Small businesses need to proceed with “extreme care” when conducting equal pay audits to avoid ending up in court by breaching the Data Protection Act, an employment law specialist has warned.
Mark Thompson, of Associa Employment Service, said that employers must be remember not to flout confidentiality laws, following calls for equal pay audits to be made compulsory to bridge the gender pay gap.
As reported by Startups.co.uk yesterday, a new report by the Equal Opportunities Commission (EOC) called for audits after revealing that women are paid far less than men and are often in the dark over how badly their salary compares to their male counterparts.
The GMB union urged the government to act on the issue, claiming that businesses have shown little desire to pay men and women equally and needed to be forced to undertake compulsory audits.
However, Thompson pointed out that detailed audits of staff pay could land small firms in court if they unwittingly break the Data Protection Act, which protects employee confidentiality.
“Nobody would argue that it is right for women to get paid less than men doing a comparable job and equal pay audits are often the most appropriate way to ensure that businesses deliver equal pay for equal work.
“However, small businesses need to be cautious if they are thinking about conducting a pay review. Bungled attempts at checking pay could land a business with its own legal problems, whether or not that business is discriminating against employees because of their sex.
“Small businesses also need to be aware of the legal sensitivities when dealing with payroll information.
“Some organisations may argue that lifting secrecy on pay would help tackle discrimination – and this may be the case – but businesses wrongly divulging sensitive personal details could find themselves facing legal problems.
“Employers need to remember that personal data, which will normally include pay records, is protected by the Data Protection Act 1998 and can only be disclosed in accordance with data protection principles,” he said.
Thompson offered the following tips to firms looking to undertake equal pay audits:
Normally the review will include all employees. As well as data about pay and benefits, the audit should include information on gender, hours worked and roles.
Remember that equal work means similar jobs, equivalent jobs or work of equal value. Make sure those with equal jobs are not discriminated against on grounds of sex.
Compare pay data and identify any pay gaps that exist.
Review policies that may cause unequal pay. The best pay structures are transparent, so employees know where they stand and how their salary is worked out.
If there are differences in pay, correct them, consulting with staff at all times, as it is their wages you are changing. Monitor pay structures to avoid any future problems.
