Mandatory equal pay audits
Labour & European Law Review Weekly Issue 391 15 October 2014
The government has this month introduced regulations which mean that tribunals can order employers to carry out an equal pay audit in certain circumstances.
From 1 October, companies that are found to have breached equal pay law must produce an audit analysing their pay structures, unless they meet one of the exceptions to the requirements of the legislation or are an exempted category of employer.
The following exceptions apply:
- if the employer had already undertaken an audit that meets the requirements set out in the regulations within three years of the finding of a breach of equal pay law by the tribunal
- if it is clear without an audit whether any action is required to avoid equal pay breaches occurring or continuing
- if the breach which the tribunal has found gives no reason to think that there may be other breaches
- if the tribunal is convinced that the disadvantage of carrying out the audit outweighs the advantages.
Exemptions apply to micro businesses with fewer than ten staff, or start-up businesses which are less than 12 months old at the time of the equal pay claim on the basis (according to the government) that it would be too “expensive” for them to carry out an audit.
The audit must include the relevant pay information for the people specified in the tribunal order and identify the reasons for any difference in pay between men and women identified by the tribunal. It must also include the reasons for any potential equal pay breach identified by the audit and set out a plan to avoid them in the future.
The regulations also require employers to publish the result of the audit in a format accessible to all affected staff, unless that would involve a breach of a legal obligation, such as a breach of the right to privacy under article 8 of the Human Rights Act 1998.
Neil Todd at Thompsons Solicitors, said: “This is good news but unfortunately does not go anywhere near far enough to address the problem and will only ever apply to a very limited number of employers.
“If the government is serious about addressing inequalities in pay structures it needs to go much further and introduce provisions that require compulsory audits in a much wider range of circumstances. A starting point would be to implement section 78 of the Equality Act 2010 which in not currently enacted and which requires employers with 250 or more employees to publish information about gender pay gaps in their organisations”.
To read the regulations, go to: http://www.legislation.gov.uk/ukdsi/2014/9780111116753