Employers in ‘last chance saloon’ over gender pay reporting, says EHRC
Organisations that fail to comply with the government’s gender pay reporting process will face “unlimited fines”, the Equality and Human Rights Commission (EHRC) has confirmed, as it published its final enforcement strategy a week before the reporting deadline.
Experts anticipate a final rush of employers publishing their gender pay data ahead of the reporting deadlines of 30 March for public sector organisations and 4 April for private sector businesses – but it is thought as many as one in 10 organisations could fail to submit their data in time.
“We could see a lot of organisations complying at the last moment – many may have already pencilled in that they would report at the end of March, although this sends out a negative message to stakeholders about the importance they have afforded this issue,” Charles Cotton, senior reward adviser at the CIPD, told People Management. “And it might be that we see hundreds or thousands of organisations that have not complied by the final deadline.”
The EHRC, which has legal responsibility for enforcing the regulations, said employers had entered the “last chance saloon” over reporting, as it published its final strategy detailing the ways it would act in the event of non-compliance. Chief executive Rebecca Hilsenrath said there was potential for “serious reputational damage” for employers that failed to act on the reporting regulations.
“This is not optional; it is the law and we will be fully enforcing against all companies that do not report,” she said.
“This legislation is in place to bring about better gender equality in the workplace, and any employer not complying needs to ask themselves tough questions, rethink their priorities, be prepared for serious reputational damage and be ready to face a very unhappy workforce.”
Under the EHRC’s enforcement strategy, all eligible organisations that have failed to publish their gender pay data will be written to by the commission on 9 April, giving them 28 days to comply with the law. Shortly after the compliance date, the number of non-compliant companies will be published on social media.
Should an organisation subsequently fail to comply, they could then come under investigation for a suspected unlawful breach of the gender pay reporting rules, which could result in the company being taken to court, where the EHRC would seek an unlimited fine.
Doubts have previously been raised about whether the EHRC has the legal powers required to enforce its strategies. But Kate Palmer, head of advisory at Peninsula, told People Management that a more relevant concern was whether the organisation had sufficient resources to deal with the potential scale of non-compliance.
“As with any promised enforcement action, the true impact of it remains to be seen and will depend on factors such as the EHRC having sufficient resources to deal with non-complying employers,” said Palmer.
“But the detailed plans to deal with any employer that has not reported its pay gap data show that [EHRC] is taking non-compliance very seriously – private sector employers that have not complied should expect a letter within a week or so after the 4 April deadline.
“Even those that have submitted their report will be subject to investigation if they have done so incorrectly.”
Palmer went on to say, however, that organisations may simply use the extra time afforded by the enforcement action to make changes to their pay practices to reduce or remove an unattractive pay gap.
Cotton warned businesses not to expect the enforcement process to be limited to large private sector organisations.
“At the end of the day, reporting on the gender pay gap will be a lot cheaper than potentially fighting this through the courts, which you would ultimately lose because of the law,” he said.
“All employers are required to report, not just private companies – private schools, trade unions, charities and professional trade bodies could be just as likely to be taken through the courts and fined as private employers.”
A little more than 500 employers reported their gender pay gap figures over the weekend, taking the total number of organisations that have reported to 3,756 by this morning (26 March).
The latest reportees included JPMorgan, Sainsbury’s Bank and Nationwide, all of whom continued the trend of large gaps in favour of men in the financial services sector. JPMorgan’s mean pay gap was 54 per cent and 69 per cent for bonus pay, while Sainsbury’s Bank reported 39 per cent for pay and 78 per cent for bonuses. Nationwide’s figures were 29 per cent and 53 per cent respectively.
Capita plc reported a 43.9 per cent gap and said it recognised “we have work to do to encourage more women into senior leadership roles”.
Cosmetics retailer Avon, with a gap of 31.5 per cent, is synonymous with offering women opportunities. In its reporting statement, it pointed out that its workforce was 73 per female and added: “We are proud that our long-established pay equity processes ensure we have fair and equitable pay for men and women doing the same or similar jobs.
“However, we have proportionately less women than men in our most senior leadership positions, offset by a field sales workforce that is predominantly female.”
Panasonic’s gender pay gap was 28.7 per cent, which it attributed to 40 per cent of its roles being skilled engineering or technical positions. It said it was establishing “strong links” with vocational and academic partners to encourage career development and apprenticeship opportunities as part of its way of addressing the issue.
A number of academy trusts also posted their figures over the weekend, with mean gaps ranging from 27 per cent to 40 per cent, reflecting concern among the education sector that pay gaps may be particularly predominant among the academy school system.