Threats by the UK government to sanction companies that do not reveal their gender pay gaps by April have no legal standing, experts have warned, in a sign that tackling unequal wages will be a sizeable challenge.
The Equalities and Human Rights Commission last month warned employers who fail to meet their obligations that they face “unlimited” fines and convictions. By Friday 29 December, just 5 per cent, or 478, of the 9,000 companies obliged to submit figures had done so on the government website.
But legal experts have warned that a change in the law is required before employers can be punished for not reporting their gender pay gap data, or for reporting inaccurate information.
Last month, the EHRC, which is responsible for enforcing the reporting requirements, published a consultation paper on proposed sanctions.
The chief executive of the EHRC, Rebecca Hilsenrath, warned that employers who failed to meet their obligations faced “unlimited” fines and convictions.
“We will educate employers about their responsibilities and hope to see widespread compliance,” she said. “If that doesn’t happen, we won’t hesitate to resort to our more stringent legal powers.”
The EHRC said companies that reported inaccurate data, as well as those that failed to report, would be in breach of their obligations.
In December, an FT investigation found that one in 20 employers had submitted figures to the government website that were statistically improbable and therefore almost certainly inaccurate.
Since this investigation, at least four companies have altered their figures.
Ruth Christy, an employment specialist at law firm Blake Morgan, said neither the gender pay gap regulations, nor the EHRC’s powers under current equality legislation, gave the regulator the power to take the action it is proposing. Two other lawyers agreed with Ms Christy’s broad assessment.
“The government had the opportunity to introduce civil or criminal sanctions into the regulations but it chose not to do so, therefore it is hard to see how an employer’s failure to publish the data would be a breach of the Equality Act 2010,” said Ms Christy.
“No change to the law is mentioned in the draft papers and indeed the EHRC has previously said it did not think it had the power to enforce gender pay reporting under the regulations when they were originally drafted.”
Employers must report 14 data points on the government’s gender pay gap website, including the difference between what they pay male and female employees, measured by the mean and the median, the gap between the bonuses paid to women and men, and the numbers of women and men in four pay bands.
Public sector employers with 250 or more employees have until the end of March 2018 to publish their data, while businesses and charities have until April 5.
When the government announced the new rules in April, it urged employers to publish action plans alongside their figures, showing how they were addressing their gender pay gap.
Under the regulations, employers must publish their pay gap data and a “written statement” on their public website.
So far, only 236, or just under half the employers that have reported have published an action plan. Thirty-six employers provide a link to their website, but not to specific information on the gender pay gap or the company’s policies on diversity.
Companies interviewed by the FT suggested that they did not believe sanctions were the right approach to addressing the gender pay gap.
Several said that measures to narrow the gap, such as recruiting more junior women, risked making a company’s data look worse in the short term, and employers risked being disincentivised by a sanctions regime that failed to recognise such anomalies.
Debbie Mavis, head of talent and resourcing at TSB, the bank, said there was no “short-term fix” to building a sustainable gender-balanced workplace.
“Using sanctions doesn’t feel like the right approach,” she said. “We need companies to come clean on the drivers of their pay gap, what they can do to address it and report on the progress they are making.”
Anne Milton, the minister for women, said that for large employers reporting their gender pay gap and ensuring the information is accurate is not optional but “is the law”.
“Almost every employer will have a gap, but waiting to report it won’t change those figures. Don’t wait for the deadline — get on and do it!”
Letter in response to this article:
Get alerts on Gender pay gap when a new story is published