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Legal loopholes allowing companies to avoid reporting full gender pay gap

Specialist consultants have been advising companies on how to avoid reporting the gap in full.

Companies are allegedly using loopholes in the law to report a more favourable picture of their gender pay gap, according to a report.

Channel 4’s Dispatches said specialist consultants have been advising companies – who are legally obliged to publish their gender pay disparity data by next month – on how to avoid reporting their gap in full.

The options include splitting a company in two, so that the highest male earners’ salaries are reported separately, withholding details of directors’ pay if they are also classed as owners of a company and even making some employees redundant.

Employers of more than 250 people are legally required to publish data on pay for male and female staff by April 4.

The consultants were filmed by undercover Dispatches reporters, who posed as bosses from a fictitious cleaning company with 264 employees.

One adviser told the programme: “There’s various scurrilous, clever legal ruses that we can suggest to you… I mean there’s even potentially options of do you set up a subsidiary, a parent company, and stick all your highly paid bosses in that… So that they get out of the picture.

“So say you have 251 employees we might suggest that you might want to make a couple redundant… On April 3 if you could find a couple to make redundant you know you gonna be, there’s obviously unfair dismissal risk there ‘cos it might not be redundancy, you might be prepared to take it if you had the odd two to let go.”

Another adviser told the undercover reporters there may be little or no consequences for organisations that do not report their figures.

“As of today, right now, there is no direct enforcement mechanism,” the adviser said.

“So, in other words, if you didn’t publish anything at all, are you ever going to get, as of today, a fine or anything? No.

“Because in terms of the resources that has been put into policing this. It’s zero because there was no enforcement mechanism,” they added.

Commenting on the documentary’s revelations, Josephine Van Lierop, a senior employment lawyer specialising in the gender pay gap regulations, said: “I certainly don’t think that it was parliament’s intention behind the regulations that companies would split themselves up into various different holdings to avoid reporting the gender pay gap.”

Commenting on the Dispatches findings, Maria Miller MP, chairwoman of the Women and Equalities Select Committee said: “The Equality and Human Rights Commission (EHRC) really has to wake up and smell the coffee and that you know if they are going to make gender pay gap reporting mechanisms work for us then they are going to have to be tough in their enforcement too.

“The EHRC in this country has quite considerable powers to intervene on companies that they feel are breaching the equality act to take cases to court to show the strength of the legislation. At the moment they’re really not making it a great priority to take cases into court to demonstrate how strong that law is.”

Of the 9,000 companies required to submit their gender pay gap figures by the April 4 deadline, only 2,360 have so far.

The Truth About Your Pay: Channel 4 Dispatches will air on Monday at 8pm on Channel 4.

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