The draft Equality Act 2010 (Equal Pay Audits) Regulations 2014 came into force on 1 October 2014. The Regulations require Employment Tribunals to order an employer to carry out an equal pay audit where it is found to have breached equal pay law. This is required where the employer has lost at Tribunal on all or part of an equal pay claim. It includes claims relating to all types of pay, such as commission, bonus payments, shift premiums and overtime payments.
Pay audits must include relevant gender pay information for the categories of employees specified in the Tribunal, identify any differences between these staff, provide reasons for those pay differences and set out a plan for eliminating the pay differences. The Tribunal must allow at least 3 months for an equal pay audit to be carried out.
The Employment Tribunal will be exempt from ordering an audit in the following circumstances:
- the employer has completed an appropriate equal pay audit in the last 3 years;
- it is clear without an audit whether or not any action is required to avoid existing or future equal pay breaches;
- the breach was a ‘one-off’ and there is no reason to think there will be any further occurrences;
- the disadvantages of an audit would outweigh the advantages; or
- the employer is a micro-business (i.e. has fewer than 10 employees) or a new business (i.e. is less than 12 months old at the time of the equal pay claim).
The Employment Tribunal will decide whether an audit has been completed correctly, and will have the power to order a financial penalty of up to £5,000 payable to the Secretary of State if the employer has failed to comply. If approved by the Employment Tribunal, the employer will then be required to publish the results of the audit on their website.