Employment tribunals will have the power to order equal pay audits

by Laurie Anstis on June 14, 2012

The Home Office has been busy recently with consultations on the abolition of the Equality Act third party harassment provisions and the employment tribunal’s power to make wide recommendations and discrimination questionnaires.

All of this left open the question of what was to happen with equal pay audits. The Equality Act had included a provision requiring equal pay audits (or “gender pay gap information”) for large employers, but this had not been implemented. The concept was revisited in the “Modern Workplaces” consultation in May 2011, but nothing more has been heard of it until today.

In a written ministerial statement, Lynne Featherstone MP has announced that the government intends to proceed with the Modern Workplaces proposal to give employment tribunals the power to order employers to carry out equal pay audits.

According to the statement:

“… an Employment Tribunal which finds that an employer has discriminated on grounds of sex in contractual or non-contractual pay will be obliged to order the employer to conduct a pay audit in cases where continuing discrimination is likely. An audit would not be ordered if an audit has been completed in the last three years, the employer has transparent pay practices or the employer can show a good reason why it would not be useful. Micro businesses will initially be exempt from the proposals.

The Government intends to issue a further consultation later this year on the exact details of how the audits will operate and what publication requirements will apply. We will work closely with business organisations and other interested stakeholders throughout this process, and we will seek an opportunity to bring forward legislation when Parliamentary time allows.”

It is notable that the employment tribunal will be obliged to make the order, and that it will apply in cases where there is a finding of sex discrimination on the basis of contractual or non-contractual pay. Covering non-contractual pay will mean that the order can be made outside the strict confines of an equal pay case (equal pay cases being technically confined to contractual pay).

There are, of course, exceptions. The order can only be made where “continuing discrimination is likely” and the employer might be able to show “a good reason why it would not be useful”.

The threat of a compulsory equal pay audit is unlikely to be welcomed by many employers, and as and when this is implemented strong arguments can be expected in tribunal from both sides as to whether the exceptions apply. It may also increase pressure on employers to settle such cases outside the tribunal, and avoid the risk of a compulsory equal pay audit.

There is likely to be more on these proposals in due course on the Home Office website here.

[Update 15 June 2012: Kevin Poulter and Michael Scutt give their views on the proposal here.]

One comment

Might one inevitable consequence of this be an increase in the HR industry offering compliance materials to get the “completed in the last three years” nailed down? And it does seem odd that they row back of the wider ET recommendations power yet proceed with this. Trade off within the Coalition? Arguably the audit issue would be impose much more “burden on business”. That’s not to say that I’m against it as anything which might close the scandalous pay gap still apparent 40 years after the Equal Pay law came into force is to welcomed. Devil will be in the detail as ever and let’s hope the exceptions are not too widely drawn.

by Craig on 15 June 2012 at 7:05 am. #