New legislation will be introduced in October which will give employment tribunals power to order compulsory equal pay audits if an employer has lost an equal pay claim or a pay-related sex discrimination claim. In most circumstances the employer will be required to make the results of the audit public.
These provisions fall considerably short of the plans set out in the Equality Act as originally enacted, which would have made equal pay audits compulsory for larger private sector and all public sector employers. However the new modified provisions confer considerable powers on a tribunal to dictate how the audit should be conducted and to supervise its publication. There are also financial sanctions for non-compliance, with a maximum penalty of £5,000 for each infringement.
Employers which have already completed an equal pay audit in the previous three years will be exempt. There are also a number of other exemptions, including where the employer can convince the tribunal that "the disadvantages of an audit would outweigh its benefits".
Given the relatively small number of equal pay claims that reach a final hearing, this measure alone is unlikely to make significant inroads into the gender pay gap which still stands at around 10% for full-time workers and not far short of 20% for all employees. However, where employers know they have a potential exposure to equal pay claims, it will provide an additional incentive for them to conduct an equal pay audit on a voluntary basis.
More details of the Government’s plans and the thinking behind them can be found in its response to consultation.