Gender pay gap reporting is “flawed in principle” and must be altered to simplify the process for employers to generate clearer results and avoid gaming of the system, a report has said.
Proposals released today by the Royal Statistical Society (RSS) set out a list of 10 recommendations to improve pay gap reporting, reduce ambiguities and make it easier to assess employers’ progress.
Numerous organisations entered their pay gap data incorrectly in 2017/18, the report said, urging the government to develop guidance alongside experts to help explain statistical concepts in a simpler format with the addition of illustrations to reduce ambiguity.
Professor Jen Rogers, vice president for external affairs at the RSS, said: “We warmly welcomed the government’s original decision to introduce gender pay gap reporting. We also recognise the important improvements that it has since made. But we would urge it to go further and faster.
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“I hope it will heed RSS’s 10 recommendations and turn a system that’s great in principle into one that’s equally impressive in practice.”
An online calculator tool should be made available to businesses with inbuilt ‘sanity checks’ to prevent the submission of anomalous and incorrect data, the report said.
In the first round of reporting, one employer stated it had a gender pay gap of 121 per cent, the report noted, which would have meant the median female employee earning negative £0.21 for every £1 earned by her median male counterpart. boi
The sanity checks would automatically question the input of such figures, the RSS said.
Tom Hellier, senior client partner at Korn Ferry, told People Management it was important businesses knew how to correctly calculate their pay gap. "If you can’t get that calculation right then you will be explaining something that is not necessarily there,” he said.
“Of those organisations that have correctly calculated their results, there might additionally be capacity and capability gaps for getting into the detail and understanding what the numbers are telling you."
The RSS also called for gender pay data to only be submitted in pounds and pence, as using percentages left too much room for confusion.
Currently, there are four statistical methods for calculating the percentage difference in pay gaps and despite the government recommending one option, evidence suggests some organisations calculate their result using others, which creates inconsistent data.
The report added the government should offer training courses to help develop in-house statistical skills among HR teams, as organisations that do not employ statisticians are currently at a disadvantage.
Employers’ records also should be published side by side rather than on a standalone basis, for transparency and comparability. This would make organisations more accountable for their results and stop an unprincipled employer portraying their results in an unjustifiably favourable light, the RSS said. It added that businesses had been caught dismissing or outsourcing their lowest paid female workers to improve their figures.
In 2018, parliament recommended that the threshold for inclusion in reporting should be reduced from 250 employees to 50. But the RSS refuted this stance and said it would be “irresponsible” and lead to the production of “unreliable data”, damaging the system rather than improving it.