With the delayed 2021 gender pay gap reporting deadline of 4 October now fast approaching, we consider the importance of reporting gender pay gaps, how employers should deal with reporting on furloughed employees and the difference between the gender pay gap and equal pay.

The gender pay gap is the difference between the average earnings of men and women across a company's workforce over a period of time, irrespective of their role or seniority.

The UK's Equality and Human Rights Commission requires employers with at least 250 employees to publish their gender pay gap information, on their own websites, as well as upload the data to the government website. Employers with under 250 employees can choose to publish the information, but it is not mandatory. The government pushed back this year's deadline for reporting gender pay gap information from 4 April 2021 to 4 October 2021 due to the COVID-19 pandemic. With that date fast approaching employers would be well advised to begin their calculations now to be ready for October 2021.

What must employers calculate?

Employers must calculate and report the following gender pay gap figures and ensure they are presented in an accessible manner:

• percentage of men and women in each hourly pay quartile
• mean (average) gender pay gap using hourly pay;
• median gender pay gap using hourly pay;
• percentage of men and women receiving bonus pay;
• mean (average) gender pay gap using bonus pay;
• median gender pay gap using bonus pay.

For any employers who are unsure on how to calculate these figures the government provides guidance here

How should employers account for furlough?

One of the main challenges for employers who are required to report is just how they are going to account for the employees who have been furloughed in the past year. The Equality and Human Rights Commission published new guidance earlier this year which addressed the proper way for employers to report on furloughed employees. The guidance states:

• furloughed employees should be included in gender pay gap calculations in these circumstances:
  • figuring out headcount – all furloughed employees count as relevant employees when determining headcount – for example, an employer of 261 employees that had 50 employees on furlough would still be required to report their gender pay gap;
  • calculating the percentage of men and women receiving bonus pay;
  • calculating the average (mean) gender pay gap using bonus pay; and
  • calculating the median gender pay gap using bonus pay,
• employers must exclude employees receiving less than full pay who were on furlough when calculating:
  • the average (mean) gender pay gap using hourly pay;
  • the median gender pay gap using hourly pay; and
  • the percentage of men and women in each hourly pay quartile.

Why is it important to report on the gender pay gap?

According to the Office of National Statistics the gender pay gap fell to 15.5% among all employees in 2020 from 17.4% the previous year. It is important for relevant companies to keep reporting gender pay gaps, in a transparent way, so that the overall imbalance can be addressed. It will be interesting to see if employers have continued the trend to close the gender pay gap since the last figures were published.

For employers to redress the balance it is valuable to look at what might cause the gender pay gap. Some commonly reported reasons for the gender pay gap are that:

• women are far more likely to take career breaks to look after family and then return on a part-time basis;
• fewer women hold executive positions in companies: just 6% of FTSE 100 CEOs are women; and
• in terms of the national pay gap, women are more likely to pursue careers in sectors where there is less scope for financial reward.

What is the difference to "Equal Pay"?

People often confuse the gender pay gap with equal pay, however, they are quite distinct. Equal pay is where a person of one sex receives less pay than a person of the opposite sex for carrying out the same or a similar job. Unlike the gender pay gap, the legal right to equal pay has existed for decades and is now legislated for in the Equality Act 2010. It applies to all employers no matter their size. Things get slightly confusing when a company is complying with the equal pay regulations but still has a gender pay gap. This does not mean a woman is being paid less for the same job, instead it points to other gender imbalances such as in leadership roles where more men are in employed in senior management, while more women are in junior roles.

If an employer does not comply with equal pay legislation they can easily find themselves facing legal action on the grounds of discrimination. However, there is no real legal consequence for employers who report significant gender pay gaps. What's more, the common reasons behind the pay gap (as mentioned earlier in this article) are generally more complex and cannot be linked directly to equal pay for specific work.

For further advice on pay equality and tackling the gender pay gap, please contact us.