Employers face post-tribunal pay audits

In response to the Modern Workplaces Consultation, the government has confirmed that employers who lose an employment tribunal equal pay case will be required to carry out a pay audit.

Junior equalities minister Lynne Featherstone said: “This will mean that an employment tribunal which finds that an employer has discriminated on grounds of sex in contractual or non-contractual pay will be obliged to order the employer to conduct a pay audit in cases where continuing discrimination is likely.”

However, an audit would not be ordered if an audit has been completed in the last three years, the employer is deemed to have transparent pay practices or the employer can show a good reason why it would not be useful. Micro businesses — those with fewer than 10 employees — will initially be exempt from the proposals.

The government intends to issue a further consultation later this year on the exact details of how the audits will operate and what publication requirements will apply.

The introduction of the compulsory audits is intended to encourage employers to settle cases before they go to tribunal, as they would be deterred from proceeding to a situation where losing might result in them facing a pay audit.