‘Last Chance Saloon’ for gender pay gap reporting?

With just days to go before the deadline for large employers to submit their gender pay gap information (30 March for the public sector, 4 April for the private and third sectors) the press is full of concern that many employers (no-one really knows how many) have not yet published their figures on the Government website.

Why?

There’s no requirement to hand anything in yet. Nobody is late with anything. In fact more than 4,000 employers have published information ahead of the deadline. They are like those people who did their homework on a Friday night so that they would have the weekend free. Personally I never did my homework until Songs of Praise came on and to this day I feel a small knot of anxiety in my stomach when I hear the theme tune.

I expect there will be a late flurry of employers submitting their data, but no doubt there will be many who then miss the deadline. What happens then? Well yesterday the Equality Commission published its strategy (complete with flowcharts) for enforcing the Regulations.

In a press release, the Commission’s Chief Executive said:

Employers with 250 or more staff still have time to report their gender pay gap. The clock is ticking and with just 10 days to go, those who haven’t reported really are entering the last chance saloon. This is not optional; it is the law and we will be fully enforcing against all companies that do not report.

Tough talk from the Sheriff there – but what does the Commission think ‘fully enforcing’ looks like?

In the public sector the procedure is based on the Commission’s as yet unused powers to enforce the public sector duty to promote equality (which is the mechanism by which the duty on public sector employers to report gender pay gap data was imposed). I don’t think we need to worry about public sector employers, though. They are bound to publish their figures, even if some of them may clearly have got them wrong (I’m looking at you Bolsover District Council).

When it comes to the private and third sectors, an employer who fails to publish its gender pay gap will – the Commission claims – face a series of steps:

  • Step 1: The Commission will write to the employer requiring them to publish their data within 28 days
  • Step 2: If the employer does not comply, the Commission will instigate a formal investigation. Terms of reference will be prepared and the employer will be able to make representations on those terms of reference before the investigation begins.
  • Step 3: If the investigation reveals that the employer has not complied with the Regulations,  the Commission will issue an unlawful act notice giving the employer 14 days to prepare a draft action plan setting out how it intends to comply with its duty.
  • Step 4: Within six weeks of receiving the draft action plan the Commission will either approve it or issue a further notice stating that the plan is inadequate. In that case, the employer will have to provide a revised draft within 21 days
  • Step 5: If the employer does not comply with its own action plan the Commission will apply for a court order requiring it to do so.
  • Step 6: If the employer fails (without reasonable excuse) to comply with that order then it will be guilty of an offence and may be fined.

Now you would be forgiven for thinking that this procedure for enforcing a requirement to publish specific data is rather unwieldy. Is there really a need, for example, for employers to submit draft action plans for review by the Commission? Since we all know what is being investigated, do we really need draft terms of reference for each investigation to be submitted to the employer for comment? Why doesn’t the Commission simply say ‘publish your data by the end of the month or we’ll take you to court’?

The answer is that the Commission has no choice. The procedure set out in the strategy is the procedure that the Commission is required to follow when it believes that an employer is committing an ‘unlawful act’ as defined by the Equality Act 2006. The Act sets out the Commission’s enforcement powers and they are quite specific. The Commission cannot just take someone to court or impose a fine. It has to conduct a formal investigation first. Only then can it issue an unlawful act notice (although as far as I can tell, no case has ever actually got to this stage). Even an unlawful act notice can’t just instruct the employer to comply with the law – it has to require the employer to come up with a plan setting out how it will stop acting unlawfully. It is only if the employer then fails to comply with the plan that the Commission can get a court order seeking to enforce it – and it is only if the employer breaches that court order that a fine can be imposed.

Hitherto, even getting to the formal investigation stage has been a big step for the Commission to take. The 2006 Act clearly envisages that a formal investigation will be a drawn out and complicated investigation of allegedly discriminatory practices, which is why it is so prescriptive about the procedure for conducting one. To see what’s involved, have a look at the 2016 investigation into the Metropolitan Police.  It’s over a hundred pages long and was obviously a major piece of work (I’m pretty sure, by the way, that this is the only formal investigation that the Commission has ever conducted).

It is manifestly absurd to apply the formal investigation process to a simple failure to publish data. But that is the logical consequence of the Commission insisting that its general powers can be used to enforce the gender pay gap regulations. My view is that they can’t. Failure to comply with the regulations is not an unlawful act within the meaning of the Equality Act 2006 and so the Commission’s general enforcement powers don’t apply.  I explained why I think this back in January 2017 and in the year since then I haven’t seem anything to change my view. If anything, the hopelessly overblown enforcement procedure the Commission finds itself proposing reinforces the point.

Large employers should of course publish the data that is required. The overwhelming majority will do so because they will want to comply with their legal obligations. Besides which, missing the deadline may cause  embarrassment and lead to some awkward correspondence. I expect that the Commission will indeed write to a number of employers warning them to publish their data and I doubt that any will want to test my theory that the Commission doesn’t actually have the power to take things further.

Things might get more interesting, however, if the Commission wants to challenge the accuracy of an employer’s figures. An employer might well want to resist an investigation that involves the Commission poring over its payroll information, checking its maths. Perhaps it will be at that stage that the courts will be asked to rule on how far the Commission’s powers go.

 

About Darren Newman

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

8 Responses to ‘Last Chance Saloon’ for gender pay gap reporting?

  1. MarkTarran says:

    I think you’re being a bit hard on the EHRC. Far from “insisting” that they have the requisite powers, the Commission were insistent right from the start that they don’t. In their response to the consultation on the GPG Regulations they said this:
    “Section 78 [of the Equality Act 2010] itself does not impose a requirement to publish gender pay information; therefore it is not possible for an unlawful act to arise from it. It is merely a power to make regulations imposing a requirement. Further, section 78 explicitly gives power for the regulations to make provision for the enforceability of requirements imposed under it, which the draft regulations fail to do. Accordingly, in our analysis, under the draft regulations the requirement to publish gender pay information is not enforceable by the Commission or otherwise.”
    I also remember them pointing out elsewhere that, even if their existing powers applied, they were too cumbersome for GPG enforcement (as you have illustrated perfectly above) and that more bespoke powers would be far more effective (although I can’t find a reference for this online).
    The problem is that their plea for legislative clarity from the government fell on deaf ears. The government backed them into a corner leaving the commission with the unenviable choice of either making the best of their existing (inappropriate) powers or simply saying “we are powerless to act”, which would hardly be good PR (especially as the chair of the Commons Women and Equalities Committee has recently criticised them for not taking a robust enough approach to the GPG.)
    Their strategy, unsurprisingly, has therefore been to change tack and make as much noise as possible about how good their powers are and how well prepared they are to exercise them, in the hope this will detract from the fact that the government has left them high and dry.

  2. One of my employers is a university and I can not find them … I thought public sector was required to report, so that should include universities right?

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