Kemi Badenoch has stepped in to prevent employers from collecting gender pay gap figures based on how their workers identify, rather than their biological sex.
Civil servants told employers to collect the figures based on how their identify, but the Business Secretary has vowed to intervene.
Companies with over 250 staff are obliged to report their gender pay gap, as part of the Government initiative to end the difference in salaries between the genders.
But advice from the Government Equalities Office (GEO), last updated in March 2023, suggests companies should collect information based on the gender their employees identify with.
Civil servants told employers to collect the figures based on how their identify, but the Business Secretary has vowed to intervene
PA
Under the current system, salaries of biological men could be recorded as belonging to women - something critics are concerned could skew the data.
But trans activists have argued that trans people should be included in the statistics in their own right, highlighting that they face their own, unique form of discrimination.
A report from the Human Rights Campaign Foundation, an LGBTQ+ advocacy organization, published last year, found that trans women were paid 60 cents for every $1 earned by the average worker in the US in 2021.
Badenoch is said to be "looking very closely" at how to correct the guidance to make it clearer that statistics on the pay gap are aimed at recording the difference between the biological sexes.
Gender critical campaigner Dr Kate Coleman highlighted the situation in a letter to Badenoch.
She said: "Sex has a systematic effect on pay and this is why we should ask for this information, rather than any alternative."
Coleman, director of Keep Prisons Single Sex, added: "The GEO guidance is based on an incorrect (and frankly perverse) interpretation of the gender pay gap regulations,” she wrote.
“We strongly recommend that GEO guidance is corrected to ensure that the protected characteristic of sex (as registered at birth) is used as the basis for gender pay gap reporting as this will be consistent with your updated guidance and with relevant regulations.”
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A source close to Badenoch told The Telegraph: "We are constantly finding this sort of stuff buried in Whitehall guidance and regulations.
"We’re glad Kate has brought it to our attention and we’re looking very closely at what we can do about it."