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Legal Minds

5 December 2014 / by / in

Compulsory Equal Pay Audits

Employers should now take a closer look at their remuneration structures to check whether there is inequality in pay between male and female employees. The Government is determined to reduce the pay gap between men and women in the workplace, which currently stands at around 15%.  Some may say that they have heard this before. 

The Government has, however, gone further than its predecessors by now requiring Employment Tribunals to order employers who fail in equal pay claims to undertake an equal pay audit, the findings of which will have to be disclosed to their workforce, which may in turn give rise to further unequal pay claims.

There are situations where this new rule will not apply, for example, where an employer has carried out an equal pay audit within three years before the Employment Tribunal decides on an employee’s claim for unequal pay – hence the need to be proactive now. By carrying out a voluntary audit of current remuneration practices in this way, employers will be able to identify any potential issues before they arise. Further, voluntary audits need not be published or distributed to employees. A note of caution is that these audits may be disclosable in any subsequent litigation, however it is nevertheless considered best practice. Employers may also wish to join ‘Think, Act, Report’, the voluntary publication of information scheme, to demonstrate their transparency.

The Equality Act 2010 has certainly put the spotlight on the gender pay gap, and therefore employers can no longer afford to ignore equal pay issues. However, in taking the initiative and addressing the issue now, employers will also reduce the risk of additional sex discrimination claims arising out of unequal pay between men and women.