UK Builds on Gender Pay Gap Regulations With Enforcement Proposal

On December 19, 2017 the Equality and Human Rights Commission (EHRC) proposed a draft plan for enforcement action in relation to The Equality Act of 2010 (Gender Pay Gap Information) Regulations 2017. The proposal was set out in a draft policy, and it was open for consultation until February 2, 2018. We now await the results.

The Regulations, which first came into force on April 6, 2017, stated that private sector employers with 250 or more employees were required to disclose certain information about their gender pay gap. To summarize, the following information for the relevant pay period must be published by no later than April 4, 2018 and thereafter annually if the employer still falls within the scope of the Regulations:

• The gender pay gap information must be in relation to the mean and median hourly gender pay gap and also the annual bonus gap; this must include the proportionate difference between men and women receiving bonuses.
• Employers must publish the proportion of men and women in each salary quartile of the pay structure.
• It is not compulsory to provide supporting documentation in order to explain the disclosed figures; however, it is advised to provide the context of the data.

During the development of the Regulations, there was uncertainty surrounding the consequences of failing to comply with the obligations. The Regulations have indicated that it would be an “unlawful act” if employers were to be non-compliant, and that the EHRC could take enforcement action under its statutory powers. In the draft proposal, the EHRC describes how it will scale the level of non-compliance after the reporting deadline and will then decide which form of enforcement is required. The EHRC is committed to ensuring high participation from private-sector employers in the first reporting year by continually raising awareness of the gender pay reporting requirements. However, the levels of enforcement for non-compliant companies are as follows:

• The EHRC has indicated that in 2018 and 2019 it will first focus on employers that did not disclose any data at all and will engage informally with those employers. It also proposes to monitor and publish compliance rates, including the accuracy of data.
• In terms of the informal resolution of non-compliance, the EHRC intends to write to employers and remind them or their obligations, requiring a letter of acknowledgment within 14 days. In these letters, employers will need to confirm that they will rectify their noncompliance of the past year within 42 days and will conform to the Regulations for the current year. If employers comply, the EHRC will not take further action.
• If an employer ignores this informal approach, the EHRC will launch an investigation to determine whether the employer has breached the Regulations and may issue a notice to enforce the compliance. If the employer ignores this notice, the EHRC may apply for an order from the court. Failing to comply with this order could result in an unlimited fine.
• During the investigation, the EHRC will offer the employer an opportunity to enter into an agreement, in which the employer would agree to abide by the Regulations for the previous and current year. So long as the employer complies with the agreement, the EHRC would not take further action.

Comment

It is doubtful that the proposed enforcement plan and the results of the EHRC’s consultation will be known before the first deadline of April 4, 2018. Employers should make sure they are aware of the reporting obligations and will want to have processes and procedures in place to collect and analyze the relevant data. It is important to note that the EHRC is intending to address the inaccurate reporting of the gender pay gap. Therefore, employers will want to ensure that their data is accurate and that any accompanying documentation should be credible and presentable.

Written by Daniella McGuigan of Ogletree Deakins