Employers who lose equal pay claims at employment tribunals will face mandatory equal pay audits, the Government has announced.
Companies who fail to comply with an order to carry out an equal pay audit after losing a sex HR case on the grounds of equal pay will face a financial penalty of up to £5,000.
The measures are to be introduced following responses to the ‘Modern Workplaces’ consultation. A study found there was evidence pay audits could help ensure pay inequality ceased with that particular employer, benefitting all employees.
Employment tribunals will have powers to order an employer who has lost an equal pay claim to carry out an equal pay audit where continuing HR is likely. The audit will not be ordered if one has been completed in the last three years, the employer has transparent pay practices or can show a good reason why it would not be useful. Fines will only be imposed if employers fail to comply with an order to conduct an equal pay audit.
Businesses with less than 10 employees will be exempt from the proposals initially, although this will be reviewed. The Government has also pledged to ensure pay audits are imposed only where they may help to expose the need for change.
Legislation is to be introduced when the Parliamentary timetable allows.
The Government’s response to other elements of the ‘Modern Workplaces’ consultation, including a new system of shared parental leave and an extension of the right to request flexible working to almost all employees, will be published in due course.