As part of its research for the Guide to UK Company Giving (12th edition) which has just been released, the Directory for Social Change (DSC) analysed the gender pay gap data of 400 companies with community investment programmes in the UK and encountered several flaws in the current system.
Three hundred and forty-four companies in the sample provided information and an additional thirty were not required to report. However, gender pay gap data for 26 companies was unaccounted for with no clear indication as to why.
Following the 2017 amendment to the Equality Act (2010), companies with over 250 employees have to report their gender pay gap data to the Gender Pay Gap Service. The service is monitored by the Equality and Human Rights Commission which is responsible for ensuring that the data is correct and companies comply.DSC’s research encountered several flaws in the current system that can lead to patchy reporting.
Corporate groups are required to submit the data for each separate company within the group. If a company within the group does not employ over 250 people, then they do not legally have to submit a report. This misrepresents the overall figures for the group.
Companies are given the option of voluntarily reporting combined figures for an entire group, but we did not find many companies that reported in this way. We came across companies that had up to seven separate subsidiaries that they were legally required to report on. Not only does this make it difficult to understand a whole company’s true gender pay gap, it also means companies can, and frequently do, highlight more favourable figures and misrepresent the actual gap.
Partners in Limited Liability Partnerships (LLPs) fall outside the current scope of regulations as traditional or limited liability partners receive a share of the profits and therefore do not get paid in the same sense as salaried employees. While some LLPs that DSC looked at did report on their partners’ pay gap, many did not. The legal sector has a high number of LLPs and the lack of transparent reporting fails to show true representation of that sector’s gender pay gap.
A final list of companies that are required to submit data does not exist. The government estimates there are 9,000 companies, however the Financial Times suggests the number of companies required to submit could be 13,500. The Guardian also reported that some companies have submitted inaccurate figures to the Gender Pay Gap service and have faced no fines for failing to comply with legislation.
Judith Turner, DSC Researcher, says,
Our research leads call into question the credibility of companies’ gender pay gap data disclosures in general, as well as some big loopholes in the reporting requirements. When will the government enforce sanctions on companies that are breaking the law by ignoring the requirement to report? Despite legal requirements, government recommendations and changing workplace culture, too many companies are evading measures designed to support gender equality in the UK. If robust evidence isn’t accessible and in the public domain, companies will never be in a position to tackle gender inequality effectively and decisively.