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Firms Face Audits Over Discrimination

Lynne Featherstone, the Government's equalities minister, has announced new regulations that would force employers who are found guilty of discriminatory pay practices to conduct a pay audit.

The new policy affects employers who are found to engage in pay discrimination on the grounds of gender by an employment tribunal. If found guilty of discriminating against any employee on the grounds of gender, employers will be obliged to undertake a gender pay audit to ensure that all employees receive a fair wage.

In a statement given to Parliament on the 14th of June 2012, the minister revealed that the new move was prompted by the results of the recent Modern Workplaces consultation. Featherstone wrote: "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."

The policy is designed to encourage more employers to settle cases before they go to tribunal. Microbusinesses (those employing fewer than five people) would initially be exempt from the new requirements, as would businesses who have conducted a pay audit in the last three years. Employers with transparent pay practices and those who can show that an audit would not be useful would also be exempt.

The policy comes a year after the launch of the Government's "Think, Act, Report" guide, which was designed to persuade employers to run their own voluntary pay audits. Previously a personal champion of compulsory reporting, Featherstone had revealed that her position had changed and that she now supports voluntary reporting.

Critics of the new policy argue that it has the potential to prompt a rise in spurious claims of pay discrimination. They suggest that employers would be motivated to settle out of court rather than pursuing the matter through a tribunal, especially if a tribunal might mean that their pay policies were made public.

The exact nature of the audit and the degree of transparency required from firms being audited has yet to be established, with the Government planning a full consultation later in the year.

 


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