Subsidiary companies leading to ‘skewed’ gender pay gap reporting

Universities’ establishment of subsidiary firms to hire staff could result in misleading figures in their gender and ethnicity pay gap reporting, experts have warned.

Numerous universities have begun employing staff through subsidiaries in a bid to cut pension costs. Institutions are not required to submit to the Higher Education Statistics Agency (Hesa) pay data relating to such staff, whereas they are for directly employed staff.

Even when subsidiaries’ figures are reported, noted a Higher Education Policy Institute (Hepi) report released earlier this week on the challenges facing professional services staff, the rise in staff employed through such companies could result in lower-paid and higher-paid workers being “separated”, given that professional staff, who are generally less well paid, are more likely to be employed via subsidiaries.

All employers with more than 250 employees have a statutory requirement to report their gender pay gaps, but subsidiary companies with staff numbers below the threshold are exempt.

The Hepi report recommended that universities publish combined figures to ensure transparency.

Southampton Solent University, where professional services staff have been hired largely through a subsidiary firm since 2018, reported a median gender pay gap of 0 per cent for 2025. It reports separate figures for its professional services subsidiary, for which the median gender pay gap is 6.9 per cent, but it does not include a combined figure.

The University of Staffordshire – which previously told Times Higher Education that about 60 per cent of its 1,600 staff members were employed through a subsidiary firm – reported in its gender pay gap report for 2025 a median pay gap of 0.87 per cent. The report makes no mention of any subsidiary firms, but the university said in a statement that the figure includes staff from the subsidiary, which does not publish separate figures.

Amanda Owen-Meehan, consulting director at AHEP Consulting, said that “if lower-paid roles are disproportionately held by women, both the university and the subsidiary can appear to have narrower gender pay gaps than would be shown by a combined calculation covering the whole workforce”. As lower-paid roles have a higher proportion of ethnic minority staff, she continued, ethnicity reporting gaps are also affected.

The impact is “huge”, she said. “It skews the figures. We’re seeing a rise in [subsidiary hiring], so I think the problem is only going to become more pronounced.”

She encouraged any university establishing a subsidiary structure to publish combined pay gap figures, saying there was “no excuse” for universities not even referencing the existence of their subsidiary firms in their reporting.

Coventry University says in its 2025 report that it “consist[s] of several legal entities, but we are currently only required to report gender pay gap figures for six of them”.

“This is due to how different staff groups are structured and distributed across the University, leading to the formation of multiple entities within the Group.”

Coventry noted that it had not included the pay gap for one subsidiary firm it had previously reported “due to a decrease in headcount”. According to its website, it has 13 registered UK companies; its Pay Gap Report gives overall median gender pay gap figure of 11.37 per cent for the whole group.

Universities are also not required to report employment details about the staff in their subsidiaries – including staff numbers, demographics and salary details. This could result in a lack of transparency about the employment conditions of university workers, said John Britton, lead consultant at AHEP.

Transparency on employment models is particularly important as universities undertake major restructures and job cuts, Britton argued, adding that Hesa should make it a requirement to report details on every member of a university’s staff.

Not doing so “means you don’t know about the ethnicity or the gender mix of staff in the subsidiary company”, he said. “It means you’re just losing sight of any kind of accountability for whether those alignments are fair.”

Coventry, Southampton Solent and Hesa have been approached for comment.

juliette.rowsell@timeshighereducation.com