UK: UK Government Pushes Ahead With Equality Reforms In The Enterprise Bill

The government has recently announced its intention to press ahead with its proposals to abolish the third party harassment provisions under the Equality Act 2010 and to abolish discrimination questionnaires; although the responses to the government's consultations on these issues1 showed these provisions were not considered particularly problematic to employers, they will nevertheless be welcomed.

Employers will be concerned, however, with the government's intention to proceed with its proposal to give employment tribunals the power to order equal pay audits where an employer is found guilty of sex discrimination in relation to contractual or non-contractual (e.g. discretionary bonus schemes) pay matters.2

Equal Pay audits

Proposals to give power to tribunals to order equal pay audits have been introduced as amendments to the Enterprise and Regulatory Reform Bill which is now before the Lords.3 The new amendments to the Bill describe an equal pay audit as an audit 'designed to identify action to be taken to avoid equal pay breaches occurring or continuing'. If the amendments to the Bill are accepted, regulations are likely to include provisions on the content of audits, the powers and duties of a tribunal when deciding whether its order has been complied with, provisions about circumstances in which an audit may be required to be published or disclosed to any person, and what should happen where an order is not complied with.

Where an ordered audit is not undertaken, the respondent employer will be hit with a financial penalty. There are certain exemptions where an equal pay audit cannot be ordered. Essentially, to be off the hook, the respondent employer would need to demonstrate that it has completed an audit in the 3 last years, it already has transparent pay practices or it is clear without the need for an audit what needs to be done to avoid further equal pay breaches, and therefore an audit would serve no useful purpose. Coming within these exceptions is likely to be difficult in practice. Start-ups and micro-businesses will be exempt but this may be changed in the future.

The government recognises in its response to the consultation on equal pay audits that this new power seems at odds with the thrust of its deregulatory agenda but reasons that its impact will be limited only to those who have already broken the law. This is true but the introduction of such a power is likely to be a strong bargaining tool for a claimant alleging sex discrimination in contractual or non-contractual pay claims. Respondent employers may prefer to reach an out of court settlement rather than risk having such an audit undertaken that could prompt further claims.

Third party harassment

Currently under the Equality Act, employers can be liable for harassment of their employees by third parties, such as customers or clients, in certain circumstances where the harassment relates to a protected characteristic, such as age, disability, race or sex. Liability can arise where:

  • The harassment has occurred on two previous occasions, not necessarily from the same third party
  • Employer is aware that this has happened
  • The employer has not taken reasonable steps to prevent it from happening again

The government plans to abolish these provisions through the Enterprise and Reform Bill as part of the government's "Red Tape Challenge", designed to cut bureaucracy and unnecessary regulation for employers. On the third party harassment provisions, the government's view was that they served no purpose as employees were protected by other legislation.

There is an element of truth to this in that employees will still be able to rely on constructive dismissal rights, health and safety legislation, the Protection from Harassment Act and the remaining harassment provisions in the Equality Act. However, the level of protection afforded by these other options would, in most cases, be lower and not as straight forward.

From the employers' point of view, it is difficult to see how the abolition of this little used provision will be of any help to them in terms of cutting "red tape". Harassment from whatever source is something that employers will and should be continuing to strive to eliminate from the workplace, both from the perspective of protecting their employees and reducing potential liabilities for themselves.

Abolishing discrimination questionnaires

83% of respondents to the government's consultation opposed the abolition of discrimination questionnaires. Despite this, the government concluded that the questionnaire procedure was "prescriptive and potentially threatening to employers" and has proposed an amendment to the Bill to implement this proposal.

The move will be welcomed by employers since the completion of questionnaires is often time consuming and burdensome but claimants are bound to try to find alternative ways of asking the same questions. However, as we have said in our previous alert on this topic4, if questions are posed during the course of tribunal proceedings, the employer can respond robustly – i.e. refuse to provide the information and assert that it will resist any application the claimant makes to the tribunal. Even if the tribunal agrees to an order for further information or disclosure, the employer would be in a better position than when faced with a questionnaire, because there is scope for persuading the tribunal to limit the scope of the order, and when assessing such an application, the tribunal must deal with the case fairly and in ways which are proportionate to the complexity or importance of the issues.

Footnotes

1 Equality Act 2010: Employer liability for harassment of employees by third parties, Response to the Consultation and Equality Act 2010: Employment Tribunals' power to make wider recommendations in discrimination cases and obtaining information procedure, Response to the Consultation

2 Modern Workplaces Response to Consultation on Equal Pay June 2012

3 Amendments to the Enterprise and Regulatory Reform Bill

4 Government consultation on abolishing discrimination questionnaires - May 2012, Response to the Consultation

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