Inaccurate figures and a lack of sanctions risk making a “mockery” of the gender pay gap reporting system, critics have warned following an in-depth Guardian analysis of submissions.
Amid concerns that a lack of transparency and inaccurate reporting is undermining efforts to address pay inequality, mathematically impossible gender pay gap data filed by companies for last year has yet to be corrected.
And with less than a month to go before this year’s reporting deadline, the Equality and Human Rights Commission (EHRC) admitted that, despite those errors, no companies have yet been fined for failing to comply with legislation.
The deadline for companies to report their gender pay gap figures for 2018 is 30 March for public bodies and 4 April for private companies.
However, more than 30 companies are yet to file accurate data for the previous 2017 period with the Equalities Office, and a number have filed mathematically impossible figures this year. Analysis also shows a further 725 companies have filed or resubmitted their figures since last year’s deadline.
The shadow secretary for women and equalities, Dawn Butler, said: “Gender pay gap reporting was meant to provide transparency, but the fact that companies have given inaccurate data and faced no sanctions makes a mockery of the whole system.”
Responding to a Freedom of Information request, the EHRC, which is responsible for enforcing the gender pay gap reporting rules, said it had sent enforcement letters to 1,456 companies on 9 April 2018 in relation to last year’s figures and all companies required to submit data had subsequently filed gender pay gap information. However inaccurate figures still remain on the government portal.
EHRC said they had completed enforcement against 100 employers who submitted suspicious-looking data last year. They said that while they were not currently pursuing enforcement action against any companies who reported last year, that didn’t mean they couldn’t do so retrospectively. However employers appear to still be filing figures for 2017 as of February 2019.
Days before the reporting deadline last year, the Guardian reported that a number of companies had filed mathematically impossible results, with gender pay gaps of more than 100%. Some companies had entered zeros in all fields, reported mathematically impossible bonus gaps and removed key workers from their figures.
EHRC’s chief executive, Rebecca Hilsenrath, responded to the figures by saying: “We have mechanisms in place to identify questionable data, and have the power to enforce against any employer whose published information doesn’t comply with the legal requirements.”
But Guardian analysis of company filings, which were due on 4 April 2018, show that 35 employers still have filed mathematically impossible figures.
What is the gender pay gap?
The gender pay gap is the difference between the average hourly earnings of men and women. The figure is expressed as a proportion of men’s earnings. According to the ONS, the gap between what UK male and female workers earn – based on median hourly earnings for all workers – was 17.9% in April 2018, down from 18.4% in April 2017. Data in 2018 showed that men were paid more than women in 7,795 out of 10,016 companies and public bodies in Britain.
What is being published?
All companies and some public sector bodies in Great Britain, except Northern Ireland, with more than 250 employees had to report their gender pay gap to the Government Equalities Office for the first time by by 4 April 2018. The second year of gender pay gap reports - and the first indicator of how public bodies and companies are performing - must be filed by April 2019
What’s the difference between the mean and the median figures?
Commonly known as the average, the mean is calculated by adding up the wages of all employees and dividing that figure by the number of employees. The mean gender pay gap is the difference between mean male pay and mean female pay.
The median gap is the difference between the employee in the middle of the range of male wages and the employee in the middle of the range of female wages. Typically the median is the more representative figure, because the mean can be skewed by a handful of highly paid employees.
What will happen if companies don’t report?
The Equality and Human Rights Commission (EHRC) said that, while it would approach employers informally at first if they failed to publish figures by the deadline, businesses could ultimately face “unlimited fines and convictions”. However, information published following a freedom of information request by the Guardian showed that no companies have been fined to date despite hundreds failing to accurately file their gender pay gap figures on time.
According to EHRC guidance on enforcing gender pay gap regulations: “Employers who submit data that has not been calculated in accordance with the [Gender Pay Gap Reporting] will be in breach of the regulations and subject to enforcement action in the same way as those who publish no data at all.”
The organisation’s enforcement policy says that, in the first instance, they write to organisations that fail to file their gender pay gap information, setting out the law and asking them to comply within 28 days. If an employer fails to do so, the EHRC can eventually apply for a court order, which could then lead to a financial penalty.
Among the companies that missed the deadline for submission or refiled their results for 2017 are the Ministry of Justice, the Law Society, Arriva plc and LK Bennett.
So far a total of 1,402 companies have reported their gender pay gaps this year, out of 10,000 which are expected to file. Banks have filed some of the most egregious gender pay gap figures. Barclays Bank plc reported a median gap of 44%, meaning on average women are paid 56p for every £1 a man earns at the company. That figure widens to a 71% median bonus gap, meaning on average women are awarded 29p to every £1 awarded to a man in bonus pay.
The bank also disclosed women only account for 19% of its highest paid staff. The data does not show significant changes on the reported 2017 figures, when the hourly pay gap stood at 43.5% and the bonus gap stood at 73%. There has also been no change in the gender diversity among the top earners at the bank.
Lloyds Bank plc reported a median gap of 41.7%, while Royal Bank of Scotland reported a median gap of 36.8%. Lloyds Banking Group reported a pay gap of 32.8% and PricewaterhouseCoopers had a gap of 32.3%.
Butler said that the EHRC should be encouraged to use the full force of its powers to force companies to comply with the law: “News that the gender pay gap is growing in hundreds of companies is extremely worrying and this latest failure in reporting raises serious questions about the government’s commitment to tackle this issue.
“The next Labour government will require employers to publish action plans or face auditing or fines. That’s how to close the gender pay gap.”
We'd like to hear what, if anything, has changed since last year. We'd also like to know if any initiatives have worked, and what else needs to be addressed to close the gender pay gap.
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An EHRC spokesperson said: “It is an employer’s responsibility to ensure that their figures are correct. Our enforcement against data which looked inaccurate or unlikely has found that they were a result of errors, rather than a deliberate attempt to mislead. We have worked closely with employers to identify and correct errors and have written to those we believe to have inaccurate data.
“This has been a steep learning curve for employers and as they get to grips with the calculations, it is likely that fewer errors will be made. As with any self-reporting law, employers can be asked in any reporting year, to verify their historical figures and face enforcement action if found to be deliberately misreporting. Through our enforcement approach we achieved 100% compliance without the need for costly and lengthy legal process, which is something to celebrate.”
• This article was amended on 4 March 2019. Due to an editing error, an earlier version referred to Dawn Butler as “Labour’s minister for women and equalities”; Butler is the shadow secretary of state for women and equalities. The name of the Equality and Human Rights Commission was also corrected.
