Enforcement of gender pay gap reporting – the EHRC gets involved

The proposals are set out in a draft policy, and responses to the consultation can be submitted via a survey, with a closing date of 2 February 2018.

The draft policy sets out a range of activities the EHRC plans to undertake to ensure compliance with the GPG Regulations:

• Promoting awareness and educating employers.
• Monitoring compliance (including accuracy of information), in conjunction with the Government Equalities Office (‘GEO’).
• Publishing compliance rates.
• Resolving non-compliance through informal resolution, initially focussing on employers who do not publish.
• Formal enforcement action, starting with investigations, seeking formal agreements and proceeding to unlawful act notices if an agreement is not reached.

The EHRC is seeking to rely on its powers under section 20 of the Equality Act 2006, which empowers it to carry out investigations and take other action in relation to “unlawful acts” - namely acts which are contrary to a provision of the Equality Act 2010 (‘EA 2010’). It is not actually clear, however, that the EHRC has these enforcement powers in relation to the GPG Regulations. The EA 2010 prohibits discrimination in its various forms, but it does not impose any obligation on employers to comply with the GPG Regulations. It merely empowers the Secretary of State to make regulations requiring publication of gender pay gap information (section 78 of the EA 2010). Indeed, the EHRC’s own position in the consultation on the draft regulations was that it did not have the power to enforce compliance. The current consultation gives no explanation of its apparent change of heart.

The EHRC’s draft policy makes it clear that the aim is to achieve high levels of compliance. There will be a focus on awareness raising and informal engagement, with formal enforcement action only being used where necessary. For 2018/19, they intend to focus enforcement work on employers who do not publish the required information. The policy makes reference to taking action against employers for publication of inaccurate data if the EHRC has capacity to do so, but it is questionable whether such resources will be available.

Encouraging compliance

The policy refers to promoting awareness and educating employers by providing information on the EHRC website, a communications campaign targeted at employers, and input into correspondence from the GEO to employers.

The GEO itself has been contacting employers direct since the autumn, reminding them of the deadline for reporting, encouraging registration on the online reporting portal and providing information and a registration security code. Although there is nothing in the GPG Regulations dealing with this, the GEO is also proposing to publish three separate lists of:

• Employers who have already reported (whose details and statistics will already be viewable on the government website);
• Employers who have indicated they are on track to report by registering on the government website; and
• Employers who, according to the GEO’s records, have taken “no action”.

The GEO’s correspondence also asks employers to register by the end of January, after which the registration security code they have provided will expire. This is somewhat surprising as there is nothing in the GPG Regulations specifying a registration deadline - the only legal obligation is to report the relevant data, and upload it to the government website, by 4 April 2017. However, employers who want to avoid appearing in a “no action” list will no doubt want to register with the government website in good time, even if they are not yet ready to report.

The EHRC also proposes to monitor compliance (including accuracy of data) and publish compliance rates. Bearing in mind the complexity of data in some organisations, it is unclear what methods or resources the EHRC intends to use to monitor accuracy.

The EHRC proposes to assess the scale of non-compliance after the reporting deadline and will decide whether a staged approach to enforcement is required, in which case they will randomly select non-compliant employers from each industry sector.

Informal resolution of non-compliance

If the EHRC identifies that an employer has not complied with the GPG Regulations, they will initially seek an informal resolution by:

• Writing to the employer to remind them of their obligations, and requiring acknowledgement of the letter within 14 days.
• Requiring confirmation in that letter that the employer will rectify their non-compliance for the past year within 42 days, and comply with their reporting obligations for the current year.

If that confirmation is given, the EHRC will monitor compliance. If the employer does comply, no further action will be taken.

Formal enforcement

Formal enforcement action will only be taken if informal resolution does not achieve compliance. The EHRC has identified the following powers it intends to use when enforcing the GPG Regulations in relation to private and voluntary sector employers:

• Section 20 Investigations. The EHRC would provide the employer with draft terms of reference for the investigation and provide an opportunity to make representations on the scope. It would go on to gather and analyse evidence, and can serve a notice requiring the provision of information and documents. The EHRC can apply for a court order requiring compliance with a notice to provide information and documents, and breach of such an order would be a criminal offence. The EHRC would aim to prepare a draft report within 28 days of receiving relevant evidence, and there would be an opportunity for the employer to make representations before the final report was issued.
• Section 23 Agreements. During an investigation, the EHRC would offer the employer the chance to enter into a written agreement to comply with the GPG Regulations for the past year (within an agreed period) and the current year. An agreement would be offered within the period for representation on the terms of reference, and would be repeated in the period for making representations on the draft report. If an agreement is entered into, the EHRC will monitor compliance.
• Section 24 Orders. The EHRC can seek a court order if an employer enters into a section 23 Agreement and fails to comply with it.
• Section 21 Unlawful Act Notices and section 22 Action Plans. If there is no section 23 Agreement and an investigation finds an employer has failed to comply with its reporting obligations, the EHRC will issue an unlawful act notice. This will require the employer to prepare a draft action plan, setting out how it intends to rectify its non-compliance. The EHRC can apply for a court order if an employer fails to provide a draft action plan, or if it fails to comply with a final action plan. Failure to comply with the court order would be a criminal offence (for which the sanction is an unlimited fine).

The policy setting out these formal enforcement proposals is still only in draft, pending the consultation. However, the powers outlined are all existing ones under the Equality Act 2006. Assuming that the EHRC’s powers do indeed apply to the GPG Regulations, it is unlikely there will be any significant change to the proposed enforcement action.

It remains to be seen whether the EHRC will have sufficient resources to implement this level of enforcement, but this consultation does clearly indicate that the EHRC is willing to get involved with ensuring compliance, with a particular focus on employers who have failed to report at all.