In this OnPoint we report on the Equality and Human Rights Commission's proposals for its approach to enforcing employers’ gender pay gap reporting obligations.
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the “Regulations”) came into force on 6 April 2017 and require private sector employers with 250 or more employees to disclose certain information about their gender pay gap. In summary:
- The relevant information must be provided for the first time – in relation to the position as at the first “snapshot date” of 5 April 2017 – by no later than 5 April 2018 and thereafter annually (assuming the employer still falls within the scope of the Regulations).
- The relevant information must be made available on an “appropriate website” for three years.
- The reporting obligation is to publish gender pay gap information by reference to the position at the snapshot date in April each year in relation to the mean and median hourly gender pay gap and also the annual bonus gap, including the difference between the proportions of men and women receiving bonuses.
- Employers must also publish the proportion of male and female employees in each of the employer’s lower, lower middle, upper middle and upper quartile pay bands.
- There is no obligation to provide any supporting explanation for the disclosed figures but to do so may well make sense to provide context for the raw data.
Enforcement – EHRC
During the gestation of the Regulations there had been uncertainty about the consequences of failure to comply with their obligations. The explanatory notes to the Regulations indicated that a failure to comply with the Regulations would be an “unlawful act” in respect of which the Equality and Human Rights Commission (“EHRC”) could take enforcement action under its statutory powers.
On 19 December 2017, the EHRC published its draft plans for enforcement action in relation to the Regulations. Consultation about these plans is due to close in early February 2018. In summary, in respect of private sector employers:-
- The EHRC has stated that it is committed to ensuring high levels of compliance in the first reporting year by raising awareness about the gender pay reporting obligations.
- The EHRC has indicated that it will engage with non-compliant employers informally in the first instance and that in 2018/19 its focus will be on those employers who do not disclose any data at all, with enforcement action being taken in respect of the publication of inaccurate data if it has the capacity to do so.
- In terms of informal resolution the EHRC’s proposed course of action will be to write to a non-compliant employer drawing its attention to the gender pay reporting obligations and seeking confirmation that the employer will comply with the reporting obligations in respect of the relevant year within 42 days of the EHRC’s letter and will comply on time for future reporting years. Where the employer complies with these timescales, no further enforcement action will be taken.
- If an employer does not engage with this informal approach, the EHRC will conduct an investigation to establish whether the employer has breached the Regulations and may issue a notice to enforce compliance. If an employer ignores such a notice, the EHRC may apply for an order from the court, failing to comply with such an order can result in an unlimited fine.
- During the course of its investigation, the EHRC will offer an employer a chance to enter into an agreement under which the employer agrees to comply with its obligations under the Regulations. So long as the employer abides by the terms of the agreement, no further enforcement action would be taken.
The results of the EHRC’s consultation into its proposed enforcement plan are unlikely to be known until after the deadline for first providing the information under the Regulations has passed. Nonetheless, so long as employers are aware of their obligations and have processes and procedures in place for collecting and analysing the appropriate data, there should not be any cause for concern. It is clear from the consultation document that the EHRC is planning to take a proportionate approach – with informal action preceding any more serious measures. That said, the fact that the EHRC is planning to becoming involved in the enforcement of the Regulations and potentially to address inaccurate reporting of gender pay gap data is a valuable reminder to employers of the need not only to ensure that they comply with their obligations but also that their statistics are accurate.
As employers finalise their gender pay gap reporting ahead of the deadline for the first year’s reports – the approaches being adopted are discussed in "Reporting on the gender pay gap", published by HR Magazine in November 2017 - they will wish to ensure that their data is accurate, especially given some of the recent publicity concerning suggestions that some employers’ published gender pay gap data was inaccurate. They will also wish to ensure that any accompanying narrative is credible and presentationally appropriate.