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Who's afraid of the big bad audit?

Employment Law & HR
BG Purple

An equal pay audit is probably not fighting for space at the top of any employer’s wish list of tasks they would love to get stuck into as soon as possible.  There would be concerns as to how disruptive, costly or time consuming it might be.

What would it unearth? What effect would it have on employee relations and morale? Surely I am not the kind of employer who discriminates?  Do I really have to do it?

With effect from 1 October 2014, under the Equality Act 2010 (Equal Pay Audits) Regulations 2014, Employment Tribunals will be obliged, in certain circumstances, to order employers in breach of equal pay law to conduct and publish equal pay audits.

In light of these new powers it may be the Tribunal and not the employer who ends up answering these questions and the consequences, both in terms of exposure and in cost, could be alarming to say the least.

Birmingham City Council hit the headlines in January 2014 with the press announcing what appeared to be an ‘everything must go’ sale of Birmingham NEC, The Grand Shopping Centre and the LG Arena.  While the Council were not explicit as to the reasons for this, most commentators agreed that it dates back to a landmark equal pay case brought by 11,000 employees which could cost Birmingham City Council up £1.1bn to settle.

Equal pay legislation has been in force for over 40 years and is now contained within the Equality Act of 2010.  It gives the right for men and women to be paid the same for the same or equivalent (similar) work.  Where there is a difference in the rates of pay in these circumstances, the employer must prove that there is a reason for this difference which is not gender related.

In spite of the legislation, there is still a significant gender gap in pay and one which after some years of narrowing, grew again in 2013.  

An equal pay claim can be brought by an employee for up to six months after leaving employment if raised in the Employment Tribunal and up to 5 years in Scotland (6 in England and Wales) if pursued through the civil courts.   In standard cases, employers can be ordered to pay up to 5 years’ pay arrears (6 in England and Wales) by either the Court or the Tribunal, with interest added in some cases. 

Employers might think it’s worth taking the chance that no inadvertent HR is taking place since most do take steps to ensure that equality and fairness exists throughout the workplace. However, since the causes of this gender gap are as many and varied as the theories that seek to explain its existence, an equal pay audit is the only sure fire way to know if your business is in breach of the law on HR. 

If you feel your business could benefit from an Equal Pay Audit or from other useful measures such as Job Evaluation or redesigning your pay structures, please contact Stephanie Harper, HR Projects Manager at Law at Work: email, DD 0131 603 5205 or mobile 07786 660713.

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