Enforcing gender pay gap reporting?

gender pay gap reporting

With the recent resignation of BBC former China Editor, Carrie Gracie and only months to go until larger employers must publish their gender pay gap, equal pay remains a hot topic. Here, Kevin Lau, a senior solicitor in the employment team at Blake Morgan LLP looks at what employers and HRs need to know.

gender pay gap employers HRs
Kevin Lau, senior solicitor at Blake Morgan LLP.

2017 represented a milestone in the drive towards eliminating the gender pay gap. In March and April 2017, regulations came into force governing gender pay reporting for specified employers in the public sector predominantly in England (the “Public Regulations”), and others governing those in the private or voluntary sectors across England, Scotland and Wales (“the Private Regulations”). The regulations require employers with at least 250 employees to report and publish their gender pay gap and a statement of its accuracy by 30 March or 4 April 2018 and annually thereafter.

Following revelations to many female BBC staff about their pay gap in 2017, it continues to be 2018’s hot topic with the recent resignation of BBC former China Editor, Carrie Gracie. However, while the BBC has published the pay bands of specific individuals (which could well lead to equal pay claims), the regulations do not compare the pay of individuals. The anonymous pay information required is aimed at getting employers to consider gender pay and improve gender diversity at all levels.

With less than three months to go, only around 520 out of around 9000 employers have published their data. A recent survey suggested one in 10 businesses would not meet the deadline. Commentators have expressed concern that so far, many employers have not complied, and some have submitted implausible figures.

The Equality and Human Rights Commission (EHRC) recently opened a consultation on enforcement for those who fail to comply with the regulations, which should prompt employers to take action.

The deadline and beyond

March and April 2018 marks the first deadline for relevant organisations to report on their gender pay gap. Considering relatively low numbers of reports, and the EHRC’s consultation, enforcement will be a topical issue in 2018.

EHRC proposes enforcement by way of an initial informal step, writing to non-compliant employers effectively permitting a further 42 days to comply.

For those subject to the Private Regulations who fail to comply, EHRC then proposes to enforce using its powers set out under the Equality Act 2006, briefly consisting of:

An investigation into the suspected unlawful act.

EHRC to gather evidence and report in draft within 28 days for employer comments.

Two opportunities for the employer to give undertakings to comply, before, and after the investigation takes place. If accepted, EHRC will monitor and discontinue enforcement.

Unlawful act notice to be issued if necessary, requiring an action plan setting out how the employer will remedy the breach.

EHRC can apply to court to require compliance with the process or with a notice. Failing to comply with a court order could lead to an unlimited fine on conviction.

For employers to whom the Public Regulations apply, there is a similar process that EHRC can follow.

EHRC’s proposals prioritise enforcement against employers who fail to publish, ahead of any action against employers who publish inaccurate data. Depending on numbers of non-compliant employers, it also proposes a staged approach to enforcement by sector, whereby tranches of randomly selected non-compliant employers will be contacted.

Comments and action for employers

EHRC’s powers of enforcement against the private sector under the Equality Act 2006 apply where there is a suspicion that an organisation has committed an unlawful act, which under section 34 means “contrary to a provision of the Equality Act 2010”. However, the Equality Act 2010 does not require gender pay gap information to be reported, it merely empowers the government to make regulations for employers to report, and to specify any offences or penalties for failure to comply.¬† Currently, it is difficult to see how a breach of the Private Regulations could be an unlawful act under the Equality Act entitling EHRC to investigate or enforce.

The Private Regulations themselves do not include any penalties or offences, despite the explanatory notes stating that non-compliance is an unlawful act. This arguably leaves scope for relevant employers to challenge any enforcement action taken, although following consultation it is possible that legislation will be amended to clarify EHRC’s powers.

Depending on the number of non-compliant employers, EHRC’s approach suggests that not all non-compliant employers will be contacted by EHRC, and that if employers are in a sector with high non-compliance, it is possible that they may not be contacted by EHRC at all, which raises the question of how effective enforcement will be.

Employers should:

Consider whether their organisation is subject to the regulations, and report accordingly.

Publish their report on the organisation’s website, and consider carefully whether they should include any explanatory statement. For example, CIPD reported in November 2017 that it had a mean gender pay gap of 14.9% but explained that if the CEO were female, this would have been reduced to 9%.

If an explanatory statement is deemed appropriate, use it to highlight any steps the organisation has taken or intends to take to address the pay gap. For example, a BBC article gave the following examples of ways to tackle a pay gap, including: promoting and enhancing pay for paternity leave so that mothers can return to work; subsiding childcare; and letting parents work from home. Other sources have suggested pay transparency and agile working.

Consider whether their sector or senior employee groups are dominated by one gender or the other, and to target recruitment accordingly. For instance, one commentator involved in the BBC’s equal pay audit has said that the BBC’s gender pay gap of 9.3% was driven by an “underrepresentation of women in the more senior jobs”.

Remember that the ultimate aim is to close the gender pay gap. Compliance with the regulations will enable an organisation to understand its own gender pay gap, the challenges it faces, and is a starting point to develop measures to close the gap.

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