Why employers should carry out an equal pay audit



Finding out the real situation now could avoid trouble in the future

After many years in which the public sector was the focus of significant and highly costly equal pay litigation, it appears the private sector is now becoming the target of such claims. An employment tribunal recently ruled that thousands of women who work in Asda’s stores can proceed with their equal pay claim by comparing themselves with men working in the retailer’s distribution centres. Although the claim still has a long way to go, it is estimated that, if the 7,000-plus claimants are successful, it could cost the organisation up to £100m in damages, not to mention increased wages, in the future. There is a similar claim against Sainsbury’s currently going through the system.

It is not just retailers that are vulnerable. Many private sector employers may not realise they could be at risk of such claims, believing they are complying with their legal obligations if they pay men and women the same for the same role. However, as the Asda case and previous public sector litigation demonstrates, the law is more complicated than this, as it also allows women (or men) to compare themselves with people of the opposite sex doing jobs of equal value, or work rated as equivalent. Problems are more likely where there is gender segregation between an organisation’s divisions or departments; for example, where most of the head office employees are women and most of the employees in manual roles are men.

What should employers do if they are concerned they may have an equal pay issue, or if they just want to confirm they do not have a problem? An equal pay audit – which is a detailed analysis of the workforce and its pay – may be the answer.

Organisations sometimes do not want to find out if they have a problem because they will then be compelled to do something about it. While the temptation to bury heads in the sand might be strong, there are good business reasons for understanding the level of legal risk so that this can be reduced.

The problem that employers often perceive in carrying out such an exercise is that, if the audit reveals a lack of equality, this will alert employees to the possibility of bringing claims. However, if certain precautions are taken, the data can remain private to the employer. Advice received from a lawyer is subject to ‘legal privilege’, which means it is confidential to the client and does not have to be disclosed in the event of any subsequent legal proceedings. However, this only applies when advice is received from a solicitor or barrister; it does not apply to correspondence from HR consultants or accountants.

This legal privilege can also be lost – which means the information becomes disclosable – if it is circulated too widely within an organisation; for example, if an email containing legal advice is forwarded on to managers in other departments by the HR department that asked for it. However, an equal pay audit, carried out in the context of receiving legal advice and where information is closely held by a small group within a business, will stand a good chance of remaining confidential.

It has become harder for potential equal pay claimants to access the information that might assist them in making a claim since the statutory questionnaire procedure was abolished on 6 April 2014. From April next year, legislation requiring employers with 250 or more employees to publish their gender pay gap figures is expected to be in force. While this will not assist employees working for smaller employers, it may lead employees in larger organisations to question whether they are receiving equal pay.

Employers are being encouraged to carry out gender pay audits now in advance of the legislation to see what their likely pay gap will be. London’s mayor, Sadiq Khan, published the Greater London Authority’s gender pay gap figures earlier this year. A gender pay gap is different from, and does not necessarily point to, an equal pay problem, although there is likely to be confusion about this within the wider workforce, and employers may need to investigate and address any grievances about pay that occur. But, given that it will be mandatory for relevant employers to publish their gender pay gap data, it may not be so crucial to ensure this is done in a way to maintain legal privilege.

Some employers may prefer to adopt a ‘wait and see’ approach, but forewarned is forearmed. Taking the initiative and understanding the extent of any problems now will give organisations time to prepare an action plan to deal with any issues that arise.


Story via – http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/11/08/why-employers-should-carry-out-an-equal-pay-audit.aspx

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