Gender pay gap and furloughed employees
Gender pay gap reporting in 2020One of the many equality casualties of the covid-19 pandemic has been comprehensive gender pay gap statistics. The Government Equalities Office and the Equality and Human Rights Commission put out a joint statement in March 2020. The statement confirmed that enforcement of the gender pay gap reporting deadline would be suspended for the 2019-20 reporting year. The rationale for this move was the pressure on employers in light of the covid-19 pandemic. Despite the somewhat opaque nature of the statement (only enforcement of the deadline, not the deadline itself, was suspended), the outcome was that under 50% of employers published reports.
2021 – a fresh approachFor some employers, having skipped a reporting year, 2021 represents a fresh start. Helpfully, the Government Equalities Office has just published a detailed set of guidance papers on gender pay gap reporting requirements. These contain no suggestion that there will be a repeat of the suspension of the enforcement deadline so employers should assume that they will need to submit their figures by 4 April 2021 (or 30 March 2021 in the case of public authority employers).
Impact of the furlough schemeThe guidance gives helpful confirmation on a point which many employers will have been considering – how should they deal with employees who were on furlough leave on the pay reporting snapshot date (5 April 2020). The legislation is clear that employees who received a reduced rate of pay as a result of being on leave during the relevant pay period should be excluded from pay (but not bonus) calculations. The GEO guidance confirms that employees on furlough leave fall within this group and should therefore be excluded from pay (but not bonus) calculations. Note that bonus calculations encompass all employees who received a bonus and who were employed on the snapshot date regardless of whether they are on leave or receiving reduced pay.
2021 figures – a skewed pictureThe upshot is that unless employees were receiving an employer top-up to the CJRS grant, such that they were being paid their full salary, all furloughed employees will be excluded from 2020 pay data. This applies even if employees were only furloughed briefly during March or April 2020. For many employers, this will lead to a skewed picture of their gender pay gap which may well render the figures entirely unrepresentative.
One option for employers whose gender pay gap is severely impacted by their use of the furlough scheme, is to generate a separate set of statistics using an earlier pay period (i.e. prior to implementation of the CJRS). These statistics could be referred to in the narrative submitted alongside the statistics to the government website and could also be published alongside official statistics on the employer’s website.
Without figures which provide a correct representation of the gender pay gap, employers cannot accurately diagnose the cause of the pay gap or provide any context for or analysis of it. More significantly, employers will be unable to produce a targeted action plan to address it.