The just-published Equality Bill gives the Government the power to introduce regulations forcing companies of more than 250 employees to publish details of the pay gap between men and women.
Employment law expert Philip Titchmarsh of Pinsent Masons, the law firm behind OUT-LAW.COM, said that the Government dismissed the gender pay gap audit idea as recently as January, and that the practice could damage business.
"In January there were reports of this and the Government dismissed them as 'nonsense' but now the Bill contains that power," said Titchmarsh. "It is a u-turn."
Titchmarsh said that the information published by companies could well lead to a raft of equal pay claims.
"If you are an employer and you publish statistics which show that you are paying men more than women, it will set hares running, no doubt," he said. "Ultimately more cases will be likely to end up in a Tribunal."
The audits have been heavily criticised by groups representing employers. Business lobby group CBI's director of human resources policy Katja Hall said that the requirements could "backfire" and "be taken out of context".
"The gender pay gap can be misinterpreted. It does not compare men and women doing the same job. It reflects the fact that fewer women have higher paid jobs and the way to address that is not by comparing misleading average pay rates, but by improving opportunities for women via better childcare and careers advice," she said.
The audit requirement will not take immediate effect when the Bill becomes law. The Bill gives the Government the power to introduce regulations requiring audits and the Government has said that if it introduces the requirement at all it will not be until 2013.
Titchmarsh, though, believes that if it survives, the requirement will definitely be brought into force. "They have said that it will not be brought in until 2013 and only if sufficient progress on voluntary reporting of these statistics has not been made, but hardly anybody is going to report voluntarily," he said.
The Bill will also change the law for disabled people seeking to establish discrimination on the basis of their disability. A House of Lords ruling had said that employers could make a comparison with how they would have treated someone without a disability.
"In a housing case, the House of Lords said you could have a comparator, that it would be a defence to a claim of disability-related less favourable treatment [to say that they would have treated someone else without a disability in the same way]," said Titchmarsh. "This is significant because lots of employers had welcomed the House of Lords decision, but it is now going to be reversed."
Chair of the Equality and Human Rights Commission Trevor Phillips said the Bill was welcome. "Overall we think it is well framed and proportionate. It will help unblock some of the systemic problems that get in the way of equality and achievement for everyone in Britain," he said.
"For business we believe the bill will provide a proportionate and level regulatory playing field that will encourage them to treat staff fairly, root out inequality and think in new ways about how to find and retain the best people," said Phillips. "For staff they will have a guarantee that merit and hard work will be rewarded, irrespective of attributes like age, gender or race."
The Bill also contains provisions to permit, though not compel, employers to employ people from disadvantaged or under-represented groups, but only if they are an equally good candidate for a job as someone not from that group.
Titchmarsh said that employers should monitor the proposed law, but that it could change significantly through the parliamentary process.
"This is just a Bill, the law has not changed, but employers should track the process. It is important to appreciate that what's been published is a Bill that has to go through the Parliamentary process, the law that we eventually end up with could be quite different," he said.
"There is clearly a renewed focus on equality, and the Government appears to be very serious about addressing the issues and appears to have a focus on the gender pay gap," said Titchmarsh. "If you are a private sector employer and think you have equal pay issues, this could ultimately be very expensive."