Iceland, equal pay and enforcing the gender pay gap regulations

So the internet informs me that Iceland has become the first country in the world to make it illegal to pay men more than women.

Screenshot 2018-01-05 00.05.55

Iceland has not, of course, passed a law saying that it is illegal for an employer to pay any man more than any woman. How would that even work? Obviously we are talking here about paying men more than women who are doing equal work – and lots of countries (including the whole of the EU and Iceland) have had laws about that in place for decades.

What has come into force in Iceland on 1 January this year is a requirement that employers with 25 or more employees should implement a previously voluntary Equal Pay Standard in their pay systems. As far as I can tell this is basically a requirement for larger Icelandic firms to adopt a transparent pay system so that it can be demonstrated that men and women are getting equal pay for work of equal value. It’s explained properly in this article from the Icelandic Women’s Rights Association.

I’m sure that’s great for them. And I can see why people might argue that a similar rule should be adopted for the UK. But it won’t be. We are a million miles from subjecting employers to that level of control.

Employment law is a very culturally specific thing and different countries have entirely different ideas about the extent to which employment is regulated – and who does the regulating. To look at just one point of difference –  in Iceland, just over 85 per cent of the workforce is a member of a trade union, compared with less than 25 per cent union membership in the UK. It is inevitable that employment law is going to work differently in Iceland and we can’t expect to copy it.

Gender Pay Gap Reporting

Nevertheless Iceland’s law is in marked contrast to the UK’s almost entirely pointless requirement for large employers to report their gender pay gap. This requires absolutely no meaningful transparency about who gets paid what or how employers reward employees.  Instead we get some very selective statistics, shorn of all context and telling us next to nothing of any use (comments below please).

And that is assuming that the figures being reported are even accurate. The FT has done some really good work picking apart some of the more suspiciously improbable  entries on the Government website. Just wait until there are more than 9000 entries – how on earth will you be able to tell whose figures are accurate and whose aren’t?

Personally I don’t think employers have much incentive to get their figures right. I’ve written before about why I don’t think the Equality Commission can do much to enforce the gender pay gap in the private sector. My point is that the Commission can only act where the employer is acting in breach of the Equality Act 2010 – and the Equality Act does not require employers  to report their gender pay gap. I stand by that analysis.

So I almost admire the chutzpah of the Commission publishing a draft strategy for enforcing  the Regulations accompanied by a press release saying:

Businesses failing to comply with gender pay gap reporting regulations could face unlimited fines and convictions, the Equality and Human Rights Commission has warned as it published its enforcement strategy.

As the regulatory body responsible for ensuring that all employers with over 250 employees report their gender pay gap statistics, the Commission has set out its enforcement policy for consultation.

Although it will take steps to encourage compliance and engage informally with employers who are in breach of the regulations as a first port of call, it will ultimately enforce against all employers who do not publish their gender pay gap information.

This is nonsense.

One caveat is that public sector employers are in a more vulnerable position because their obligation to publish is part of their statutory duty to promote equality – and the Commission has much clearer powers to intervene where a public body is not complying with its duties.

But even if the Equality Commission has the power to do something about gender pay gap reporting – that isn’t a power that it is actually going to use in real life. You only have to read their proposed approach to see the absurdity of it. The Commission says that it will focus its efforts on those employers who do not comply with the duty to report their gender pay gap at all. If the Commission finds an employer that has not reported, this is how it says it will approach the issue of enforcement:

  • It will write to the employer pointing out their obligation to report and giving them 42 days to comply.
  • If the employer still does nothing the Commission will then initiate a formal investigation – giving the employer 14 days to make representations on draft terms of reference and writing a draft report within 28 days of the receipt of the evidence that is requested.
  • The employer will then have the opportunity of reaching an agreement with the Commission to provide the appropriate gender pay gap information within a specified period.
  • If the employer refuses to enter into such an agreement or breaches its terms then the Commission will issue an ‘unlawful act notice’. That would require the employer to come up with a draft action plan explaining how they will remedy their continuing breach.
  • Within six weeks of the receipt of that plan the Commission will respond saying whether or not they accept it. If they do, then it will come into force six weeks later. If they do not approve the draft action plan they will issue a notice requiring a revised draft to be produced within 21 days.
  • If the employer fails to comply with the action plan the Commission will apply for a court order requiring the employer to comply.
  • If the employer does not comply with the order then it commits an offence and may then face an unlimited fine.

Does this seem like a sensible way chivying along some employers who have not got round to entering a few (largely meaningless) figures on a Government website?  The Commission’s enforcement powers are designed for employers whose ongoing practices amount to a serious breach of equality law. They really don’t have any sensible application to the reporting of gender pay gaps. Whatever the legal position, it is inconceivable that any employer will ever be taken through the whole process to the point where it is actually fined. Telling employers that they face an unlimited fine if they don’t comply with gender pay gap reporting is just silly.

The fact is that the Commission’s role in enforcing the Equality Act is largely theoretical. They publish guidance and information; they commission research and sometimes intervene and make submissions in important legal cases. But as for using their formal enforcement powers? Not really. We can debate the potential scope of unlawful act notices, but as far as I can tell, the Commission has never actually got as far as issuing one. You can count the number of formal investigations it has undertaken on the fingers of one hand. The idea that employers up and down the country who have not reported their gender pay gap will end up being taken to court by the Commission is for the birds.

So forgive me if I treat the Commission’s consultation on a ‘strategy’ for enforcing gender pay gap reporting with a certain amount of scepticism. Also – it’s one of those annoying consultations that asks a lot of  closed questions to make it really easy to plot the responses on a graph. I won’t be answering those questions, but I will be asking one: what resources will the Commission be allocating specifically to enforcing the gender pay gap regulations? When we know the answer to that question, we’ll have a much clearer idea of what their strategy actually is.

 

About Darren Newman

Employment law consultant, trainer, writer and anorak
This entry was posted in Equal pay, Equality Act, gender pay gap, Uncategorized and tagged , . Bookmark the permalink.

2 Responses to Iceland, equal pay and enforcing the gender pay gap regulations

  1. Kieron says:

    Interesting post. Your point that that there is little the Commission will do, or are able to do, will be shown to be more or less correct over the next half year or so. Ultimately the GPG regulations are driving better awareness of workplace inequality at the individual organisation level, which is a first for the majority of employers. The data which may not be meaningful enough is, I hope, useful data for employees to be able to take a view on their own employer. Employees can now take a view on their own employer, one based on what they say and what they do (or don’t) about their GPG situation, and compare it with others. We may not have Union representation like Iceland, but employees can vote with their feet!

  2. Pingback: Mind the (Gender Pay) Gap | Labour Pains

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