Pay transparency and equal pay audits 


Tribunals have the power to order an employer to carry out an equal pay audit, but only if the tribunal has already found a breach of equal pay law affecting contractual or non-contractual pay (such as discretionary bonuses). An equal pay audit is an “audit designed to identify action to be taken to avoid equal pay breaches occurring or continuing” (Section 139A, Enterprise and Regulatory Reform Act 2013). 


An equal pay audit must:


• state the pay of men and women;


• identify differences in pay between the men and women and the reason(s) for the pay differences; 


• give the reasons for any potential equal pay breach identified by the audit; and


• set out the plan to avoid equal pay breaches occurring or continuing. 


(Regulation 6, Equality Act 2010 (Equal Pay Audits) Regulations 2014 (EPAR14). The regulations affect tribunal claims brought on or after 1 October 2014. 


The Equality and Human Rights Commission has put together an equal pay audit toolkit available from their website (https://www.equalityhumanrights.com/en/multipage-guide/equal-pay-audit-larger-organisations). 


The scope of a tribunal’s power to order an equal pay audit is severely restricted. Only if a woman succeeds with an equal pay claim in the tribunal is the power triggered at all, even though in practice, the lack of pay transparency makes it very difficult for women to find out whether equal pay obligations have been breached in the first place and to launch a claim. 


Even if a claimant brings a successful equal pay claim, the employer can escape a compulsory equal pay audit on one of the following grounds: 


• the employer carried out a qualifying audit in the last three years;


• the action needed is already clear without an equal pay audit;


• there is no other reason to believe there is unjustified equal pay;


• the disadvantages of an audit would outweigh the benefits; or


• the employer is a new or micro-business.


(section 139A(5), EA 10, regulation 3, EPAR 14)


Once an audit is completed, a tribunal must decide whether it meets the requirements of the legislation. The employer is then given 28 days to publish it on their website, or if they do not have a website, to tell affected employees where they can get a copy — unless publication would breach a legal obligation such as data protection laws (regulations 6 and 7, EPAR 14).


Employers can be fined up to £5,000 for non-compliance with an order to produce an audit, with the possibility of a further £5,000 fine for continued non-compliance, but this penalty is paid to the Treasury, not to affected workers.