Employment tribunals must order employers to carry out equal pay audits if they lose an equal pay claim or pay related sex discrimination claim, unless one of a limited number of exemptions applies. This applies to any equal pay claim brought on or after 1 October – including disputes over contractual terms on pay, bonuses, holiday pay, sick pay, overtime and pension benefits, as well as non-contractual terms such as discretionary bonuses.
The audit must identify gender-related pay differences and contain a plan to address any equal pay breaches. The regulations do not set out minimum requirements for the content of the audit; instead, the employment tribunal will specify details, such as the timing for completion (not less than three months from the date of the judgment) and employee coverage, based on size of organisation and the issues identified at the hearing. But the final version of the regulations did include an unpleasant surprise – an employer will have to publish the audit on its website, as well as informing the employees covered by the audit and the trade unions.
There are some exemptions from the possibility of being ordered to carry out an audit (in addition to ten year exemptions for start-ups and small businesses), including that the employer conducted an audit meeting the requirements within the three years prior to the tribunal's judgment. Employers who have identified an equal pay issue or received a claim may want to consider carrying out a voluntary audit now. Although there would be no need to publish the results, the voluntary audit could be referred to as evidence in tribunal proceedings in the future. The other exemptions are:
- the audit is not necessary to establish whether any action needs to be taken to prevent breaches – an example given in the consultation is where jobs are clearly graded and this information is open to all employees
- the breach is a "one off"
- the disadvantages would outweigh the benefits – such as if the employer is in grave financial difficulty.
There has been some speculation that the next Government (in particular, a possible Labour administration after next year's General Election) might decide to activate the dormant power in the Equality Act to require employers with 250 or more employees to publish information about the gender pay gap in their organisation. Although this was an idea from the previous Government, and the Coalition pledged to let it lie whilst they developed a voluntary approach, the last official comment on this was three years ago and it appears that the gender pay gap figures have not improved much since.