Mind the gap : article on non compliance with Gender Pay Gap reporting

The deadline for reporting under the Gender Pay Gap Reporting (GPGR) requirements passed yesterday. At present is appears that at least 1500 relevant companies have failed to comply. Not surprisingly, The Equality & Human Rights Commission (EHRC) has been given significant powers to enforce compliance with the GPGR requirements and to punish non-compliant employers.

Alex Radley, our Head of our Regulatory Team looks at the potential consequences to private and voluntary sector organisations for failure to comply with the GPGR requirements.

“In the first instance, non-compliant private and voluntary sector employers will be contacted by the EHRC within 28 days seeking retrospective compliance. Non compliant employers will be selected at random on an industry basis, so the finger of suspicion could point anywhere.

“Failure to report after this initial contact is likely to give rise to a formal investigation. This investigation could result in the non-compliant employer being ordered by a court to provide documents or oral representations to the EHRC in the course of its investigation. Failure to comply with the Order to provide information to the EHRC or providing false information is a criminal offence, punishable by an unlimited fine. “The investigation may result in either an “Agreement” by the employer to comply with its reporting requirements retrospectively and in the future (s. 23 Equality Act 2006) or the EHRC issuing of an “Unlawful Act” Notice (s. 21 Equality Act 2006).

“Failure to comply with either of these notices may then result in the EHRC applying for an Order from a court requiring compliance by the employer. Not surprisingly, failure to comply with such an Order is a criminal offence punishable in an unlimited fine. “From this we can see that there are two opportunities for the same non-compliant employer to be prosecuted. First if the employer fails to comply with an Order requiring information to be provided to an EHRC investigation and second, if an employer fails to comply with either a compliance “Agreement”, or in response to an “Unlawful Act Notice”.

“Whilst expert advice and representation will always be a benefit, being prosecuted in the criminal courts is unpleasant, time consuming and expensive. If a non compliant organisation is convicted the Court can impose an unlimited fine. In the absence of guidance on what the level of the fines will be, it is almost certain that any fine is likely to be of a magnitude sufficient to send a clear message to the management and stake-holders of relevant employers that non-compliance will not be tolerated.

“However, what may be of even greater significance to non compliant employers is the adverse publicity associated with prosecution and conviction in the criminal courts. The basic principle is that criminal proceedings are held in public. It is hard to see why proceedings for failure to comply with the GPGR requirements would not therefore be widely publicised by both the EHRC and the media across all platforms. The reputational impact of this is unquantifiable, but association with a non-compliant employer is likely to cause concerns amongst a number of stake-holders crucial to the health of the organisation.

“There are a number of legal checks and balances built into this process: written representations can be made, notices requiring information during an investigation can be challenged, agreements varied and a reasonable excuse defence may be available. The GPGR requirements are here to stay and relevant employers should therefore always seek advice and representation from their trusted employment and regulatory compliance legal advisors.

“If you are one of the 1500 or so non-compliant employers, then you need to take advice, have a plan of action in place and be prepared to act now.”

For advice in relation to this article, an EHRC investigation or for any other Regulatory or Employment Law  queries please contact us here. 

Further advice and guidance regarding gender pay gap reporting can be found here.

The final gender pay gap figures can be found here.