The start of April would usually see a flurry of activity by private sector employers publishing their gender pay gap (GPG) reports.

Much less so this year now that the Government has extended the publication deadline by six months until October 5, 2021. In these difficult times for employers, this development will be welcomed by many. However not all businesses are taking advantage of the reporting reprieve.

Pushing the deadline to October gives businesses time to focus on other priorities as the UK emerges from lockdown. It also gives additional time for employers to make sure they properly understand their GPG data and present it most effectively. The GPG reports which will be published by employers this year will be based on data collected on April 5, 2020, a date when lockdown was newly implemented and the furlough scheme had taken effect.

Any furloughed workers receiving less than full pay cannot be counted in an organisation’s GPG figures, meaning that data published this year are likely to present a distorted picture. This could make it difficult to track any trend following on from an organisation’s previous GPG reports (usually one of the key benefits of the annual reporting process) particularly if no figure was published last year at all. To address this, some organisations are doing additional analysis of data including furloughed employees (for example by using a different pre-furlough snapshot date) to see what impact furlough has (or has not) had on their pay gap. Either way, understanding the April 2020 data and being able to properly explain the resulting GPG, including how it has been affected by the pandemic, is essential and could be a good use of the six-month extension.

On the other hand, there is an argument that the Government-led postponement and the wholesale cancellation of the GPG reporting requirements in 2020 undermines the importance of gender equality issues in the workplace.

However, the number of employers reporting voluntarily on their GPG gives cause for optimism in this respect. By the end of March 2021, more than 2,000 employers had published already. Likewise, last year, in excess of 6,000 employers (slightly more than half of the employers in scope to report) did so, even though the Government’s relaxations meant that they did not need to. A stark contrast to the handful of voluntary reports made before mandatory GPG reporting was introduced in 2017.

That same mindset is now being extended to the ethnicity pay gap (EPG). Although the Government said it would legislate to introduce mandatory EPG reporting, it has yet to do so. According to PwC, however, 23% of employers calculated their EPG data for 2020 and a further 33% intend to do so. Meanwhile, 10% have voluntarily disclosed their EPG. This is despite the complexities involved. For example, employers need to decide what classification system to use. Simply having one general ethnicity classification (i.e. white and all others) masks differences between ethnic groups. However, with no standard classification system in place, employers risk spending time and money setting up a system to gather and report on EPG data which then needs overhauled as and when a legal framework comes in to mandate EPG reporting.

The fact that so many employers are prepared to take this risk indicates how important many employers now see race issues at work as being. It also recognises the merit of pay reporting as a helpful (albeit not perfect) equality-measuring tool. This was summed up in the Commission on Race and Ethnic Disparities Report published at the end of March 2021, which explained that while businesses were “aware of the pitfalls around the execution of ethnicity pay reporting” they felt “this work needs to start somewhere”.

There are inevitably a range of factors behind this shift to voluntary pay gap reporting but it suggests that employers are moving from a strict compliance mindset. This would fit with a wider trend we are seeing which indicates a more substantive commitment from employers to diversity and inclusion in the workplace; many are not taking steps in this area simply to fulfil legal obligations but rather to try to deliver genuine change and to benefit from the opportunities embracing D&I affords their organisation.

Catriona Aldridge is a senior associate at international law firm CMS