We are quoted in The Independent on gender pay gap reporting

Philip Landau was quoted in The Independent in relation to the latest gender pay gap reporting requirements by employers. This appeared in the subscription part of  the publication, so the comments we provided are reproduced below:-

What might be some legal challenges for businesses in reporting their gender pay gap? Could they be bound to the reasons or plan of action they include in their narrative?   

The publication of the gender pay and gender bonus cap data will require sign-off from a board-level director or equivalent, together with a written statement confirming that the information is accurate. Although there is no legal obligation on employers to publish any form of commentary or narrative on the figures, it is strongly encouraged that they do so in the accompanying guidance to the Regulations.   It is likely that the relevant finance departments will need to provide the background data for the report and accompanying narrative to be compiled, so it is important that they fully understand the precise requirements and the reasons for supplying the data.

There are no criminal or civil penalties for breaching the regulations although the government’s explanatory note says that the Equality and Human Rights Commission can take enforcement action for non-compliance. Should matters reach litigation (in the context of an equal pay claim), a tribunal could draw adverse inferences from either no or false published information. This could also result in significant reputational damage for the employer.

Can reporting the gender pay gap bring up any potential legal action from employees who could claim they have been discriminated against because of their gender?

 An employee could pursue a claim under Equal Pay Law. The Equality Act 2010 (EqA 2010) provides that men and women should receive equal pay for equal work. Claims in relation to basic pay, automatic pay progression, performance related pay and benefits and non-discretionary bonuses are covered by equal pay law.

There may also be a claim for sex discrimination, especially in relation to promotion, discretionary pay rises, or discretionary bonuses, where it would not be possible to make an equal pay claim.

 Are there any legal benefits for companies reporting early?

There do not appear to be any legal benefits for reporting early, however, those that do so will doubtless receive favourable exposure on their transparency and progressive stance towards the Regulations. On a practical level, an earlier the reporting also means employers will be able to identify any gender pay issues highlighted by the statistics and take quicker remedial action. There is nothing to stop employers publishing their report right up to the deadline, but it doesn’t look great from a reputational point of view-especially if the statistics do not show the company in a good light.

What would the legal punishment be for any companies that don’t report within the first 12 months?

There are no real sanctions or penalties for employers who do not comply with the regulations, even though reporting is a legal requirement. However, it has been suggested that this could be an ‘unlawful act’ under the Equality Act 2010 and the Equality and Human Rights Commission has the power to enforce a failure to comply with the regulations. On a more practical point, if all employers are revealing their figures, it is going to be more obvious to third parties and employees if a particular employer is refusing to publish their statistics. The Government have said may also decide to name and shame companies who are not complying. This could result in reputational damage, as the purpose of these regulations is to encourage transparency and accountability.