The pandemic and the gender pay gap

Carly Hilkin, Associate Director, Purposeful Business

Two weeks ago, the UK Government announced that employers will have an additional six months to report their gender pay gap data for 2020, due to the continued effects of the Covid-19 pandemic. In other words, companies that fail to meet the original gender pay gap reporting deadline of 4th April will not face enforcement until October this year.

The news comes as campaigners and business leaders have been raising concerns that women are being disproportionately affected by the economic fallout of the pandemic, bearing the brunt of additional childcare needs and a higher likelihood of being furloughed. A poll from the Fawcett Society revealed over a third (35%) of working mothers lost work or hours due to a lack of childcare during the pandemic.

It’s no secret that Covid-19 has exacerbated societal inequalities around the world. But companies of course need to consider what the implications are and put plans in place to account for it with their employees – the gender pay gap being one of them.

Impact of Covid-19 on the gender pay gap

Although the pandemic will affect the gender pay gap, it should not be heavily reflected in every company’s figures reported this year because the snapshot date, 5th April 2020 was only a few weeks after the UK first went into lockdown. That is not to say there won’t be some impact, as employers will need to exclude the pay of any employee who was furloughed or had reduced pay on 5 April, but it means that companies should not be pointing to the Covid pandemic as an excuse or the primary reason for changes in figures.

Next year for 2021/22 reporting, however, the business impact of Covid-19 including furloughs could have a more significant impact on gender pay gap data and broader diversity, equity and inclusion challenges. This makes it even more important for companies to explain changes to their pay gaps and what actions will be taken to address them.

Communicating on the gender pay gap

For companies preparing to report on the gender pay gap, there are a few key points to consider:

  • Embrace transparency: The Covid pandemic has altered companies’ relationships with employees in several ways, often including increased trust and transparency. Several organisations and people managers have needed to have more open and at times vulnerable conversations with their employees over the last year. This should be built on with communications surrounding the gender pay gap and any other equality measurements. Report transparently to employees, acknowledge any changes in light of the pandemic, but don’t treat it as the scapegoat. 
  • Start planning for next year: The gender pay gap reporting requirement next year will be based on data from 5th April 2021, a year on from changes companies have experienced from the pandemic. With the likelihood that there will be more significant changes in gender pay gap figures as a result, companies should plan ahead to review data as soon as available, understand the causes of change and put a plan in place for how to address it, well ahead of publishing the 2022 report. 
  • Consider broadening beyond GPG: While the UK awaits the Government next steps on diversity and inclusion plans, including the potential introduction of ethnicity pay gap reporting, it is worth considering how to broaden equality reporting for employees. Some companies have already made shifts to adopt a broader reporting approach, including gender pay gap and other factors such as age and ethnicity. Two-thirds of businesses are now collecting ethnicity data on their employees and almost a quarter have calculated their ethnicity pay gap, according to a survey by PwC. Even if not required, the reasons for introducing ethnicity pay gap reporting are numerous; increased transparency of pay numbers can improve employee trust, diversity and a more successful and representative business.

Regardless of reporting requirements by the Government, companies should be focusing on what they can do to be open with their employees. The Covid pandemic changed our view of companies as employers, with employees and consumers alike paying attention to how staff are treated.

At the beginning of the pandemic hitting the UK last year, I wrote about some of the positive stories we saw of companies embracing their purpose to support their employees and communities they operate in a time of crisis. I hope that with the pandemic shining a light on inequality, more companies recognise and address the gender pay gap and other inequalities in the workplace with renewed vigour. Frankly, if they don’t, employees will hold them to account.

If you’d like support on gender pay gap reporting and communications, please get in touch with our purposeful business team at purpose@fleishman.com.

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