Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

The pay gap gap

The pay gap gap

The UK has a gender pay gap problem. It’s not just the gap, which still favours men over women across much of the economy. It’s a bizarre loophole that can mask unfairness and financial insecurity.

Thousands of FTSE 100 employees at companies including Tesco, WPP and Schroders are being missed by pay gap reports because rules do not require them to be included, Tortoise has found.

The rules mean employers can avoid publishing a gender pay gap figure that covers their whole workforce. They also allow gaps to go unmeasured when big companies report as multiple smaller ones.

New pay data that UK companies were required to produce this week showed that the gender gap at Britain’s banks has barely shrunk in five years and men’s bonuses at City firms are still at least 50 per cent higher on average than women’s. 

But holes in the data mean the information provided by some of Britain’s biggest companies often doesn’t give the full picture:

  • Tesco provides no figure for its full UK-based workforce, but instead reports 12 separate pay gaps covering a total of around 275,000 employees, 85 per cent of its total of approximately UK-based 325,000 employees.
  • WPP, the advertising group behind Dove’s “courage is beautiful” campaign, reports 13 separate pay gaps, with the data covering under 80 per cent of its UK-based workforce, leaving out approximately 2,000 employees. 
  • Schroders, the London-based fund manager, reports data that covers just 76 per cent of its UK-based workforce, leaving more than 700 employees unaccounted for.

Why are people being left out? The law states that all companies with over 250 employees must report their pay gap figures to the government. 

Often, large companies are made up of a web of multiple smaller ones, meaning anyone employed at a constituent company with fewer than 250 people won’t be counted. 

Part-time, self-employed and full-time employees are counted, but those being paid a reduced rate aren’t. That includes anyone who was on furlough with lower pay when the data was collected – and more women than men fall into that group. Charlotte Woodworth, Gender Director at Business in the Community, says the exclusion of furloughed employees from this year’s data means the starting point for understanding the gender pay gap across UK companies is with “one arm tied behind our back”. 

The way the data is reported can also make it impossible to find a single pay gap for a large company. Tesco plc, for example, consists of a group of over 100 UK-based companies rather than a single large one, so is not required to publish a UK-wide pay gap for its whole workforce. 

Instead, it reports separate pay gaps for each of its constituent companies that have at least 250 employees, including Tesco Bank, Tesco Stores, and Tesco Family Dining.

Anyone working at a company within Tesco’s group structure with fewer than 250 people would have been missed out because the rules don’t require the data to be reported.

To get an idea of the scale of the problem, we asked every member of the FTSE 100 about the data they do publish. The majority of FTSE 100 companies consist of a group of different-sized companies, meaning they aren’t required to publish pay gap data on their full workforce. 

Nor are they required to publish a consolidated pay gap number for the whole group. A sizeable number of companies chose voluntarily to report a consolidated UK figure covering their full workforce, including all subsidiaries. But because it’s not required by law, many don’t. Of the FTSE 100, we found 35 companies that chose not to publish a figure for their UK-wide gender pay gap. 

Even when companies voluntarily report on their full UK-based workforce, the numbers tend to be buried in pay gap reports or annual reports on their websites.

To note: in 2019/20 when companies were not required to produce gender pay gap data because of the pandemic, nearly half didn’t. 

Why it matters

  • Fairness. Pay gap reporting is a vital window on workplace inequality, for employers as well as workers. It’s “important for corporate groups to be aware of, and if necessary justify, pay differentials between different parts of the larger organisation,” says Lorraine Heard of Womble Bond Dickinson, a law firm.
  • Cost of living. Now more than ever, Woodworth says, pay gap reporting “reminds us about the power of financial security – and financial insecurity”. 
  • UK lags. Researchers at King’s College London’s Global Institute for Women’s Leadership have criticised the UK’s uniquely “light-touch approach” compared with other rich countries on data collection requirements for employers, and on actions expected of them when gender pay gaps are identified. 

This isn’t the first time these issues have been raised. When the rules were being drawn up in 2016, several companies including BT raised concerns during a government consultation. 

BT suggested they should be required to publish both at the group level and at the subsidiary level to avoid parts of the business being missed out, but the concerns were dismissed. 

The battle has since moved to parliament. Stella Creasy, the Labour MP, has introduced a bill to reduce the employee threshold to 100 for mandatory reporting. The result would be to capture many smaller companies as well as the smaller entities within large ones – but for now there’s little prospect of the bill becoming law. The pay gap gap persists.

Photographs by Getty Images