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Gender pay gap reporting: the 2020/2021 reporting deadline is approaching

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United Kingdom

For companies in Britain with more than 250 employees, the requirement to report their Gender Pay Gap data has been compulsory since April 2017. While COVID-19 led to a six-month reporting extension for the 2020/2021 reporting year, the requirement to report has not gone away. Companies caught by the Gender Pay Gap Regulations must make sure they publish their reports by 5 October 2021.
 

What information do you have to publish?

Gender Pay Gap calculations are based on payroll data taken from a specific date each year. This is the "snapshot date." For private sector employers, the snapshot date for the 2020/2021 reporting year is 5 April 2020 (for companies in the public sector, the snapshot date is 31 March 2020).

If you are a private sector employer required to report your company's Gender Pay Gap data, you will need to publish:

  • The percentage of men and women in each hourly pay quarter
  • The mean and median gender pay gap
  • The mean gender bonus gap over a 12 month period
  • The percentage of men and women who received bonus pay in the 12 month period
  • Written statement confirming the information is accurate

The results: the impact of COVID-19

The Regulations require you to calculate your Gender Pay Gap by reference to "full-pay relevant employees" and so you must exclude from your calculations any employees who were on reduced rates of pay on the 5 April 2020 snapshot date.

The Government's furlough scheme, which was backdated to 1 March 2020, covered 80% of worker's wages and was widely used by employers. This means that if you made use of the furlough scheme and did not top-up the extra 20% of your workers' wages, you must exclude those furloughed workers from your calculations.
As reports suggest that more women than men were on furlough, the exclusion of these workers from your Gender Pay Gap calculations could have a significant impact on your Gender Pay Gap when compared with previous years.

Draft your narrative carefully

While capturing your data is important, setting out a narrative, which explains your data and your strategy to reduce any Gender Pay Gap, is equally important.

We have seen the first case that considered an employer's narrative and eagerness to reduce the gender pay gap swiftly. In Bayfield v Wunderman Thompson (UK) Limited an employer reported a pay gap of 44.7%, which it found to be "very disappointing." In order to address this, the company claimed that it would "obliterate" its reputation as a "Knightsbridge boys club" full of "white, British, privileged, straight men." Following this announcement, the company decided to make two creative directors redundant. It selected two straight white British men for redundancy while saving a senior female director. The Tribunal found that the dismissals were due to the sex of the Claimant's and held the employer liable for direct sex discrimination.

This case shows the importance of having a well-developed action plan as opposed to rushing to implement a strategy that does not genuinely aim to level the playing field. You should ensure that you properly explain your approach and outline your plan for addressing your Gender Pay Gap going forward.

Conclusion

It is important to remember that you are obliged to publish your report annually. Your narrative should be realistic and designed to cover the specific circumstances of your company. When reviewing your data and drafting your narrative, you should consider whether your narrative fits with the company's stated values as well as its ESG and Inclusion & Diversity strategies. It is important to remain alert and flexible and be prepared to explain your results.

For those companies in Republic of Ireland, please note that Gender Pay Gap reporting will come into force in January 2022. Northern Ireland is also currently considering the introduction of gender pay gap reporting.

If you would like further details, please contact Ranjit Dhindsa at Ranjit.Dhindsa@fieldfisher.com

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