Equal pay

From today, employers who are found to have breached equal pay law will be ordered by the employment tribunal to carry out and publish equal pay audits.

In broad terms, breaches of equal pay law arise where men and women don’t receive equal pay for equal work.

An equal pay audit involves a systematic evaluation of an employer’s pay and reward systems. Any differences in pay, whether contractual or not, between women and men doing the same or equal work must be identified. The audit must include an action plan for eliminating any differences due to gender.

However, compulsory pay audits are not required for new businesses (less than 12 months trading), micro businesses (less than 10 employees), or where an employer has completed a valid audit in the last three years.

Further audits aren’t required where the equal pay breach appears to be an isolated issue, or it’s clear what, if any, action is required, or the disadvantages of an audit outweigh its benefits. This leaves employers plenty of wriggle room.

Furthermore, audits are limited to specified persons to be identified by the employment tribunal. A comprehensive and meaningful audit would ordinarily encompass the whole organisation. The restriction of compulsory audits to specified persons limits the burden on employers but materially limits their effectiveness.

Employers who fail to comply can be fined multiple penalties up to £5,000.

The government heralds compulsory equal pay audits as a tough new approach to tackling persistent pay inequality, but in the same breath estimates that only two or three business a year will be required to undertake them.

With equal pay claims down by 84%, compulsory equal pay audits are set to be all bark and no bite.

For more information, see The Equality Act 2010 (Equal Pay Audits) Regulations 2014.

Published by MacRoberts LLP © MacRoberts LLP 2014

Disclaimer The material contained in this e-update is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

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