Equal Pay Audits: Government publish response to consultation and draft regulations

Under the Equality Act 2010 (“the Act”), men and women are entitled to equal pay for equal work. Under section 139A of the Act, employers who have been found in breach of equal pay legislation can be ordered to carry out and publish an equal pay audit.

An equal pay audit involves comparing the pay of any protected groups within an organisation and investigating the reason for any differences and involves a commitment to put right any discrepancies.

In its recent consultation, in light of upcoming changes to legislation, the government sought views on the contents and disclosure of equal pay audits and also the availability of relevant guidance.

The published response to the consultation was accompanied by the draft Equality Act 2010 (Equal Pay Audits) Regulations 2014. In summary, the draft Regulations set out the following:

• An employer must be ordered by a Tribunal to carry out an equal pay audit if it has breached equal pay legislation. The draft regulations set out some exceptions to this, including where an audit has been carried out within the three years prior to the Tribunal’s judgment and where the disadvantages of carrying out an audit would be greater than the advantages of doing so (please see Regulation 3)
• Some organisations shall be exempt from the new regulations. These include new businesses (up to 12 months old) and “micro-businesses” (those with less than 10 employees). These definitions are not clear-cut however and employers are urged to consider the regulations in further detail (or take advice) to fully understand whether they are exempt or not.

An equal pay audit must set out:

• Gender pay information in relation to those types of employees specified by the tribunal;
• Set out pay differences between men and women and the reasons for the differences;
• The reasons for any identified potential breach; and
• A plan to avoid future breaches

Also, the penalty for an employer failing to conduct a satisfactory equal pay audit is a fine of up to £5,000.

The Regulations are set to come into force on 1 October 2014. In its consultation, the Government decided not to publish additional guidance to the Regulations as it considered this would duplicate guidance already provided by the Equality and Human Rights Commission (EHRC).

Employers are encouraged, as always, to continually review pay across their organisation and to ensure that staff are receiving equal pay for equal work.

The EHRC’s guidance on equal pay can be accessed here.