A clear message to large employers has been issued to ensure that they take the Gender Pay Gap Regulations (GPGR) reporting requirements seriously and that they accurately report the data by the deadline of 4 April 2018. If not, they risk being targeted by the Equality and Human Rights Commission (EHRC) for enforcement action. As the Chief Executive of EHRC has said “We won’t hesitate to resort to our more stringent legal powers – including enforcing unlimited fines and convictions”.
Failure to comply with the new GPGR could result in enforcement action by the EHRC with potentially unlimited fines. On 19 December 2017, the EHRC announced a new draft policy on enforcement of the regulations. The policy will subject to public consultation until 2 February and the proposed measures will cover both private and public sector employers. The EHRC is the equality regulator with responsibility for enforcing the Equality Act 2010. It has statutory powers to investigate and issue unlawful act notices under the Equality Act 2006.
Employers with 250 or more employees should be reporting on their gender pay gap based on a pay data snapshot as at 5 April 2017 with the deadline for publication being by 4 April 2018. Clearly peer pressure has been regarded as insufficient to enforce compliance; one in 40 of all large employers who have reported to date on the Government’s website appear to have published “statistically improbable” data since they have reported exactly the same number of men and women in the four pay quartiles. Some employers have reported anomalous data and then re-entered their information several times.
The EHRC’s stated approach is to seek informal resolution to non-compliance and to educate employers on their statutory gender pay gap reporting obligations. They intend to achieve high level compliance by raising awareness of the GPGR obligations which will no doubt include “calling out” employers who are obviously not complying – the so-called “naming and shaming” of defaulting employers or those paying only lip service to the reporting requirements.
The EHRC intends to monitor which employers have published the information and the accuracy of that information with a view to holding non-compliant employers to account. It also intends to publicise compliance rates and will promote enforcement work to encourage others.
The EHRC proposes that where an employer has not complied by the reporting date:
- The EHRC will write to the defaulting employer requesting acknowledgement within 14 days and confirmation that they will comply retrospectively within 42 days of date of letter for the past reporting year. The employer will also be required to provide confirmation that they will comply for the current reporting year
- If the necessary assurances are given, the EHRC will simply monitor.
The proposed formal process could result in unlimited fines and costs awards for the enforcement action. The steps to formal compliance are invasive and will require compliance over a specified time period in order to avoid the financial penalty.
If the necessary assurances under the informal approach are not given, the EHRC will take enforcement action as follows:
- Investigate whether the employer has committed the suspected unlawful act (breach of the GPGR)
- Consider issuing a Notice to provide information and/or an Order to take steps to comply
- If the employer fails (without reasonable excuse) to comply with either such Notice or Order or falsifies anything in relation to it, they risk a level 5 fine – which means no maximum limit on the amount they may be fined plus legal costs
- Seek a formal Agreement (e.g. action plan for compliance) with the employer, but if this is refused an Unlawful Act Notice may be issued requiring the employer to prepare a draft action plan for approval within six weeks. Again, non-compliance could result in a “level 5” e.g. unlimited fine plus legal costs.
The EHRC states that for 2018/19 it intends to focus its enforcement work on employers who have not published the information required and that if it has capacity to do so it will take action against employers for the publication of inaccurate data.