Last March, the government suspended the obligation for organisations with 250+ employees to report their gender pay gap (GPG) data but made clear it was a one-off reprieve. That means agencies affected should now be calculating their GPGs - as at 5 April 2020 - ready to report them by 4 April 2021.

Here are our top tips for dealing with eight of the trickiest issues:

  • Covid bonuses. Many employers gave staff some form of Covid bonus last April to cover home office expenses, compensate for extra work or simply help during a difficult time. Such payments may count as either “pay” or “bonus” (or neither) for GPG reporting purposes.
  • Furlough. Don’t assume you won’t have to report if your workforce was largely on furlough last April – furloughed workers are still included in your headcount. But they will not count towards your mean/median pay gap and quartiles calculations. Where lower-paid women were furloughed, average gaps will be calculated only from the remaining higher-paid staff. This means gaps could be greatly reduced – it’s advisable to work out what your GPG would be were it not for furlough, and report this alongside your mandatory statistics.
  • Pro-rating of bonuses. Pay gaps are calculated from hourly rates, which are calculated from pay plus a pro-rated amount of any bonus paid in the April 2020 snapshot period. This calculation can be difficult, especially for discretionary or informal “spot” bonuses, because it involves working out to which period the bonus relates.
  • Contractors. These may be within the scope of GPG reporting if they provide services personally and not through a personal services company or suchlike. Remuneration of contractors can cover different time periods, so deciding what to include and how many hours to use in hourly-rate calculations may be highly complicated.
  • Joiners and leavers. All those employed on 5 April 2020 should be included in the analysis. For those who didn’t work the full month, because they either joined between 1 and 5 April or left between 5 April and 30 April, their hourly-rate calculation must reflect that they worked and were paid for a reduced pay period. Getting this wrong will mean hourly rates and resulting gaps are inaccurate.
  • Group companies. Each legal entity that employs 250 employees or more must report. There can be no consolidating of employees across group subsidiaries.
  • Salary sacrifice. Pay and bonus gap figures must be calculated from gross pay before any deductions. Salary sacrifice is an agreement to reduce gross pay, so all figures must be on a post-salary-sacrifice basis.
  • Ethnicity pay gaps. Although not yet a legal requirement, many agencies have begun analysing their ethnicity statistics in conjunction with gender to properly understand diversity within their organisation.

The Equality and Human Rights Commission is increasingly proactive in taking action against businesses failing to take their GPG reporting obligations seriously. If you need help, please get in touch.