The deadline for big companies to make public the gender pay gaps in their organisations is just around the corner – 30th March for public sector organisations and 4th April for businesses and charities. The publication of these figures is a huge move, intended to help bridge the gulf between what men and women are paid in the UK, often for work that's the same or of equal value.
The legislation – which requires companies with more than 250 employees to reveal their average pay for men and women, including bonuses, and gives them the option to explain themselves and detail how they're tackling the gap (if at all) – came about after campaigning by feminist charity the Fawcett Society, which hailed it "the best opportunity in a generation to close the gender pay gap."
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Many people had high hopes for the legislation – but it's far from foolproof and, in news that will make your blood boil, it's been revealed that many companies are looking to dishonestly skew the figures in their gender pay gap data by exploiting legal loopholes.
In a Channel 4 investigation, The Truth About Your Pay: Channel 4 Dispatches, airing tonight, reporters posed as a fake cleaning company with 264 employees. They asked specialist consultants offering advice on gender pay gap issues how they could report a more favourable picture of pay inequality within their company – and, infuriatingly, there were often several legal, if morally outrageous, ways to do this.
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One advisor told the reporters there were "various um scurrilous, clever legal ruses" available
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How companies could hide their gender pay gaps
• Splitting the company so that the highest male earners' salaries are reported separately under a subsidiary organisation
One advisor told the reporters there were "various um scurrilous, clever legal ruses" available to exploit. "I mean there’s even potentially options of do you set up a subsidiary, a parent company, and stick all your highly paid bosses in that…So that they get out of the picture."
One advisor told the reporters there were "various um scurrilous, clever legal ruses" available to exploit. "I mean there’s even potentially options of do you set up a subsidiary, a parent company, and stick all your highly paid bosses in that…So that they get out of the picture."
• Withholding details of directors’ pay if they are also classed as owners of a company
In a conversation about whether company directors' pay needs to be disclosed, one advisor said there could be "a way of taking the directors, who I presume are owners as well? …Out of [the pay gap calculations]…" as some other organisations already had done. "Now it is a moot point as to whether or not that is strictly in compliance with er, what the regulations say but you could structure it on that basis and we know other organisations that have done that," the advisor added.
In a conversation about whether company directors' pay needs to be disclosed, one advisor said there could be "a way of taking the directors, who I presume are owners as well? …Out of [the pay gap calculations]…" as some other organisations already had done. "Now it is a moot point as to whether or not that is strictly in compliance with er, what the regulations say but you could structure it on that basis and we know other organisations that have done that," the advisor added.
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• Making people redundant so they would no longer have to submit their gender pay figures
Yes, you read that correctly. The reporters were told they "might want to make a couple redundant" before next year’s reporting window. "So say you have 251 employees we might suggest that you might want to make a couple redundant," the advisor said.
Yes, you read that correctly. The reporters were told they "might want to make a couple redundant" before next year’s reporting window. "So say you have 251 employees we might suggest that you might want to make a couple redundant," the advisor said.
(Josephine Van Lierop, a senior employment lawyer specialising in the gender pay gap regulations, told Channel 4 that while this was not a breach of the gender pay reporting regulations, the unfairly dismissed employees would likely be able to make an unfair dismissal claim.)
• By simply not reporting their gender pay figures at all
Another advisor told the reporters that there may be little or no consequences for companies that don't make their figures public. "As of today, right now, there is no direct enforcement mechanism. So, in other words, if you didn’t publish anything at all, are you ever going to get, as of today, a fine or anything? No," they said. "Because in terms of the resources that has been put into policing this. It’s zero because there was no enforcement mechanism."
Another advisor told the reporters that there may be little or no consequences for companies that don't make their figures public. "As of today, right now, there is no direct enforcement mechanism. So, in other words, if you didn’t publish anything at all, are you ever going to get, as of today, a fine or anything? No," they said. "Because in terms of the resources that has been put into policing this. It’s zero because there was no enforcement mechanism."
(Indeed, the Fawcett Society flagged this issue two years ago, when it called for "meaningful penalties for companies who fail to act".)
What's more, most companies have left their reporting to the last minute, with just 26% (2,360) of the 9,000 companies required to submit their gender pay gap figures by the 4th April deadline having done so at the time of writing. Based on data from those who have submitted already, there is an 18.4% hourly pay gap between men and women.
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Van Lierop said the loopholes undermine the reason the gender pay gap reporting legislation was implemented in the first place – to look not just at the number "but look at why they have that figures and what are the causes of the gender pay gap within their organisation."
She added: “If companies take the approach where they are looking to minimise or artificially represent their gender pay gap then that’s not going to give us the kind of buy-in that we need in order to have real progress for our gender pay gap.”
The body responsible for ensuring employers publish their gender pay gap, the Equality and Human Rights Commission (EHRC), said in response to the investigation that "employers that do not comply will risk facing legal action from the Equality and Human Rights Commission."
Rebecca Hilsenrath, the EHRC's chief executive, continued: “Employers seeking to avoid reporting their gender pay gap data are ignoring the advantages of creating a fairer workplace, both for individual employees and for their wider business. Equality pays: estimates show that bridging the gender gap in work could add £150 billion to the UK economy by 2025.
“Those businesses that not only report their data but go beyond the mandatory requirements, for example by publishing an action plan on closing the pay gap, will benefit in the long term.”
The Truth About Your Pay: Channel 4 Dispatches airs on Monday 19th March at 8pm on Channel 4.
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