A review of all staff wages must be carried out by a company after it has lost an employment tribunal claim over equal pay, according to equalities minister Lynne Featherstone
If a tribunal rules that a worker has been discriminated against because of their gender, that firm would be compelled to examine employees’ salaries, an audit that costs an average of £12,800 on each occasion while average legal costs could run to £6,556 for each case.
Featherstone said: “This will mean that 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.
“An audit would not be ordered if an audit has been completed in the last three years, the employer has transparent pay practices or the employer can show a good reason why it would not be useful.”
Government officials believe that the new rules will also mean an increase in out of court settlements of up to 25% as companies facing the prospect of a tribunal decide to settle early rather than risk an audit.
Pierre Williams, spokesman for the Federation of Small Businesses, said: “Unfortunately, this might provide an incentive for employers to settle vexatious claims out of tribunal rather than face the costs and paperwork associated with an audit."
