Some gender pay gap reporting “statistically improbable”

Companies submitting their gender pay gaps are getting their sums wrong and providing statistically impossible numbers, according to an equal pay expert at a law firm.

Lorraine Heard of Womble Bond Dickinson believes the problem is more serious than revealed today in an FT investigation into the accuracy of the gender pay gap submissions made so far by 322 organisations.

The FT has today reported that more than 5% of the UK companies to have submitted their gender pay gap data have recorded information that is statistically improbable and therefore “almost certainly inaccurate”.

The organisations identified include A Kahn Restaurants, which is a McDonald’s franchise; the north Tyneside branch of Age UK; and Dana UK Axle, a car part manufacturer.

One company, Hugo Boss, which employs 900 people in the UK, initially reported that it had no pay gap of any kind between what it paid men and women. It also said that it had 53% men and 47% of women in each of the four pay quartiles and that all employees received a bonus.

After the FT pointed out to Hugo Boss that its results were unusual, the fashion house resubmitted its data this time recording a mean gender pay gap of 33% and a median gender pay gap of 77%.

In total, 16 companies reported that male and female staff were paid exactly the same, so they had 0% gender pay gap measured by both the mean and median.

“Whilst it is not impossible for a company to have a zero gender pay gap it is highly improbable that the gap would be zero when measured on both a mean and a median basis,” said Heard.

“Some companies are publishing gender bonus gaps of more than 100%.  This is simply not possible if the calculations are completed correctly… The fact that some organisations are reporting a positive gender bonus gap in excess of 100% reveals that not all employers are doing their sums right.”

Womble Bond Dickinson also suggested that companies were coming unstuck due to:

• the incorrect handling of salary sacrifice schemes;
• the potential for different approaches for comparing employees with irregular working hours;
• the inaccurate handling of incentive and other payments that fall within the statutory definition of ‘bonuses’;
• confusion regarding the correct handling of bonus payments that should be included as part of the gender pay gap figures, in addition to the gender bonus gap figures.

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Of the estimated 9,000 private employers who have more than 250 employees (with more in the public sector), 322 organisations have published their gender pay gap figures to date.

“There is no point in having transparency in gender pay unless all organisations are confident that they are entering a level playing field when they publish their results,” added Heard.