Campaign groups are concerned employers are calculating their gender pay gap information incorrectly, with some claiming potential “fake data” is being published by companies to skew their pay gap results.
Under legislation introduced in April 2017, organisations with 250 or more employees are legally required to calculate and report their gender pay gap. Approximately 9,000 companies will have to carry out their required calculations and publish their reports by the 4th April 2018 deadline, or by the 31st March 2018 for public sector employers. The required calculations include working out the difference between how much male and female staff earned on a given date, calculated in relation to both ordinary pay and bonus pay. Staff also need to be divided in to four groups depending on their salary, from the lowest 25% to the highest 25% of earners, with the proportion of male and female employees in these quartiles then calculated.
Concerns are being raised due to “statistically improbable” data being published on the government’s reporting website. Over twenty employers have reported a gender pay gap of zero across their business, with the majority of these also reporting 50% of men and women in each salary quartile. Although it is not impossible for companies to have a zero gender pay gap, it is highly unlikely all the calculations will produce a ‘zero’ result because employers have to assess the data in different ways. Calculating the mean gap looks at the difference between average salaries whereas the median gap is the difference between the middle values once salaries are listed in order.
Following an earlier investigation, the Financial Times wrote to a number of employers who they suspected had uploaded incorrect data. One company, a well-known retailer, updated the data on the government website – changing their zero pay gap to a mean gender pay gap of 32.6% and a median gender pay gap of 76.5%. Others, however, replied stating their zero gender pay gap results were due to pay rates being set dependent on the role in question and were not affected by gender.
It is a legal requirement for employers to accurately calculate and report their gender pay gap. There are, however, nuances within the reporting laws which could lead to mistakes being made when carrying out the required calculations. For example, the definition of ‘ordinary pay’ includes certain payments and excludes others, whilst calculating working hours will depend on whether the employee works the same hours each week or has variable hours.
Following these concerns, the Government Equalities Office has confirmed they will be contacting employers who have reported “statistically improbable” data to help them improve their reports. Employers who breach the law are at risk of being investigated by the Equality and Humans Rights Commission and could face subsequent enforcement action, including penalty fines or court orders requiring employers to comply with the law.
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For any gender pay gap advice, or for more information on Croner Reward, please contact your Peninsula HR expert today.