on furlough under the CJRS were women.
If furloughed employees comprised a majority of the lower paid employees and this group was excluded from the figures over the past two years, in the shorter term this is likely to have had a temporary effect of narrowing the gender pay gap. However, it would be clear that this would be a transient impact more attributable to the external factors, and not as a result of a genuine narrowing of the underlying gender pay gap. In 2023 those employees will all be included in the workforce reporting once again and it is likely that any reduction that may have occurred in the gender pay gap may well increase again in the immediate term.
Given the multi-faceted impact of COVID-19 on the gender pay gap, it’s clear that analysis of the figures reported over the last few years is unlikely to be straightforward and will likely require greater attention by employers to analyse, understand and explain the full impact on their organisation’s gender pay gap and what progress they are making against their prior years’ published figures and indeed their targets over the coming years.
Despite the potential negative impacts and challenges of COVID-19 on an employer’s gender pay gap reporting, businesses should still see this as an opportunity to work on effective strategies to reduce the gender pay gap.