• 13 AUG 14
    New equal pay rules bring burden to businesses

    New equal pay rules bring burden to businesses

    New legislation due to be introduced in October will give employment tribunals the power to order equal pay audits putting more pressure on business owners to close the gender gap.

    The Equality Act (Equal Pay Audits) Regulations 2014 vests this power in Tribunals in the event that an equal pay claim or sex discrimination claim is lost.

    The proposed law only applies to claims presented on or after October 1, 2014 so employers currently engaged in defending equal pay claims will not be affected by the changes.

    Here is some guidance:

    Exemptions

    The rules will exclude micro businesses with fewer than ten full-time employees and new businesses that have been trading for less than twelve months.

    Employers will also be exempt from conducting the compulsory audits if:

    • The employer has completed an audit in the previous three years.
    • It is clear what action needs to be taken to prevent breaches from continuing or occurring again in the future.
    • The identified breach gives no reason to suggest there may be other breaches.
    • The disadvantages of an audit would outweigh the benefits.

    Content

     The proposed regulations set minimum requirements for all audits. According to the proposals, an audit must:

    • Include information relating to the pay of the relevant male and female employees.
    • Identify any differences in pay between male and female employees and the reasons for those differences.
    • Include the employer’s proposal for resolving the equal pay breach and preventing breaches occurring in the future.

    Penalties

    Failure to submit a compliant audit to the Tribunal within a stipulated period (but in any event within three months of the date of the Order) will lead to the employer having to attend a further hearing at which a fine of up to £5,000 may be imposed.

    Publication

    Subject to limited exceptions, within 28 days of the audit being approved by the tribunal, the employer must publish the report on its website and make it available for at least three years. The new rules will also require the employer to alert all employees whose pay information is included in the audit to the whereabouts of the document. Refraining from doing this could lead to a further hearing albeit without financial penalty.

    The publication of equal pay audits could have a negative impact on employers, generating harmful publicity and resulting in further equal pay claims if an employer is found to have discriminatory pay practices. This may also give claimants leverage to increase the value of equal pay settlements.

    For further information on compulsory equal pay audits or any aspect of employment law, contact David McCraith at david.mccraith@whnsolicitors.co.uk  telephone 01254 236221 or Michael Shroot at michael.shroot@whnsolicitors.co.uk telephone, 0161 761 8087.