Formal investigations into companies that have not complied with their gender pay gap reporting obligations will begin in June, the Equality and Human Rights Commission (EHRC) has announced.
The EHRC, which is responsible for enforcement of the regulations, began writing to firms that missed the 4 April reporting deadline on 9 April 2018, according to a letter from the EHRC to Treasury Committee chair Nicky Morgan (2-page / 173KB PDF). Over 400 employers which received the letter have since either reported their data or informed the EHRC that they are not caught by the regulations.
Employers which received that letter were given 28 days in which to comply with the regulations or face further action. The next stage of the EHRC's enforcement process for private sector employers is an investigation under section 20 of the 2006 Equality Act, but unlimited fines and potential criminal convictions could ultimately follow.
In addition, details of all employers that reach investigation stage will be published on the EHRC website, along with a final report setting out the EHRC's conclusions at the end of the investigation, according to the letter.
"This letter serves to reinforce the EHRC's commitment to act as a fair but firm regulator, and to hold to account employers which have not complied with their reporting obligations," said gender pay gap reporting expert Susannah Donaldson of Pinsent Masons, the law firm behind Out-Law.com.
"Aside from facing the possibility of enforcement action, employers which make it onto the 'non-compliant' list are likely to be subject to intense media scrutiny. The potential for reputational damage cannot be overstated," she said.
All private and voluntary sector employers with 250 or more employees were required to report on their gender pay gap information as ay 5 April 2017 by 4 April 2018. The deadline for public sector employers, who are subject to a similar duty under separate legislation, passed on 30 March 2018.
Of the over 10,000 employers who published their data on government's gender pay gap reporting portal before the deadline, more than three quarters paid men on average more than women, according to analysis by Pinsent Masons, the law firm behind Out-Law.com. There were also stark differences in gender pay across sectors. Over 1,000 of the employers who reported in time did so in the final 24 hours before the deadline.
Employers subject to the reporting regulations must publish their overall mean and median pay gaps based on gross hourly pay for men and women, expressed as a percentage; as well as their mean and median gender bonus gaps. They are also required to publish the proportion of male and female employees within each quartile of their pay distribution, ordered from lowest to highest pay, as well as the proportion of both men and women that have been paid a bonus in the preceding 12 month period. This information must be published annually.
Morgan wrote to the EHRC to request more information about gender pay gap compliance in the financial services sector. In particular, she sought a list of those financial services employers that had missed the 4 April 2018 deadline.
EHRC chief executive Rebecca Hilsenrath said that she was unable to provide a list at this stage, as EHRC was "working on updating the information provided to use by the [Government Equalities Office] to ensure that details of employers who are not caught by the regulations are removed". However, her letter confirmed that the names of non-compliant employers would ultimately be published.
Employers who have not reported their gender pay gap data as required by the regulations will be investigated and, where the EHRC establishes that an 'unlawful act' has been committed, an 'unlawful act notice' issued. Where an employer does not comply with an unlawful act notice, the EHRC will apply for a court order requiring them to do so.
Breach of this court order is a criminal offence, punishable on conviction with an unlimited fine.
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