Compulsory pay audits in Equality Bill will lead to floods of claims

Forcing firms to carry out equal pay audits as part of the new Equality Bill will only lead to a flood of litigation claims, equalities campaigners have said.

The Equality Bill, due to be published on Monday will reveal that pay audits comparing women and men’s salaries will be made compulsory by 2013 for firms with more than 250 staff, according to The Times.

The move will seek to eradicate the gender pay gap, which still stands at 17.1% for full time hourly roles despite almost 40 years of legislation.

But the Equalities and Human Rights Commission has long said that equal pay audits should not become mandatory. An EHRC spokeswoman told Personnel Today just last month that to force firms to carry out equal pay reviews would only lead to a “flood of litigation claims” when the tribunal system is already overwhelmed.

Instead, the EHRC believes the law should be changed to allow employers a period of amnesty so that equal pay claims can be dealt with away from the costly and lengthy tribunal process.

Philip Titchmarsh, partner at Pinsent Masons, says exposure to equal pay claims is potentially very significant including up to six years back pay and pay equalisation going forward.

Business groups were also concerned over the proposed legislative changes, as they had been reassured they would face no more burden during the recession. The British Chambers of Commerce were shocked the government would place extra legislative burden on businesses during the recession.

David Frost, director-general of the BCC, told the newspaper: “24 hours [after the Budget] they are announcing that [businesses] are to be burdened with a requirement to carry out gender pay audits. Clearly some sections of this government just don’t get it, that business is critical to the recovery.”

Last year 44,000 equal pay claims were brought before the courts, more than double the number in 2005. The tribunal system has seen an almost 500% rise in equal pay claims over the past four years.

Nicola Brewer, chair of the EHRC, said: “The 1975 Equal Pay Act is no longer fit for purpose. We need to look afresh at what modern equal pay legislation should look like.”

IRS Conference: Discrimination and Equality

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