Gender pay gap figures for 2020/2021 have now been published, so are organisations doing enough to close the gap?  We look at the hidden reason why the gender pay gap may be continuing and other pay gaps organisations should consider.

What is gender pay gap reporting?

Since 2017, all organisations with a headcount of 250 or more employees have been required to report and publish their figures in relation to their pay gap between men and women on an annual basis. All figures must be reported within one year of the "snapshot" date. The "snapshot" date for private sector employers is usually 5 April. Gender pay gap reporting calculates the average difference between men's and women's pay as a percentage within an organisation, regardless of role or seniority. The predominant rationale behind gender pay gap reporting is that, by increasing the transparency of the differences between men's and women's pay, organisations will be encouraged to implement positive changes to reduce their gender pay gap.

Gender pay gap figures

As a result of the COVID-19 pandemic, the government pushed back the 2020/2021 reporting date for six months from 5 April 2021 to 5 October 2021. Promisingly, PWC reported that the gender pay gap has narrowed marginally amongst organisations that have reported every year since 2017/2018, when the median gender pay gap was 14.2%. The median gender pay gap of organisations that had reported every year since 2017 was 13.1% on the 2020/2021 "snapshot" date, 5 April 2020, compared to 13.3% in 2019/2020. However, disappointingly, the overall gender pay gap across all organisations that reported has risen from 14.9% in 2019/2020 to 15.4% in 2020/2021 and the gender gap amongst full-time employees rose from 7% to 7.9% between 2019/2020 and 2020/2021.

Worryingly, the gender pay gap could be higher than reported due to the government instructing employers to exclude furloughed employees from the majority of calculations. The introduction of furlough under the Coronavirus Job Retention Scheme (CJRS) resulted in many employees receiving reduced pay until the CJRS ended on 30 September 2021. In November 2020, HMRC reported that 52.1% of workers put on furlough between March 2020 and August 2020 were women. The Office of National Statistics (ONS) has also reported that more women than men were furloughed with a loss of pay in 2021. Therefore, the current statistics may not represent the actual pay disparities between employed men and women in the UK from 2019 to 2021.

What can employers do to reduce their gender pay gap?

Although the gender pay gap has reduced amongst those who have reported each year since 2017/2018 (save for possible CJRS-related issues), that reduction has been achieved at a slow, if not glacial, rate. Despite PWC reporting that 56% of those organisations saw a reduction in their mean pay gap during 2020/2021, 41% reported an increase in the gap and 3% reported no change. As these organisations have reported each year, it would have been hoped that they would be implementing initiatives to decrease the gap year on year. As the figures show, reporting alone does not result in a reduction of the gender pay gap. Organisations need to adopt a proactive stance in order to close their gender pay gap and be aware of any hidden practices that may result in men being paid more than women.

The Fawcett Society is urging recruiting organisations to stop asking job candidates about their salary history. During a recent survey, the campaign group found that 47% of 2,200 working adults had been asked about their salaries when applying for a role. Of the women who had been questioned about their salary history, 61% reported that this undermined their ability to negotiate better pay. Employers should be aware that asking job candidates about previous pay rates may transfer the pay gap issues of an employee's previous firm to the organisation. Women may be offered a lower rate of pay due to salary offers being based on their previous earnings.

Other pay gaps to consider

Unlike the gender pay gap, there is currently no legal requirement for organisations to publish pay gaps in relation to ethnicity or disability. However, last year PWC reported that more businesses were collecting data and reporting on their pay gaps in relation to ethnicity in an effort to further diversity and inclusion initiatives. MPs have called on the government to introduce mandatory ethnicity pay gap reporting for larger organisations following a parliamentary debate in September this year. In response to the Black Lives Matter movement, the CIPD has supported the introduction of mandatory ethnicity pay reporting by 2023 in order to encourage real change. In the absence of legislation, the CIPD has published an "Ethnicity pay reporting guide" to provide guidance to organisations as to how they may improve inclusion and tackle inequality in the workplace.

The Trade Union Congress has also called for disability pay gap reporting to be mandatory. The Labour Force Survey revealed that disabled workers are paid 16.5% less on average each year than those who are not disabled. Although the disability pay gap has narrowed slightly from 20%, the TUC and others are calling for more to be done.

We previously reported that PWC had collected data from 80% of its employees in order to analyse socio-economic diversity within its workforce. KPMG has now published its socio-economic background pay gap for the first time and has stated that by 2030 29% of its partners and directors will come from a working class background.

The dangers of chasing pay gap percentages

However, although many firms have set targets in relation to pay gap percentages, organisations should be careful not to fall foul of discrimination law, for example attempting to reduce a pay gap by discriminating against employees who belong to a certain demographic, most notably white and male. A recent employment tribunal case, Bayfield and Jenner v. Wunderman Thompson (UK) Ltd and others [2019], found that two senior white male employees were made redundant in an attempt to lower the organisation's gender pay gap of 44.7%. Organisations should be wary not to discriminate against one demographic in order to allow another to succeed.