Gender pay gap – the here-to-stay-gap? Can the regulations be enforced?

Since the first publication of draft Gender Pay Gap Regulations (the “Regulations”), which do not contain specific civil sanctions, it has been unclear how non-compliance would be enforced.

The Equality and Human Rights Commission (a non-departmental public body established by the Equality Act 2006 (“EA 2006”) and responsible for safeguarding and enforcing equality laws) has now published a draft enforcement policy:

• In the first instance, enforcement will be through "informal resolution".
• If that is unsuccessful, the EHRC will carry out a “section 20 investigation” and may apply for a court order. The employer will have the opportunity to enter into a "section 23 agreement" requiring it to comply, retrospectively and going forward, with the GPG regulations.
• If an agreement is entered into but not complied with, the EHRC will apply for a county court order requiring compliance.
• If a section 23 agreement is not accepted and the investigation concludes that the employer has breached the regulations, the EHRC will issue a "section 21 unlawful act notice" requiring the employer to prepare a draft action plan. If the employer does not do so, or does not subsequently comply with the action plan, again a county court order will be sought.
• Failing to comply with any order obtained will be an offence and the employer will be liable to a "level 5 fine", i.e. unlimited.

“Section” refers to various provisions of the EA 2006 that confer such powers on the EHRC. However, there are grounds to question whether the EHRC actually has the ability to exercise those powers in relation to the GPG Regulations.

The EHRC’s powers under the EA 2006 apply in relation to an “unlawful act”, defined in section 34 of the EA 2006 as an act contrary to a provision of the Equality Act 2010 (“EA 2010”). While the GPG regulations have been made pursuant to the EA 2010 (see section 78), the EA 2010 does not itself impose an obligation to publish such information. On a plain interpretation, failure to comply with the GPG Regulations is not contrary to a provision under the EA 2010 but contrary to regulations made pursuant to a provision under the EA 2010. A technicality, perhaps, but one that has the potential to render any attempt by the EHRC to enforce the GPG Regulations invalid.

Interestingly, this issue was raised by the EHRC itself in its response on 11 March 2016 to the Government’s consultation on the draft GPG Regulations, in which it stated “it is not possible for an unlawful act to arise from [section 78 of the EA 2010]” and advised that enforcement be addressed in the final regulations. However, the EHRC has since changed its tune, with Chief Executive Rebecca Hilsenrath stating in a letter to the Financial Times on 5 January 2018 that the EHRC “has the statutory powers needed to enforce the gender pay gap regulations.” No further detail is given and so it is not clear what has caused this change. Certainly the Government’s responses to its two consultations on the GPG Regulations do not shed any light. Its February 2016 response to the initial consultation stated:

“as a requirement under the EA 2010, gender pay gap reporting by employers would already be subject to the compliance and enforcement arrangements provided for in the EA 2010 itself, and in the EA 2006”

while its December 2016 response to the consultation on the draft regulations (the consultation in response to which the EHRC made the comments quoted above) stated:

“non-compliance would constitute an ‘unlawful act’ and fall within the existing enforcement powers of the EHRC under the EA 2006”

In neither response has the Government addressed the issue that the GPG Regulations are not an obligation under the EA 2010 and so not covered by the definition of “unlawful” under the EA 2006, nor has it acknowledged that this could cause problems with enforcement.

It is worth noting that section 78 of the EA 2010 specifically allows for the GPG Regulations to provide that failure to comply is an offence liable to a level 5 fine and to be enforced by such means as are prescribed, but the Government specifically chose not to provide for any specific enforcement provisions. If the validity of any enforcement action by the EHRC is called into question, it may need to reconsider that stance.