Employers could face serious reputational damage if they fail to comply with gender pay reporting requirements, experts have warned, as new figures suggest one in 10 eligible organisations will not meet their deadlines this spring.
Under government regulations introduced in April 2017, all companies with more than 250 employees are required by law to report on their gender pay gap, detailing the difference in average pay between all men and women in their workforces.
The deadline for companies to publish their gender pay audit data is 4 April 2018, while public sector organisations have to report by 30 March 2018.
However, analysis from accountancy firm RSM has found that 90 per cent of affected companies have yet to comply with their gender pay reporting requirements, with only 502 of 9,000 recently surveyed business stating they had already reported.
While 77 per cent of businesses surveyed by the firm said they had already published or were on track to publish their gender pay gap report on time, 10 per cent said they would be unable to meet the deadline.
Experts have suggested that many organisations are delaying gender pay reporting while they develop a narrative to explain the figures, before they become public.
However, Shirley Hall, a senior partner at law firm Eversheds Sutherland, warned People Management that a failure to comply with the reporting deadline could have far-reaching repercussions for the organisations involved.
“We would advise that employers make every effort to comply with the statutory requirements to report gender pay gaps. The implications for failing to do so go beyond potential enforcement by the Equality and Human Rights Commission (EHRC), who have been appointed by the government to enforce compliance with the regulations,” said Hall.
“The media, business community, employees and public are watching developments in gender pay gap reporting very carefully. A failure to comply with the regulations could attract negative publicity, which could cause reputational damage for employers.
“A failure to produce the statutory figures may result in people speculating that the reason is because the figures are poor – which may not be the case,” she added.
“Negative publicity could impact on retention and recruitment of employees if they perceive that the company is not engaged with gender equality issues, and could also deter organisations from contracting with a particular employer - especially if the company contracts with the public sector.”
Kerri Constable, a senior consultant from RSM’s HR consulting service, said there were a number of factors behind the failure to report to date: “These figures reinforce our concerns that there are many companies struggling to complete their gender pay gap calculations, partly as a result of difficulties with manipulating the data from payroll systems.
“Many employers are also using the remaining time to develop the right narrative to try and mitigate any reputational risk - both internal and external. We also suspect that many firms are playing a wait-and-see game so they can see how competitors are presenting their own findings.”
Reports last week suggested that the government had failed to grant “direct power” to the EHRC to impose sanctions on employers that fail to comply.
While reporting requirements are mandatory for organisations falling within the scope of the gender pay regulations, which means employers who miss the deadline will be breaking the law, there has been little evidence of the consequences for doing so, said Keely Rushmore, senior associate at SA Law.
“An ongoing criticism of the regulations is their lack of ‘bite’, she said. “This relates to the lack of an enforcement process, or official sanctions for employers who fail to comply or who provide inaccurate or misleading information.
“However, while employers may feel relatively relaxed about their non-compliance, it would be unwise for them to rest on their laurels.
“Members of the public, existing employees and, of course, the media are able to check the government’s website to see an organisation’s gender pay gap report, or lack of it”, she said.
“Prospective job applicants may be put off by employers who don’t comply, and there’s no guarantee a business won’t find itself being contacted by the press or the subject of a media story”, added Rushmore.
In these times, “when issues such as sexual harassment and gender equality are firmly in the spotlight, employers really should do all they can to comply before the deadline or, if that really isn’t possible, as soon as they are able to,” she warned.
On 7 January, BBC China editor Carrie Gracie said she had quit her role in a stand against pay inequality. She suggested that women are paid significantly less than men for the same work, following last year’s revelations of the BBC's gender pay gap among on-screen stars.
In an open letter on her own website accusing the organisation of having a “secretive and illegal pay culture”, Gracie wrote that the Equality Act 2010 states that men and women doing equal work must receive equal pay, yet she believed female international editors were being paid less than their male counterparts: “I learned that in the previous financial year, the two men earned at least 50 per cent more than the two women.
"Despite the BBC's public insistence that my appointment demonstrated its commitment to gender equality, and despite my own insistence that equality was a condition of taking up the post, my managers had yet again judged that women's work was worth much less than men's", Gracie wrote.
The EHRC said it had launched a consultation in December 2017 on enforcing gender pay regulations. Chief executive Rebecca Hilsenrath said: "The law now says employers must be transparent about pay for women, and our regulatory role is to make sure this happens. We will educate employers about their responsibilities and hope to see widespread compliance. If that doesn’t happen, we won’t hesitate to resort to our more stringent legal powers – including enforcing unlimited fines and convictions."