More than a thousand businesses miss gender pay gap deadline
Rachel Sharp, April 05, 2018
High proportion publish in final hours, revealing 78% of businesses have a gap in favour of men
An estimated 1,500 businesses failed to publish their gender pay gaps by the deadline of midnight on 4 April, according to the Equality and Human Rights Commission (EHRC).
More than 10,000 organisations published their gender pay gaps by the deadline, according to government figures. Of these compliant companies, around 1,000 waited until the final day to publish their data. The UK arms of Sony and Warner Bros, as well as beauty company Benefit Cosmetics, were just some of the firms to release their findings in the final hours.
“While more than 10,000 employers have complied with the law there are others who have not taken this seriously and now face legal action. Reporting gender pay gaps is not optional; it is a legal requirement as well as being the right thing to do,” EHRC chief executive Rebecca Hilsenrath said.
"We're looking at approximately 1,500 companies that haven't reported," Hilsenrath told the BBC.
Wanda Wyporska, executive director of The Equality Trust, told HR magazine that it was “disappointing to see that despite such a long lead in time some organisations have failed to report their gender pay gap”.
“We have to question why they have not chosen to do so and what message that sends out to the public and to their own employees,” she said.
Organisations that failed to comply could now face court orders and unlimited fines brought by the EHRC. Hilsenrath said that the EHRC will "soon be starting enforcement against all employers that haven’t published". It will be sending letters to the non-compliant organisations on Monday 9 April, giving them 28 days to respond. Action will also be taken against firms reporting implausible figures.
However, concerns have been raised about the EHRC’s powers to enforce sanctions. Jane Mann, partner and head of employment and HR law at Fox Williams, told HR magazine: “The regulations do not contain any specific penalties."
She explained that questions hanging over the powers of the Equality Act may lead to “legal challenges to this enforcement mechanism” from some organisations. Instead, the “most effective enforcement mechanism is likely to be 'name and shame' and the resulting reputational damage”, she said.
She added though that sanctions are set out "under delegated powers contained within the Equality Act and this Act contains enforcement powers vested in the EHRC.
“Government and the EHRC have now said that they consider that the EHRC can use these powers to enforce the regulations. If persuasion does not work they can carry out an investigation into the failure to comply and can use statutory powers to request information including pay data. The EHRC can apply for a court order to enforce compliance. The EHRC can also reach statutory agreements with defaulters whereby they agree to comply retrospectively and in the current reporting year.”
Karen Gill, co-founder of Everywoman, told HR magazine that businesses who failed to comply “run the risk of sending the message to their female workforce that they are less valued than their male counterparts. Alongside this they are indirectly sending a message that they lack commitment to business growth.
“It is complacency that could cost them dear as employees, shareholders, investors and customers begin to question their motives,” she added.
Wyporska agreed that non-compliant businesses could face a backlash from prospective employees: “Organisations with more than 250 employees surely have the capacity to make these simple calculations, so if they have not submitted the figures we can only surmise that the will to admit this problem and tackle it is lacking. I'm sure that many women, like me, will be using the data to decide where to shop and potentially where to work."
Fox Williams’ Mann offered another explanation as to why some businesses may have failed to meet the deadline, however. “They may be struggling to finalise their data in a compliant fashion; it may be taking longer than they thought and they may be awaiting auditing by external consultants to check that they are compliant,” she explained.
“They could have practical difficulties in retrieving and processing large amounts of data. They may have been unsure of the exact requirements of the regulations and could be checking points.”
Final figures for the 10,000-plus companies that did report show that 78% of businesses have a pay gap in favour of men.
Among the worst offenders were budget airline Ryanair with a 71.8% gap and Millwall Football Club with an 80% gap, as well as several high street retailers including Karen Millen and Sweaty Betty.
Analysis based on organisations’ own categorisation of their businesses showed that construction had the largest sector-wide gap, with an average median pay gap of 25%. The gap was 22% in the finance and insurance sector and 20% in education.
Accommodation and food services emerged as the sector with the smallest gap, with an average median pay gap of 1%. This could be attributed to the fact that many firms in this sector use flat pay rates with high numbers of staff on the minimum wage.
Now the initial reporting deadline has passed businesses are expected to put “action plans in place to break down the barriers to women’s progression in their organisations”, home secretary and minister for women and equalities Amber Rudd said in the hours leading up to the deadline.
The Business, Energy and Industrial Strategy Committee announced this morning that it will question campaigners and companies on issues around compliance as well as the steps businesses are now going to take to tackle their gaps.