EQUAL PAY AUDITS
Employers who lose tribunal pay claims to face equal pay audits
Equalities minister Lynne Featherstone has today announced that employment tribunals will be provided with the power to require an employer who loses an equal pay case to carry out a pay audit, where there is likely to be systemic discrimination.
Featherstone said: “We strongly believe that a light-touch approach is the best way to encourage most employers to deal with the complex causes of unequal pay. But it is right to take strong action in the few cases where employers have been shown to have breached the law."
She added: “This strikes a balance between promoting workplace equality and letting businesses get on with their jobs.”
Companies with fewer than ten people will initially be exempt from the proposal, and there will be a further consultation on exactly what companies will be required to publish when carrying out an audit.
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Under the new legislation, where an employer has breached the law and can’t show any reason why there is a difference in pay, an audit is likely to be ordered. An employer will be able to avoid this if they can demonstrate they have done a pay audit in the last three years, have transparent pay practices, or can show another good reason why it would not be useful to make an order.
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The Modern Workplaces Consultation was published on 16 May 2011 and sought views on proposals to update employment law to encourage a more fair and flexible approach to work. The consultation included questions on flexible parental leave; flexible working; working time and equal pay.
The equal pay section of the modern workplaces consultation received 116 responses. Generally, respondents agreed that there were problems within both public and private sectors in relation to transparency of gender pay gaps. In spite of this agreement, respondents had differing opinions about the effectiveness of using pay audits to address gender pay gaps, the exact nature of pay audit requirements and the likely effectiveness of the proposal.
The government response detailing the next steps to implement these proposals is now available, as well as an impact assessment.
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