Obligatory Equal Pay Audits proposed for employers who lose equal pay claims

Employers who lose sex discrimination cases will be required to carry out equal pay audits across their workforce and may also be ordered by tribunals to publish a comparison of men and women’s earnings across their entire business.

These proposals form an initiative led by Equalities Minister Lynne Featherstone and backed by Home Secretary Theresa May, which is aimed to expose systematic discrimination in companies on the grounds of sex and close any unjustified gaps in contractual or non contractual pay between men and women.

The Government is consulting on the practical issues of the measures, which may include an exemption for micro businesses (those with fewer than 10 employees). Employers may also be exempt where an audit has been carried out in the last three years, the employer has transparent pay practices or the employer can show a good reason why publishing the information would not be useful.

If employers fail to comply with an order of the Tribunal to carry out a pay audit they will be liable to be ordered to pay a financial penalty.

The measures could prompt an increase of out of court settlements as companies may opt to settle claims rather than risk an audit, which could potentially open the floodgates to more claims.

Critics of the new measures suggest that the increased likelihood that companies will settle will encourage more speculative equal pay claims in the tribunal system in the hope of settlement.

It remains to be seen whether the new measures have the desired effect and narrow the gender pay gap or simply cause increased speculative litigation.

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