UK: Gender pay gap reporting - EHRC threatens enforcement action for non-compliance

The 4th April 2018 deadline for publication of employers' first year of gender pay gap data is looming, yet over 90% of employers covered by the new statutory duty have still not reported. Many may have deliberately chosen to publish close to the deadline, perhaps in the hope that in the early April deluge their data will slip unnoticed through the net of media attention. Whether this strategy will itself attract negative publicity may depend on whether the GEO goes ahead with its original plan to publish three lists of employers "in early 2018": those who have reported, those who have "demonstrated that they are on track to report" by registering on the government website (possibly as at 31 January), and those who have not yet registered. Employers who are not yet ready to publish may want at least to register to avoid being on the third list.

Those who are contemplating ignoring the duty altogether should consider the possible consequences of non-compliance as laid out in the Equalities and Human Rights Commission (EHRC)'s draft enforcement strategy, published for consultation in mid-December. The EHRC originally disagreed with the Government's view that it could enforce this new obligation against non-compliant employers using general Equality Act powers; the draft strategy suggests a change of mind.

The EHRC state that they will monitor which employers have published information and the accuracy of it, and will post the number of compliant and non-compliant employers on social media before and just after the compliance date. Depending on levels of non-compliance, the EHRC will decide whether they need to take a staged approach to enforcement, which would involve dividing non-compliant employers by industry and contacting a proportionate number of randomly selected employers within each industry.

The "first port of call" would be to engage cooperatively and informally with employers who are in breach; this will involve requiring the employer within 14 days to acknowledge receipt of the EHRC's letter and confirm they will report retrospectively within 42 days and comply in the next reporting year. If informal resolution doesn’t work, the EHRC will use its enforcement powers to ensure compliance by carrying out an investigation, and may then:

• enter into written agreements with employers who are in breach, with a view to suspending other enforcement action;
• issue unlawful act notices to employers who are in breach and have failed to comply with previous written agreements. The notices will require employers to create an action plan to remedy their breach which, if ignored, can be enforced through a court order;
• seek unlimited "level 5" fines and summary convictions for those employers who have failed to comply with subsequent court orders and formal notices.

The document states that in 2018/19 the EHRC intends to focus its enforcement work on employers who do not publish; if it has the capacity to do so, it "may also take action against employers for publication of inaccurate data, if [it considers] that it is necessary proportionate and feasible to do so". Following continuing reports of employers uploading improbable figures (see our earlier blog post on the FT research and a BBC news report here), the Fawcett Society has called on the government to do more to provide the "Equality and Human Rights Commission the power and resources to effectively crack down on businesses who don't comply with the law." A Government Equalities Office spokesman is reported as saying that the department would be following up with employers where "statistically improbable data has been reported" to help them get it right.

Even if the EHRC is not in fact entitled to use these enforcement powers, the Government could easily make regulations to remedy that, or the EHRC could in some cases start a formal investigation on the basis of a suspicion that the employer is breaching equal pay obligations.

Employers should also bear in mind the considerable and continuing media interest in this topic, as well as the likely impact on an employer's own workforce and potential recruits of a failure to comply. Publishing the figures along with a voluntary narrative enables an employer to put the data in context, for example to explain the extent to which a gap is caused by under-representation of women in certain occupations, industries or senior roles, or their predominance in flexible or part-time working, and then setting out what steps the employer is taking to address this. Press reports have generally included this context where employers have provided it, even if the headline states that an employer pays men x% more than women (allowing the reader to wrongly assume that this is unequal pay for the same job).

Of course the next pay capture date, 5 April 2018, is also only two months away. The whole process of data capture and interpretation will have to start again; this next year the pressure will be on to show some improvement in the figures, or at least a good reason why they have not improved despite initiatives to address the issue.