The Equality and Human Rights Commission (EHRC) is adopting a rigorous approach to the enforcement of the gender pay gap reporting (GPGR) regime.
On April 9 2018 the EHRC stated that it would send letters to all employers that it believed had failed to comply with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Employers would be given 28 days to comply with the regulations (ie, until May 7 2018), after which the EHRC would begin an investigation, with an unlawful act notice being issued shortly thereafter.
Was this merely hot air or will the EHRC be getting tough on those that have failed to report their figures? Early signs suggest the latter.
The EHRC confirmed in a Freedom of Information Act request that it has sent 1,456 letters to employers that it believes have failed to comply with the regulations. The letters were sent on April 9 2018, just as the EHRC had promised. A copy of the letter is available here.
Employers that have not received one of these letters and did not report their gender pay gap appear not to be on the EHRC's radar (although that does not mean that they are legally compliant).
Sending 1,456 letters was relatively straightforward, but the next stage planned by the EHRC is potentially far more labour intensive. The EHRC has indicated that it will be investigating every company that has failed to comply with the regulations.
Under Section 20 of the Equality Act 2006, the EHRC is empowered to investigate and take action in relation to "unlawful acts" – namely, acts which violate the Equality Act 2010.
The 2017 regulations were created under Section 78 of the 2010 act, but employers are under no obligation to comply with the regulations. Section 78 merely states that the secretary of state has the power to create regulations requiring the publication of gender pay gap information, and that a method of enforcement may be prescribed in the regulations. However, the 2017 regulations are silent on this matter, leading some to argue that the EHRC has no powers at all.
The EHRC has rejected this argument, stating: "We have accepted the Government's view that a company's failure to comply with the requirement to publish its pay gap will be an 'unlawful act' within the meaning of section 34 of the Equality Act 2006."
When a public body acts outside its powers, the standard legal recourse is judicial review – a claim brought before the High Court involving a judge's review of the lawfulness of a decision or action by the body in question. Where the EHRC is concerned, the judge would be required to determine whether it possesses the enforcement powers that it claims to have at its disposal. Judicial reviews can often be heard quickly.
The GPGR regime is clearly here to stay, at least in the medium term. The EHRC is attempting to follow through on its threats to crack down on rogue employers that fail to comply with the law. While there may be a question mark over whether the EHRC has the requisite powers, it is almost certainly cheaper and easier for employers simply to comply with the regulations, rather than mount a legal challenge – quite apart from the adverse publicity that would likely result from such action.
For further information on this topic please contact Colin Leckey or Tom Heys at Lewis Silkin by telephone (+44 20 7074 8000) or email ([email protected] or [email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.
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