City firms have been wrapped up in an equality row after it was revealed diversity proposals will allow companies to include transgender women in their gender roll calls.
Equality targets will require thousands of Britain’s biggest companies to close the gender pay gap.
But the proposals define a woman the same way as LGBTQ campaign group Stonewall rather than the way gender is usually recognised under UK law.
If they go ahead, companies can meet percentage targets by including transgender women as female in their self-reported data — despite them not necessarily facing the same discrimination relating to their sex.
Critics claim the move has been brought through by ‘stealth’ by industry regulator the Financial Conduct Authority (FCA).
New diversity targets will require thousands of Britain’s biggest companies to close the gender pay gap — but define women as Pictured: Sheldon Mills, who helped draft the proposals and is also acts as chairman of trustees at LGBTQ campaign group Stonewall
Barrister Akua Reindorf said companies could land in legal trouble if they follow the advice ‘if they don’t have an idea of who’s a man, and who’s a woman in their workforce’.
And concerns have also been raised about the role of FCA executive director Sheldon Mills, a solicitor from Cardiff, who helped draft the policy.
Mr Mills also acts as chairman of trustees at Stonewall and helped draft the diversity targets in the Listing Rules, which require companies to record the percentage of female staff in senior board positions based on their self-identification rather than legal sex.
A consultation paper recommends ‘at least one of the senior board positions is held by a woman (including individuals self-identifying as a woman)’.
It recommends at least 40 per cent of board members are women.
But critics say the data — which companies would have to disclose on a ‘comply or explain’ basis — would be skewed.
Ms Reindorf told The Times: ‘A trans woman who transitioned late, in her fifties for example, who benefited from being treated as a man and paid as a man throughout her career, could really skew the figures.
‘It makes the data inherently unreliable. It is unsafe as a matter of principle. The idea behind the sex pay gap is to identify systemic sex-based discrimination and rectify it.
‘That’s the idea. It’s to right the historical wrong of women being underpaid.’
The FCA said it expects to bring in the new rules by the end of the year, subject to board approval.