On 19 December 2017, The Equality and Human Rights Commission launched a consultation into draft regulations for the enforcement process that will be taken against employers who do not comply with gender pay gap reporting requirements.
The consultation, which is running between 19 December 2017 and 2 February 2018, is seeking to gather feedback from employers, representative bodies and other interested parties on The Equality and Human Rights Commission’s draft policy on how it plans to enforce the government’s gender pay gap reporting regulations under its Equality Act 2006 powers.
The Commission proposes to initially seek an informal resolution with employers who have failed to publish their gender pay gap data by the specified reporting date. This action will involve reminding employers of their obligations, and requiring them to comply retrospectively with gender pay gap reporting regulations for the past reporting year within 42 days of receiving the Commission’s letter, as well as comply in a timely fashion to the current year’s reporting requirements. Employers must respond to this notice within 14 days. If employers comply at this stage, then no further action is taken.
If employers still fail to comply, the Commission will notify the organisation that it will undertake investigatory action. During the course of this stage, employers can enter into a written agreement to comply with the gender pay gap requirements to mitigate an investigation.
If an employer does not accept the offer of a written agreement, and the Commission’s investigation confirms that the gender pay gap reporting regulations have been breached, then an unlawful act notice will be issued. This will require the employer to prepare a draft action plan outlining how they plan to remedy the compliance breach and prevent further non-compliance. The employer must comply with the action plan once it has received the approval of the Commission.
If employers fail to comply with orders made against them during this process, they will be liable to receive a level five fine, which means there is no maximum limit on the amount they could be fined. The enforcement action process will apply to private, voluntary and public sector organisations in England, although final stage enforcement action varies for public sector organisations, which are not subject to level five fines.
On the heels of the Commission’s consultation is Iceland’s most recent legislation, which has made it illegal for men to be paid more than women. Effective from 1 January 2018, employers with 250 or more employees will have until the end of the year to implement The Equal Pay Standard, with smaller employers having until 2021 to introduce the new measures. The Equal Pay Standard requires organisations to gain a government certification for its equal pay policies, to help prevent salary discrimination. Any employers who fail to adhere to the new legislation will face fines.
Although the UK’s gender pay gap reporting regulations certainly turned a spotlight towards gender-based pay disparities, having a formalised enforcement programme in place dials up the urgency with which employers are asked to address this within their own organisations. If anything, the Commission’s consultation reinforces that reporting statistics of the difference in gender pay is only the start, and that it is in fact the action plan for pay equality that should be the more prominent focus.
As we enter into 2018 and approach the first snapshot deadlines in March for public sector organisations, and April for private and voluntary businesses, it will be interesting to see how employers across the UK are deciding to tackle any gender pay gaps that their businesses may have. However, it will also be worth seeing whether The Equality and Human Rights Commission will need to take a leaf out of The Pensions Regulator’s book when it enforces auto-enrolment compliance, by publishing a ‘name and shame’ list of those who have not complied with the regulations. Creating an enforcement process is undoubtedly another rung on the ladder of ingraining gender pay gap awareness and pay equality at the forefronts of employers’ minds.