Closing the gender pay gap
Paula Kathrens is an employment lawyer and Partner with Blake Morgan. She says organisations with 250 or more employees need to understand the implications of failing to comply with the new gender pay reporting legislation.
More big companies have been found to have wide gender pay gaps as businesses report on what they pay male and female workers ahead of the April deadline.
The BBC isn’t the only organisation facing continued difficulties. Easyjet and Virgin are amongst others reported to be facing pay discrepancies as both private, voluntary (and public sector organisations predominantly in England) with 250 or more employees gear up to submit their pay figures to the Government by April.
Gender pay reporting is already part of the Public Sector Equality Duty in Wales but the new Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 that came into force on 6 April 2017 now mean that employers in the private and voluntary sector with 250 or more employees are to comply with the requirement to publish information about gender pay. The deadline for reporting in the private and voluntary sector is 4 April 2018. To date, almost 600 employers have published the relevant information on the Government's website out of a potential 9,000. This represents only 6% of employers but the figures change daily.
The Regulations are complex and a particular criticism is that there are no clear penalties for non-compliance. The Government expects peer and consumer pressure to encourage employers to put into place measures for year-on-year improvements. However, the Equality and Human Rights Commission (EHRC), the equality regulator responsible for enforcing the Equality Act 2010, recently opened a consultation on enforcement for those who fail to comply with the Regulations and the consultation period ends on 2 February 2018.
EHRC has warned that, as part of its enforcement strategy, organisations failing to comply with gender pay gap reporting obligations could face unlimited fines and convictions. Whilst it is debatable that EHRC can impose these penalties without a change in the law, EHRC proposes enforcement by way of an initial informal step, writing to non-compliant employers effectively permitting a further 42 days to comply.
For those who fail to comply, EHRC then proposes to enforce using its powers set out under the earlier Equality Act 2006, briefly consisting of:
- An investigation into the suspected unlawful act.
- EHRC to gather evidence and report in draft within 28 days for employer comments.
- Two opportunities for the employer to give undertakings to comply, before, and after the investigation takes place. If accepted, EHRC will monitor and discontinue enforcement.
- Unlawful act notice to be issued if necessary, requiring an action plan setting out how the employer will remedy the breach.
- EHRC can apply to court to require compliance with the process or with a notice. Failing to comply with a court order could lead to an unlimited fine on conviction.
As more employers add their gender pay gap information to the Government's website we can expect a steady stream of high profile stories about pay disparities. The website lists employers alphabetically but there is a filter facility whereby searches can be made (very easily) by sector. Apart from reputational damage where a wide pay disparity is revealed, employers will also need to think about the consequences in the recruitment context. In a competitive job market, candidates are likely to look at any published gender pay information and may think twice about applying for a role or taking up a role if there is a gender pay disparity. Why choose an employer with a wide gender pay gap, with little explanation for the context for it and perhaps no specific strategy for reducing it when a competitor compares more favourably?
Gender pay will certainly be one of the most challenging issues for large organisations in the months ahead for a whole host of reasons.