By Michelle Gyimah, HR Consultant, Equality Pays

Since the 1st October 2014 employment tribunals have had a new power which could have far reaching implication for employers. Employers that lose an equal pay claim will now have to undertake an equal pay audit to address their equal pay problems. Employers could also potentially a fine with a cap of £5,000 for non-compliance, followed by a further fine of a maximum of £5,000. The equal pay audit results will be published, unless there are legal reasons not to do so.

This new tribunal power is part of a new set of measures in the Equality Act 2010, designed to practically address the equal pay problem that UK has. There are a number of case studies on the business benefits of equal pay, but we still have a pay gap of 20%.

With this new tribunal power in force and equal pay a hot topic, it is a timely reminder to check your pay systems as it is easier and cheaper to do this rather than face tribunal fines and negative reputational damage.

What are the basics of reviewing a pay system?

• Review your pay systems regularly. Pay rates set 5 years ago may be outdated especially if there have been significant market or qualification changes.

• Are you paying minimum wage? This should be the basis of your pay structure, at the very least.

• Understand the demands of each job in your workforce. Are they accurate? When were they last checked? Are there fundamental aspects of a job that is done regularly but is not in the job description? Is this accounted for within the pay structure?

• When handling pay rise requests how are the decisions made? Do they take into account gender differences? Is there a process for awarding or declining pay rises? Is the process transparent and non-discriminatory?

• Record who is being awarded pay rises. Do men ask more often than women? Do they get pay rises more often? If yes, why? How can you ensure that all employees are paid a fair wage according to their skills and experiences?

• Remember, that pay includes all staff benefits such as pension, holidays, childcare vouchers. company car, shift allowance, bonus etc. Anything that your employees get is part of their pay and benefits package. When reviewing your pay system, include these in your review.

• Is there a person responsible for reviewing your pay system? What training or support do they have? Are they involved in regular reviews and key HR decisions? If not, you really need to consider this.

The key is to make your pay system transparent and accessible to your employees. Transparent pay systems for pay and benefits minimises the risk of hiding or making pay discrimination worse. Which in turn minimises the risk of ending up in an expensive employment tribunal.