The cost of equality

Equal pay provisions were first introduced by the Equal Pay Act 1970 to ensure that women were not paid less than their male counterparts because of their sex. More than 35 years later UK employees are still experiencing significant disparity in men’s and women’s remuneration for performing work of equal value.

In response to this ongoing concern Equalities Minister Lynne Featherstone has recently announced the government's proposals that Employment Tribunals will be obliged to impose pay audits on employers who are found by the tribunal to have discriminated because of sex in contractual, or non-contractual pay matters where it considers that discrimination may be continuing, or likely.

The measures are detailed in the Government's Equalities Office's response to the 2011 Modern Workplaces Consultation published in June of this year. The response states "We are determined to put an end to unfair differences in the way women and men are paid" "........ by providing strong sanctions for those very few employers who do not see that pay discrimination has no place in British business." The Government announced that although they believe that other factors may affect pay gaps they intend to focus on sex alone due to the specific legal right to equal pay.

Under the government's proposals the Tribunal will be able to impose such an audit unless:

• an audit has been completed in the last three years;
• the employer can demonstrate transparent pay practices; or
• it can show a good reason why it would not be useful.

The response does consider the impact of a pay audit on smaller employers; the government have confirmed that they do not intend to apply the pay audit requirements to so called micro employers or new start up businesses at first; it will revaluate the position when it has had the opportunity to review how the proposals will work in practice.

The sting in the tail is that the government intend to impose a civil financial penalty for non-compliance with a Tribunal Order to conduct a pay audit. It does however currently stress the need for the sanctions for non-compliance to be persuasive. Therefore the current proposal states that where a Tribunal makes an audit order, it will be unable to apply a civil penalty as well unless the employer fails to comply with the audit.

The government intends to carry out a second consultation to assemble views on the exact particulars of the pay audits and the requirements for their publication later this year before any legislation is brought into force. It does however appear to be clear that legislation will be passed in this area so watch this space!

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