Actually, I think you can.
I mean what’s the worst that can happen? While other large employers publish their gender pay gap information you simply sit back and say. “Not for us, thanks, we’re fine.”
Of course many people will be disappointed in you. Some may even be angry and there might be ‘damaging publicity’. But if you don’t care about those things, can anyone actually do anything about your failure to publish the information that is required?
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 don’t impose any sanction for failure to comply with their requirements. In fact, the Regulations don’t even seem to contemplate anyone not complying with them. There is nothing in the Regulations themselves to say what happens if an employer just chooses
to ignore them altogether.
The Government has, however, tried to create the impression that the Regulations have some teeth by making this point in the explanatory notes:
Failure to comply with an obligation imposed by these Regulations constitutes an ‘unlawful act’ within the meaning of section 34 of the Equality Act 2006 (c. 3), which empowers the Equality and Human Rights Commission to take enforcement action.
So the Equality Commission can enforce the Regulations by taking action against employers who fail to comply?
I’m not convinced.
This is an assertion made in some explanatory notes. It is not part of the Regulations themselves. This is important. The Regulations do not provide that a failure to comply is an unlawful act; the Government is merely asserting that. And I think they are wrong.
Section 34 of the 2006 Equality Act (this Act sets up the Equality Commission and should not be confused with the 2010 Act which actually contains the substantive law on discrimination) defines the word ‘unlawful’ as meaning ‘contrary to a provision of the Equality Act 2010’. So, for example, an act of direct or indirect discrimination will be an unlawful act. The Commission then has powers to investigate employers who are suspected of committing unlawful acts and issuing them with notices or ultimately taking legal action aimed at preventing them from committing further unlawful acts in the future.
Is a failure to comply wth the gender pay gap regulations an unlawful act? What provision of the Equality Act is it ‘contrary to’? The Gender Pay Gap Regulations are issued under s.78 of the Equality Act. But s.78 does not require an employer to do anything or prohibit an employer from behaving in a particular way. It merely gives the relevant Minister a power to issue regulations which require employers to publish information. If an employer doesn’t publish that information then they will be in breach of the Regulations – but they will not be in breach of a provision of the Equality Act. Section s.78 does not impose the requirement, the Regulations do.
Section 78 itself acknowledges this fact. Look at s.78(5):
(5) The regulations may make provision for a failure to comply with the regulations—
(a) to be an offence punishable on summary conviction by a fine not exceeding level 5 on the standard scale;
(b) to be enforced, otherwise than as an offence, by such means as are prescribed.
This shows that Parliament intended that the issue of the enforcement of Regulations should be set out in the Regulations themselves. It could have added that a failure to comply with the Regulations would be deemed to be an unlawful act within the meaning of the 2006 Act – but it didn’t.
When Parliament adopts the Regulations it will have chosen to make no provision for a failure to comply with them. This attempt to make out that the Equality Commission will nevertheless swoop in on any recalcitrant employers is just misleading. Even if the power were there, the Commission is hardly resourced to police the compliance of thousands of employers up and down the country.
Now I’m not arguing that employers should just ignore the Gender Pay Gap Regulations. That could cause all sorts of awkwardness. But in deciding how much resource and energy to devote to strict compliance with them it is perhaps worth bearing mind that there is no realistic way of challenging the figures that an employer comes up with.
Employment law is going through a bit of a lean patch at the moment and Regulations like these can be seized on with great enthusiasm by those of us with a living to make advising employers on how to comply with the law. But let’s not make more out of these Regulations than they deserve. They don’t create real legal obligations and (whisper it) will do little or nothing to reduce discrimination or increase equality. A sense of perspective is needed here, I think.
NOTE: All of the above applies in relation to the Regulations applying to employers in the private sector. Similar Regulations are also being introduced which will apply to public sector organisations with 250 or more employees. They will be much harder to ignore as they will form part of the employer’s equality duty under the Equality Act 2010. While that can’t be enforced by individuals per se, bodies could be vulnerable to judicial review procedures if they do not comply with their duty and the Equality Commission has specific powers to assess their compliance and take appropriate action.
And here is the EHRC’s own view on the matter, in its response to the Closing the Gender Pay Gap consultation in 2015:
” In our view some form of civil enforcement procedures would be essential to ensure compliance. The absence of such a procedure would risk undermining the Government’s aim of increasing transparency of gender pay differences in the private and voluntary sectors and would be unfair to those who comply voluntarily.
The Commission is responsible for encouraging compliance with and enforcement of the Equality Act 2010. We see our regulatory role as helping organisations achieve what they should, not trying to catch them out if they fall short. The Commission only resorts to using its enforcement powers when persuasion, advice and reminders have not proved effective.
There will be cases where enforcement is needed, particularly against those who are not seeking to comply. However, our experience is that the potential for enforcement powers to be used is an important factor in enabling the Commission to persuade organisations to comply with the Equality Act 2010.
The Commission would however require additional powers, and resources, to enable it to enforce compliance with the regulations, because its current powers are not suitable for enforcing, in a proportionate manner, a failure to publish.”
The EHRC gave us (Practical Law) this statement on 3 February:
“We have accepted the Government’s view that a company’s failure to comply with the requirement to publish its pay gap will be an “unlawful act” within the meaning of section 34 of the Equality Act 2006.”
Although our view remains that this is not correct, for the reasons outlined above.
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