UK Builds on Gender Pay Gap Regulations with Enforcement Proposal

On 19 December 2017, the Equality and Human Rights Commission (EHRC) proposed a draft plan for enforcement action in relation to The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Consultation on the proposal is due to close on 2 February 2018. Daniella McGuigan of Ogletree Deakins’ London office is part of a working party representing the views of employers within the consultation process.

The regulations indicate that it would be an “unlawful act” if employers were non-compliant and that the EHRC could take enforcement action under its statutory powers. However, during the development of the regulations, there was uncertainty surrounding the consequences of failing to comply with the regulations.  In the draft proposal, the EHRC describes how it proposes to scale penalties for noncompliance after the reporting deadline (4 April 2018) and decide which form of enforcement is required in each circumstance.

The proposed levels of enforcement for noncompliance are as follows:

• The EHRC has indicated that in 2018/2019, it would first focus on employers that did not disclose any data at all and would engage with them informally. It also proposes to monitor and publish compliance rates, including accuracy of data.
• If an employer failed to comply with the regulations, the EHRC would “seek an informal resolution with them in the first instance.” In informal resolution, the EHRC intends to write to the employer and remind it of its obligations. Then, it would require a letter of acknowledgment from the employer within 14 days. In the letter of acknowledgement, the employer would need to confirm that it will rectify its noncompliance of the past year within 42 days and will conform to the regulations for the current year. If the employer complied, no further action would be taken.
• If the employer ignored this informal approach, the EHRC would launch an investigation to determine whether the employer breached the regulations and could issue a notice to enforce compliance. If this notice were ignored, the EHRC could apply for a court order. Failure to comply with the court order could result in an unlimited fine.
• During an investigation, an employer would be offered an opportunity to enter into an agreement with the EHRC in which the employer would agree to abide by terms under the regulations for the previous and current year. So long as the employer complied with the agreement, no further action would be taken.

It is doubtful that the proposed enforcement plan and the results of the EHRC’s consultation will be known before the first reporting deadline of 4 April 2018. That said, as long as employers are aware of their obligations and have processes and procedures in place to comply with the reporting obligations, there is little cause for concern. The EHRC intends to address inaccurate reporting as well, so employers may want to take caution to ensure that their data is accurate and that any accompanying documentation is credible and presentable.