The Government is pressing ahead with changes to the Equality Act 2010 following public consultations last year and over the summer. Two of the planned changes result from the Government's 'Red Tape Challenge', which aims to ease the burden of regulations on business. The third follows on from last year's 'Modern Workplaces' consultation, and is aimed at closing the gender pay gap.
Red tape challenge
Earlier this year the government proposed repealing three specific provisions in the Equality Act: the rule that employers are liable for repeated discriminatory harassment of their staff by people from outside their organisation where inadequate steps have been taken to prevent it; the 'questionnaire procedure' that enables people who think they have been unlawfully discriminated against to seek information and explanations from the person they believe has discriminated against them; and the power given to Employment Tribunals to recommend that an employer take certain steps to avoid others being affected by discrimination.
The Enterprise and Regulatory Reform Bill, which is currently being debated in the House of Lords, has now been amended to effect the first two of these changes. As for the power to make recommendations, the Government says this is not high priority and it has no plans to amend the Bill to cover this. That rather suggests the recommendations power will stay in the Equality Act for the foreseeable future as it will be difficult to find Parliamentary time to pass another Bill to amend the Act for a second time.
The change to the third-party harassment provisions should ease some of the regulatory burden on employers, in that there will be less of a need to take proactive steps to attempt to control the behaviour of, for example, customers, service users and suppliers. However, its impact should not be over-stated. Many employers will consider it a matter of best practice to do what they reasonably can to protect their workforce from offensive behaviour by others anyway and in this regard the law change could prove unhelpful as the ability to point to a legal obligation can help employers to tackle difficult customers. Furthermore, turning a blind eye when there is clearly a problem could still lead to trouble even if the law is changed: an employee left to fend off or put up with offensive behaviour without support from their employer is probably going to be unhappy in their job; if morale suffers so too could performance and ultimately the employee might leave and claim they have been constructively and unfairly dismissed or even bring a personal injury claim if the impact is particularly severe. What is more, if the reason for the employer's inaction is related to race or sex or some other characteristic covered by discrimination law, this could constitute unlawful harassment even if these changes are adopted. It is also questionable whether changing the law in the way suggested is consistent with EU law; the European Directives in this area are simply unclear.
As for revoking the 'questionnaire procedure', it is important to bear in mind that an employee or customer will still be able to ask questions about a situation where they think they have been discriminated against; and if the employer or service provider refuses to respond or provides an answer that is evasive, a tribunal or court could still, in an appropriate case, take account of that fact in deciding if there has been discrimination. Really all that will change is that the formal mechanism for asking questions and providing answers will be revoked. Whilst this change is superficially appealing, it has to be said that this formal regime does have advantages by providing some certainty around the time-frames within which questions should be raised and an employer obliged to answer (or risk an adverse inference); losing these timescales runs the risk of a claimant seeking a number of 'bites at the cherry', raising a series of questions over a significant period.
Equal pay audits
The Enterprise and Regulatory Reform Bill has also been amended to give the Government power to make regulations that would require employers to conduct a pay audit if they lose an equal pay case (or a sex discrimination case related to pay). The precise details of what an audit will require, and how and where the results of an audit must be published, will be set out in regulations, on which there will be a further consultation.
The Government has said that micro-businesses (presumably those with fewer than 10 employees) will initially be exempt from the regulations. There are also exemptions for organisations where an audit has been completed in the previous three years, or where the benefits of an audit are outweighed by the disadvantages.
Given that the requirement to carry out a pay audit will only apply as a consequence of losing a relevant tribunal claim, the impact of any change in the law will be limited. Nevertheless, many organisations will be concerned at the move, which seems to be swimming against the deregulatory tide of other government policies. Employers will feel under increased pressure to settle equal pay claims that they might otherwise have defended, to avoid the risk of having to carry out a time consuming analysis of pay and jobs across their organisation. That said, the Government's plan to push ahead with this proposal is not altogether surprising: in 2010 the coalition partners both gave election manifesto commitments to introduce compulsory pay audits in some shape or form. The present proposals reflect the Conservative party's pledge to 'force equal pay audits on any company found to be discriminating on the basis of gender', rather than the much more extensive approach preferred by the Liberal Democrats which would have required 'fair pay audits' for every company with over 100 employees.