U.K. gender pay gap reports rife with defects

By the 12 February this year, 767 reports had been submitted, according to the report, and while this is a 31 percent increase over last year, “the content, accuracy, and compliance still need to improve for many organisations.” According to Anthony Horrigan, CEO of paydata.com, there are upwards of 70 organisations that have their 2017 report in the 2018 folder, for example. “The legislation says you have to have the disclosures on your Website for a minimum of three years,” says Horrigan, “and there are a lot of companies that are in contravention of that. By 5 April, everybody who is in scope and has a Website should have both reports on there, so people can look at the trend and see how much progress has been made from one year to the next.”

The report, however, notes that some 85 percent of organisations have now reported twice. It says that while this should have been an opportunity to report on progress and plans for future improvement, few have. In addition, some 244 organisations did not provide a link to their written report, a clear requirement of the legislation. In fact, many of the links provided were broken or led to a “page not found” error.

“While the EHRC [Equality and Human Rights Commission] has not fined any organisations yet, there are other issues that organisations are exposing themselves to by reporting inaccurate data. It might impact their ability to attract talent, or in some cases investment.”

Innes Miller, Chief Commercial Officer, Paygaps

Mistakes occur, says paygaps.com, when there is misunderstanding of the regulations, and one of the best ways to avoid this is to have third-party verification of the data. Paygaps Chief Commercial Officer Innes Miller says, “To provide more certainty, some larger organisations have engaged lawyers to help them understand how they should be treating, for example, salary sacrifices and bonus payments, which have both caused confusion in certain situations.”

The “site has basic error checks, but it doesn’t spot everything. A thorough data check should be part of the process,” notes the report. “Just under a third of all organisations have made one or two administrative errors when carrying out the reporting process.”

“In some cases, this can come down to how the regulations have been interpreted,” says Miller. “Another common mistake we see is quartile data being entered the wrong way around,” he adds, “so lower-quartile figures are in upper-quartile fields and vice versa.”

In addition, 79 reports were signed by a person below the required management level of a director or other senior officer. This non-compliance often led to further errors. “We have also identified a correlation between reports with mistakes and the named responsible person,” says Miller. “Where the individual is not an officer of the organisation, we often find that inaccurate data has been submitted or the guidance has not been followed. We have seen office administrators, payroll managers, HR business partners all signing off.”

In addition, most companies last year compared their data to Office of National Statistics (ONS) data because that was what was available. With a full year of data already on record, however, ONS data, which is based on a sample of 1 percent of all working employees across the United Kingdom, may not be the most accurate data for comparisons. Employers should be looking for a more appropriate source of comparison, advises paygaps.com. In regard to enforcement, Miller says: “While the EHRC [Equality and Human Rights Commission] has not fined any organisations yet, there are other issues that organisations are exposing themselves to by reporting inaccurate data. It might impact their ability to attract talent, or in some cases investment. They may face reputational damage if their position is highlighted by the press; as has been the case on a number of occasions.”

Mandatory disclosure applies to several key metrics [see sidebar]. The rest is covered by guidance. “Preparing a plan [to address any inequities] is optional, but recommended, as well as a narrative to explain any inequity,” says Miller. “If you don’t provide these, it highlights poor business practice and demonstrates that, as an employer, you maybe don’t care too much about addressing gender imbalance. Organisations need to consider what that says about their brand.”

“Investors are increasingly looking at these areas,” says Miller, “because they use it as a proxy to understand what the future performance of that company might be and what talent- and culture-related risks might arise. And gender is just the first step. Consultation for ethnicity pay gap reporting was finalised on 11 January this year. This may become a legal requirement in the U.K. in 2020, with reports due in 2021. Disability and social mobility pay gaps may follow shortly after.” Miller warns that many organisations don’t have the data required to meet this new legislation. “Some large employers are already starting to gather this data,” he says, “and some have already published their data as part of their gender pay gap reports. From a compliance perspective, compliance officers should be asking management and HR functions what plans they have to collect the data in anticipation of the forthcoming legislation.”