Many UK organisations are still unaware of the legal requirement to submit a gender pay gap report this year, with the deadline just 57 days away.
In fact, fewer than 50% of firms (362) have filed in their gender pay gap reports to date; compared to the same time last year (795), despite the fast approaching deadline, confirms pay gap specialist Spktral. So, what’s gone wrong this year? Spktral offers some possible explanations. One is that organisations are unaware that they are legally required to report their gender pay gap this year.
The pay gap expert believes that many companies have misinterpreted communications from the Government Equalities Office (GEO) around the suspension of reporting the gender pay gap last year, which actually applied to the 2020 deadline only. Although the government updated its communications to clarify its message around mid-December, many organisations remain confused; or have simply “assumed that reporting is suspended till further notice”, explains Spktral.
REPORTING CONFUSION
Another reason is that organisations are confused about the inclusion of furloughed employees. Some companies believe they don’t have to report their gender pay gap this year because of furloughed employees. There are two main assertions, according to Spktral. One is that “furloughed employees take our headcount below 250, therefore we don’t have to report”. The other is that “everyone was furloughed therefore nobody needs to be reported”.
Both assertions are incorrect, confirms Spktral. Furloughed employees are still employees, therefore headcount is not affected; and although furloughed employees can be excluded for the pay gap part of the report (providing they received zero or less than normal pay due to being on furlough), they are still eligible for the bonus gap part of the report.
Aside from the legal obligations to filing, there are many benefits to organisations carrying out a gender pay gap analysis. “It’s not just about getting your gender pay gap report in before the deadline; it’s about when you do the calculations and the actions you take from the insights you discover. Gender pay gap analysis is about understanding and tracking the changing representation of men and women across the pay range of your organisation,” states Anthony Horrigan, CEO of Spktral.
At a time when more women are leaving the workplace, mainly due to Covid-19, “it “will quickly show where you should be targeting your limited resources. Simply put, by failing to carry out a robust pay gap analysis, you are carrying both a business and reputational risk”, adds Horrigan.
PAY GAP ANALYSIS BENEFITS
Many studies have also confirmed that the pandemic could reverse progress on gender equality. So a pay gap analysis is vital to understand the impact on representation in your workforce. For example, in the 2020 Diversity Wins report, McKinsey found a direct correlation between diversity and financial performance.
“This is about bottom-line performance and the long-term competitiveness of the organisation; it’s not just a box ticking compliance exercise,” pointed Horrigan. Pay gap analysis (gender, ethnicity, disability, etc) is an integral part of your D&I strategy. Not reporting your gender pay gap sends a very clear signal to your stakeholders, investors, procurement officers, current and future talent that this is not a business priority.”
Here’s why businesses should also get ready for ethnicity pay gap reporting; along with practical guidance on how to make a start.
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