Gender pay gap reporting - Are we really pressing for progress?
Solicitor Lara Kennedy asks whether gender pay reporting is really pressing for progress.
Posted on 08 March 2018
The recent focus on the gender pay gap has brought women’s rights and inequality in the workplace into the spotlight. With International Women’s Day on 8 March 2018, the campaign theme #PressforProgress, we start to ask the questions that really matter: how far have we come? Where are we going? When will it be achieved?
In this blog I start by looking at the current storm that is building on the gender pay gap reporting requirements and what measures are proposed for those employers who fail to comply.
The Equality Act 2010 enabled the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the ’Regulations’) to come into force. The Regulations apply to employers with more than 250 employees, requiring them to publish their gender pay gap report by 4 April 2018 and annually thereafter.
With the deadline just two months away, only around 1500 of the 9,000 potentially affected employers have published their gender pay gap reports. Whether those remaining will do so closer to the deadline in the aim of safety in numbers, or at all, remains to be seen.
There are two concerns; firstly that employers will not publish their results, and secondly, that the results will be inaccurate.
There is no requirement to provide a narrative explaining any pay gaps or what steps they will take to narrow the pay gap, although it is recommended to explain plausible reasons for any gaps and prevent employees making speculative equal pay claims.
The Equality and Human Rights Commission (EHRC), using the Equality Act 2010 enforcement powers, aims to ensure compliance: ’Over 40 years since the ban on sex discrimination in pay, it is shameful that women continue to be held back. But change is on the horizon and it’s about time. The law now says employers must be transparent about pay for women, and our regulatory role is to make sure this happens.’
It has published its draft plans for enforcement of the regulations with the consultation closing last month.These enforcement powers are long awaited following criticism the regulations did not have sufficient enforcement provisions in place to act as a deterrent to employers who fail to comply with their reporting obligations.
Despite their aim, the EHRC’s proposed enforcement strategy stops short and many commentators question whether they even have the legislative powers to take such action. It seems that the government has missed an opportunity to implement civil or criminal sanctions, which could have provided them with the necessary enforcement powers to ensure compliance with the reporting obligations.
Under the current plans, initially it will informally engage with non-compliant employers, focusing on those who fail to publish their results. In respect of those employers who pay lip service to the regulations by publishing its pay gap results, albeit inaccurately, the EHRC will only be taking enforcement action where it has the capacity to do so.
In engaging with non-compliant employers the EHRC will request confirmation from the employer that it will comply with their reporting requirements within 42 days of their letter and that it will comply on time for subsequent years.
If the employer remains non-compliant, the EHRC will conduct an investigation (the publication of which is unknown) and may issue a notice to enforce compliance. If this order is ignored the EHRC may obtain a court order, failure to comply with such could result in an unlimited fine. With the uncertainly as to what level of fine would be applied there is a risk that it will not act as a sufficient deterrent. This proposed enforcement process is not only vague but also likely to be lengthy in duration.
If whilst the investigation is ongoing the employer agrees to comply, and does so, no further enforcement action will be taken. But, even if an employer does publish its gender pay report, the consultation does not propose any clear enforcement mechanism to audit its accuracy. This is likely to severely limit the effectiveness of the regulations.
The EHRC has indicated that it will publicise non-compliant employers on its website in a ’name and shame’ approach. Hopefully the powers of the EHRC to publicise non-compliance will be strengthened following its consultation, exerting pressure on employers both internally from its employees and its external message.
Whilst the effectiveness of the proposed enforcement provisions is questioned, the regulations have at least compelled many employers to engage with the issue of pay disparity in their workplace. Whether employers will introduce action plans to reduce, even close, any highlighted gender pay gap remains to be seen.