This is a choice piece of political chutzpah. Some time back members of Parliament passed a law detailing how companies should report their gender pay gap. The first set of results – mandated ones that is – came out this spring. Now MPs have blasted Allen & Overy for reporting the gender pay gap in the manner laid down in that law. Passed, you know, by MPs.
The magic circle law firm Allen & Overy (A&O) has been sharply criticised by MPs for making “a nonsense” of gender pay gap reporting by failing to include the effect of £1.5m payouts to senior partners.
A&O refused to meet the demand from the Business, Energy and Industrial Strategy (BEIS) Committee to re-calculate its gender gap including the remuneration of its 441 full partners at the top of the company hierarchy.
“The exclusion of the highest paid people in organisations makes a nonsense of efforts to understand the scale of, and reasons behind, the gender pay gap,” the MPs said.
Well, yes, but then who is to blame here? The official guidance on how to report the gender pay gap is:
The term “employee” is not defined in the Regulations, but
the Guidance indicates that an employee means anyone
who is engaged under a contract of service, a contract of
apprenticeship or a contract personally to do work will be
included. This includes all employees and casual workers as well
as some contractors where there is a requirement for personal
service. Partners in a partnership or LLP are excluded from the
obligation to report, although it is arguable that they should be
included for the purposes of determining whether a particular
employer reaches the 250 threshold.
Should partners be included in the report of a partnership’s gender pay gap?
No, partners should not be included in the report of a partnership’s gender pay gap, but they should be included when determining whether or not the duty to report applies to the partnership. The gender pay gap reporting duty applies to employers with 250 or more employees. The relevant definition of employee is the broad definition under the Equality Act 2010, which includes individuals employed under a contract personally to do work, as well as those who have a contract of employment. Where the employer is a partnership, whether a traditional partnership or a limited liability partnership, partners should be included when determining whether or not the employer has at least 250 employees, provided that the partners have a contract of employment or a contract personally to do work.
However, partners should not be included in the calculations of the partnership’s gender pay gap or gender bonus gap, or when reporting the number of employees in each quartile. This is because the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI 2017/172) require employers to report information about “relevant employees” and partners are specifically excluded from the definition of “relevant employee”.
The gender pay gap report is for employees. Partners are not employees. Of course, it was always open to MPs to, while they discussed the law in the House of Commons – that rigorous debate and examination which all putative laws undergo – to insist that partners should be included in the listings of such firms. They didn’t, presumably for some good reason.
After all, we could never have it said that ignorance, imbecility or just plain flat out sloth are the basis of our laws now, could we?