How should employers treat transgender and non-binary employees when calculating the organisation's gender pay gap?

The gender pay gap reporting legislation requires employers to calculate their gender pay gap by comparing the pay of their male and female employees. The Government's statutory guidance for employers covers how to treat trans and non-binary employees in the calculation.

Following the Supreme Court decision in For Women Scotland Ltd v The Scottish Ministers, the Government has updated the guidance to say that calculations must be based on employees' biological sex. This is the case even if the employee is a trans person with a gender recognition certificate (GRC).

This presents difficulties for employers who may not know the biological sex of their employees, or that an employee has a GRC. The guidance recommends inviting employees to check and update their recorded sex, but this relies on employees being comfortable disclosing this information, which may not be the case. The guidance warns employers against singling out individual employees and asking about their sex or gender identity. In practice, employers may have to use the information they already have.

Where an employee has a GRC, the employer must be extremely cautious about how this information is shared, as this can be a criminal offence. The government guidance states that it is permissible to share the information in so far as it is required by the law on gender pay gap reporting. There should be tight controls in place to ensure that the minimum number of people necessary (perhaps only one person, according to the guidance) can access this information.