Alexandra Besnard, Associate Solicitor at specialist employment law firm Collingwood Legal, discusses the implications for employers who failed to report their Gender Pay Gap by 4 April 2018.
The deadline for employers with 250 or more employees in the private or voluntary sectors to publish their gender pay gap (“GPG”) figures was 4 April 2018 and over 10,000 companies complied with their reporting obligations.
From the data published, the national median pay gap was reported at 9.7%. Broadly, the results indicate that 78% of companies pay men more than women. The finance sector appears to have the largest reported GPG with the average woman in this sector earning 35.6% less than the average man. The transport and storage sector and accommodation and food services reported the smallest GPG which is thought to be down to a large proportion of staff being paid the national minimum wage. Overall, only 8% of companies reported no GPG between men and women.
Interestingly, the Equalities and Human Rights Commission has noted that over 1,500 companies did not publish their GPG data by the deadline. So, what are the consequences for those companies who did not comply with the reporting obligations?
Enforcement action
When introduced, the GPG Regulations were widely criticised for not containing any enforcement methods or sanctions for non-compliance and perhaps those 1,500 companies that did not publish their GPG data on 4 April are thinking that they will avoid any consequences. However, the explanatory note to the GPG Regulations states that a failure to comply with the GPG Regulations will constitute an “unlawful act” within the meaning of section 34 of the Equality Act 2006. This section allows the Equalities and Human Rights Commission (“EHRC”), the equality regulator, to take enforcement action.
In its publication “Closing the gap: enforcing the gender pay gap regulations”, the EHRC sets out its means of enforcement. Informal resolution is preferred in the first instance and those companies that have not complied with their reporting obligations can expect a letter from the EHRC reminding them of their obligations and requiring them to comply with their reporting duties within 28 days.
In the event that an employer does not comply after this initial correspondence, the EHRC has the power to carry out an investigation into whether the company has committed an unlawful act (i.e. a breach of the GPG Regulations). If the EHRC concludes that an employer has committed an unlawful act, it may issue an “unlawful act notice” which will require the employer to prepare a draft action plan within 14 days, setting out how it will remedy its continuing breach and prevent future failures. If an action plan is not received from the employer, the EHRC can apply to the court to make an order compelling the employer to provide an action plan within a specified timescale. An employer will commit an offence if it fails to comply with the court order and does not have a reasonable excuse for doing so and in such circumstances, it could be liable to pay an unlimited fine.
Reputational damage
It is not only enforcement action by the EHRC that creates a risk to businesses. Employers should consider the potential damage to their reputation for failing to comply with the GPG reporting duties. “Naming and shaming” by the media of those who do not comply creates bad publicity and noncompliant employers could lose talent as potential new recruits may be discouraged from applying for roles within their business. There is also a risk that existing employees may be wondering whether the business has something to hide’ and the nonpublication of GPG data could lead to employees asking some difficult questions.
If you require specialist advice on the Gender Pay Gap reporting or equal pay in general please contact me on 0191 282 2886 or at alexandra.besnard@collingoodlegal.com
