Tribunals to be given power to order compulsory equal pay audits
The government has published the Equality Act 2010 (Equal Pay Audits) Regulations 2014. From 1 October 2014 employment tribunals will be obliged, in certain circumstances, to order employers to conduct equal pay audits where they are found to be in breach of the equal pay provisions contained in the Equality Act 2010.
However, the tribunal must not order an audit if:
- the employer has carried an audit within the last three years;
- it is clear without an audit what action is required;
- the tribunal has no reason to think that there will be other breaches; or
- the disadvantages of ordering the audit outweigh its likely benefits.
There is also an exception for businesses under twelve months old, and those with fewer than ten employees.
What will the audits entail?
The audits will require employers to provide the tribunal with a report detailing:
- information on the gender and pay of certain types of employee specified by the tribunal;
- differences between pay for men and women and the reasons for these differences;
- reasons for any potential equal pay breach identified by the audit; and
- the employer’s plans to avoid breaches occurring or continuing.
The Regulations specify that employers must be given at least three months to complete the audit. The employer then submits their report to the tribunal, who will determine whether or not the audit is compliant with the Regulations. If it is, the employer must then publish the report on its website.
There is a maximum fine of £5,000 where an employer fails to carry out the audit without reasonable excuse.
Implications for employers
As the audits can only be ordered where an employer loses an equal pay claim, these new Regulations could provide an added incentive to settle (particularly as the audit results have to be published).
Employers would be wise to be proactive in carrying out reviews of their pay structures to avoid unnecessary exposure to equal pay claims. However, think carefully about the pros and cons of doing so and whether to publish the results. The benefits of knowing whether there is a risk of equal pay claims and the extent of any potential exposure, need to be weighed against the costs of addressing any identified pay gaps.
The post Tribunals to be given power to order compulsory equal pay audits appeared first on Brodies Blog.