Equal pay audits

19 Sep 2014

A few years ago Tony Blair's government hit upon the idea of naming and shaming employers who break the law. They started with those who failed to pay the National Minimum Wage and moved on to those who employ migrants illegally (now fondly known as "rogue" employers). On 1st October the principle will be extended to employers who fall foul of equal pay claims. You’ll notice the common thread; they’re all simple ideas wrapped up in hideously complicated regulatory packages which tend to trip-up the unwary employer rather than assist their “hard working” staff.

In future Employment Tribunals will be required to order employers found in breach of equal pay rules to undertake an equal pay audit. This will include relevant gender pay information, identify pay gaps and the reasons for them then say how the gaps will be closed, unless there are objectively justifiable reasons for them. These audits must be submitted to the Employment Tribunal for approval then published on the employer's website where they will remain for all to see for three years. There’ll be some interesting data protection compliance issues here and the penalty for non-compliance is a fine of £5,000.

Unless the new constitutional settlements for England, Wales and Northern Ireland push this off the news agenda we'll probably hear more about this in ten days time as our leaders don the righteous armour of equality and reach for the rusty sword of justice in preparation for another tilt at the windmills of the workplace.  With all this legislative effort you might think this is a big deal; think again.

Statistics on equal pay claims are notoriously difficult to interpret but a report for the Government Equalities Office by Incomes Data Services in July 2012 indicated there would probably be fewer than a dozen audits ordered each year. The same report noted that an IDS researcher spent two days interrogating the Employment Tribunal Judgement database and only found thirteen relevant cases in 2009 – 2011. Why? Because most equal pay cases are very complex and go through a couple of preliminary hearings which tend to lead to settlements. Perhaps this is why the government isn't publishing official guidance on the new process.