Equal pay audits

The government has published draft regulations which will generally require tribunals to order equal pay audits where an employer loses an equal pay case.

Subject to Parliamentary process, the regulations will take effect from 1 October 2014 and will apply to equal pay claims presented on or after that date.

An audit must include:

• pay information for men and women for the categories of employees and period specified by the employment tribunal
• the pay difference
• the reasons for the pay difference
• the reason for any potential equal pay breach that has been identified
• the employer’s plans to avoid equal pay breaches.

The tribunal will set a completion date for the audit to be completed, which must allow the employer at least three months. Once the audit has been submitted, the tribunal will determine whether it is compliant and, if not, order any shortcomings to be rectified. The tribunal can also impose a penalty of £5,000 for each failure to comply with an audit order.

The circumstances in which a tribunal will not order an audit are if:

• the employer has already carried out a qualifying audit within the preceding three years
• the action required to avoid equal pay breaches is clear without an audit
• there is no reason to think there may be other breaches
• the disadvantages of an audit outweigh the benefits

There are also exemptions for existing micro-businesses and new businesses.

The draft regulations will also require the employer to publish the audit on its website for at least three years (unless this would involve a breach of a legal obligation) and to inform all employees covered by the audit where they can obtain a copy.

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