For many years local authorities have been fighting a rear guard action in relation to mass equal pay litigation brought by trade unions and no win, no fee lawyers. This is despite the fact that most local authorities and the NHS have invested a huge amount of time and resources into job evaluation exercises and defined pay grades. In most areas of the private sector no such job evaluation and pay grades exist and for most business leaders in the private sector equal pay has been low on the corporate agenda.
The issue is that equal pay litigation in the public sector ultimately has a shelf life and if we are not yet at the end, we are approaching the beginning of the end. Once the public sector has finally got its house in order, will the trade unions and no win no fee lawyers lose interest in equal pay and move on to other things? Or will they turn their attention to the private sector?
I have long believed that equal pay claims in the private sector could be a ticking time bomb waiting to explode and the Government is doing their bit to keep equal pay on the agenda, by taking steps towards the first ever mandatory equal pay audits in the private sector. The Government is now consulting over the detail of mandatory equal pay audits for employers found to have breached equal pay legislation. Regulations empowering Employment Tribunals to order equal pay audits are intended to come into force next year.
The Regulations will also include a power for tribunals to impose (repeatedly, if necessary) a civil penalty of up to £5,000 for non-compliance with an equal pay audit order.
The Government expects that an equal pay audit, depending on the nature of the equal pay claim (i.e. whether it is based on ‘like work’, ‘work rated as equivalent’ or ‘work of equal value’), should include:
• comparisons of the employment terms and conditions of men and women doing equal work, including contractual and non-contractual pay
• identification and explanation of any pay differences between men and women, and
• where appropriate, the identification of any action required to eliminate pay inequalities that have been detected and that cannot be explained by non-sex discriminatory reasons.
It will be for employers to determine the most effective way of complying with an equal pay audit order.
However, the Government suggests that employers ensure that sufficient time and resources are available to undertake the equal pay audit in the time scale set by the tribunal, and that the following people or groups should be considered for involvement in the equal pay audit process:
• a human resources manager
• someone with knowledge and experience of equality and diversity and the relevant legislation
• a data analyst
• a payroll manager
• staff to be covered by the equal pay audit, and
• staff representative bodies.
The Government also seeks views on whether equal pay audit results should be published, i.e. made available on the company’s website and/or in its Annual Report, or simply disclosed to the employment tribunal, those of the employer’s workers who are covered by the equal pay audit and, where they exist, the employee representative bodies.
Interestingly, an audit will not be ordered where a tribunal considers that:
• the employer carried out an audit satisfying prescribed requirements in the previous three years
• it is clear without an audit whether any action is required to avoid equal pay breaches occurring or continuing
• there is no reason to believe that the employer’s breach of equal pay law is a systemic problem, or
• the disadvantages of an audit would outweigh its benefits.
I would suggest that this should provide food for thought for all employers who have not yet grasped the equal pay nettle in their own organisations.
The Government consultation closes on 18 July 2013. You can have your say here: www.gov.uk/government/consultations/equal-pay-audits-a-further-consultation#download
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