How does gender pay gap reporting affect transgender employees?

The new gender pay gap reporting laws currently make no mention of transgender or non-binary employees – employers can only classify staff as male or female. Could this grey area mask a wider pay gap issue? Alex Christen from Capital Law investigates.

What do the new laws say about transgender employees?

At the moment, the gender pay gap legislation expressly requires employers to report on ‘men’ and ‘women’. But, these terms aren’t defined in any more detail – leaving employers to decide how to categorise transgender or non-binary staff.

How should employers classify transgender employees for their report?

Classifying employees by gender can be a sensitive subject for employers – gender pay gap reporting aside.

Acas and government guidance suggests using employees’ HMRC or payroll records to determine their gender.

But, if they don’t have that information – or if they think it’s no longer reliable – employers should try to confirm which gender an employee identifies with. This can be easier said than done, though, and employers risk isolating staff, or breaching data protection, if they don’t handle it sensitively.

Other guidance suggests employers should categorise employees by their ‘lived’ identity on the snapshot date (5 April for private sector, and 31 March for public-sector employers). But this can be difficult too – and employers should be wary of incorrectly selecting what they believe is the correct identity.

What if an employee is transitioning, or is non-binary?

There is a perception that transitioning involves medical treatment – but this isn’t the case.

The Equality and Human Rights Commission code of practice confirms that gender reassignment is a personal process much wider than seeking medical intervention; it includes consciously thinking that you wish to identify with another gender.

This can be problematic for employers in terms of reporting, as they may be unaware that an employee is transitioning in the first place.

For employees that don’t identify with either gender, the Acas and Government guidance suggests that they should be excluded from the report. But this approach is not ideal – it effectively says that, if you don’t identify with either gender, you cannot take part in pay analysis.

So, with the legislation as it stands, reporting on men and women only could be concealing a further gender pay gap – between transgender and cisgender (a term used in the transgender community to describe someone who is not transgender) staff.

To encapsulate their true pay structure, employers could voluntarily report figures on their transgender staff, which in turn would highlight where pay gaps actually lie – which is the very essence of pay gap reporting.

What are transgender employees’ legal rights?

Gender reassignment is a protected characteristic and employees cannot be treated less favourably because they are undergoing gender reassignment. They also can’t be subject to indirect negative treatment or harassment because of any gender reassignment.

But what does gender reassignment mean? Again the perception is that the law will only protect those going through medical treatment.

In July 2016, the Women and Equalities Commons Select Committee recommended several changes, including switching ‘gender reassignment’ to ‘gender identity’ so as to encapsulate a wider group of people.

The government, however, chose not to take this recommendation forward, on the basis that the current definition was sufficient, which is perhaps indicative of a lack of understanding of the issues that transgender employees really face.

What if a transgender or non-binary employee believes they’re being paid less than someone doing equal work?

To bring an equal pay claim under current law, you need a comparison between a woman and a man, the concept being that men and women who do equal work should be paid at the same rate.

So, to bring an equal pay claim, a transgender employee would have to identify themselves as a particular gender – and then compare themselves to someone doing the same role in the opposite gender.

Clearly, this distinction won’t work for all and could exclude some people from the protection envisaged under equal pay legislation simply because they do not align with either sex.

As well as isolating some employees, they may still believe they are not being paid at the same rate as others doing the same work, simply because of their identity, which is not a positive and supportive place to be.

How can employers tackle inequality?

There isn’t enough data at the moment to compare trans and cisgender pay.

While studies suggest there is a discrepancy, there isn’t any hard evidence – meaning there is little visibility as to what the issues are, where they come from, and what employers can do about it.

Reports suggest though, that the transgender community does face conscious or unconscious bias, which may or may not result in pay inequality.

Employers should be as proactive as possible with their gender pay gap reporting – taking the initiative to accurately record, and analyse, all of their figures, no matter the gender of their staff.

Another positive step would be to carry out an equal pay audit focusing on all staff – including transgender and non-binary employees – so that they can try to understand the reason behind any potential equal pay issue. This way, they will also be prepared if any issues that are raised.

As well as analysing pay, employers should strive to create an inclusive environment – and increase their own awareness of transgender issues in the workplace, so that they can act appropriately and sensitively.