UK: Government consults on proposed reform of pay discrimination law, including pay transparency measures, enhanced enforcement and a new 'reasonable steps' duty on outsourcing

Following a Call for Evidence last year, the Government has now published a consultation until 27 October 2026 on proposals to reform pay discrimination law.  Phase one of the proposed reforms comprises changes to the current equal pay law and enforcement framework.  Phase two, which would only be introduced once the Government is satisfied with the progress of phase one, involves 'levelling up' the law on equal pay and pay discrimination on grounds of race or disability to make them broadly equivalent. (There is no current intention to extend these improvements to cover pay discrimination based on other protected characteristics such as sexual orientation, age or belief.)  An extended implementation period would apply before any measures are commenced. 

Phase one:

• Employers would be obliged to include pay information in any job adverts or, where there is no advert, to disclose it in writing to candidates before interviews. Views are sought on the level of information to be included (eg specific salary or pay range, other financial benefits). Employers may wish to plan for a review of their pay-setting processes, particularly as published information is likely to be seen by existing staff who may raise concerns if their pay does not align with that advertised.  Notably, earlier proposals floated in the Call for Evidence (and also in the EU Pay Transparency Directive) to ban employers asking candidates for their salary history and allow employees to request pay data regarding colleagues doing the same or equivalent work appear to have been dropped - for the time being at least.
• Where an employer has been found by a tribunal to have committed an equal pay breach, the tribunal would be mandated to order the implementation of a non-discriminatory job evaluation scheme alongside an equal pay audit. The sole exception would be where the employer has completed an audit that satisfies relevant requirements in the previous three years.  Currently a tribunal is not required to order a job evaluation and there are additional exceptions to the mandatory pay audit (where the tribunal considers that it is already clear if action is required to avoid further breaches, or there is no reason to think that there may be further breaches, or the disadvantages of an audit outweigh its benefits).  These additional exceptions are to be removed.
• The statutory questionnaire procedure repealed in 2013 would be reintroduced, but only for pay discrimination disputes.  The questionnaire would be targeted at pay information and be shorter and simpler than the 2013 version.  As previously, tribunals could draw an adverse inference from an employer's failure to answer or from an evasive or equivocal answer.
• There will be formal reviews of the rules of procedure for pay discrimination claims and the operations of the independent panel of experts, aimed at eliminating the prospect of decade-long legal cases. 
• A new Equal Pay Regulatory and Enforcement Unit would be established with the involvement of trade unions, employers and other stakeholders to improve the enforcement of pay discrimination law through targeted use of its powers and a preventative approach (including improved guidance).  Proposed new powers for the Unit include: (i) the ability to compel the disclosure of evidence before triggering a formal investigation process, where there is reasonable suspicion of pay discrimination; (ii) the power to require a job evaluation scheme and/or equal pay audit as part of an investigation, where this would help to establish whether pay discrimination has occurred; and (iii) the ability to require those subject to the Unit's recommendations to respond and provide updates on implementation. 

Phase two: 

• Currently, sex discrimination claims concerning contractual pay can only be brought as equal pay claims, whereas pay discrimination on grounds of race or disability falls within the usual discrimination provisions of the Equality Act 2010.  The Government proposes leaving the two separate regimes in place but levelling-up to ensure broadly consistent protection.  The six year back pay limit on equal pay claims would be retained and the changes would only apply to claims where the discrimination started or has continued after the commencement date.  Levelling up the race/disability provisions would include giving tribunals the power to modify contractual terms and to order an equal pay audit and job evaluation scheme following a successful claim.  Claimants would also be able to bring claims based on comparators doing work rated as equivalent or work of equal value, rather than just comparators whose circumstances are not materially different.  This represents a significant expansion in potential claims. Levelling up the equal pay scheme would allow equal pay claimants (i) to compare their pay with that of their successor in the role and (ii) where their pay is increased to match that of a new hire of the opposite sex, to claim in respect of the period before the hiring. Tribunals would also be given discretion to extend the time limit for an equal pay claim on a ‘just and equitable’ basis. 
• A new duty on all contracting parties in outsourcing arrangements to take all reasonable steps to uphold pay equality. Pay equality in this context means that no worker performing work for a principal should receive less favourable terms than another doing equal work because of or in relation to their sex, race or disability. The duty would only apply where the work meets a minimum threshold and is connected to a task of more than short-term duration.  Regulations would specify steps that would and would not be considered reasonable in specific contexts, with the size, resources, and contractual bargaining strength of the parties being relevant factors.  By way of example, the consultation suggests that reasonable steps for a medium-sized employer (with around 100 employees) operating as a principal or intermediary could include requesting pay and demographic data from other parties in the supply chain.  Breach of the duty would not give rise to an individual claim for compensation. However, the Equal Pay Regulatory and Enforcement Unit would be able to bring a tribunal claim or use its other enforcement powers to require pay equality in future arrangements.  The suggestion in the Call for Evidence, of allowing individuals to bring discrimination claims comparing their pay with in-house workers, appears to have been dropped. 

Other issues covered by the Call for Evidence, including strengthening protections against combined discrimination, are still being considered by the Government. Plans to require larger employers to report ethnicity and disability pay gaps are also progressing and intended to be operational by 2029 – see our blog post here.

If adopted as proposed, these changes represent significant additional risk for employers. Publicly available salary information, statutory questionnaires and the new types of comparators would assist individual claimants.  Mandatory equal pay audits and job evaluation exercises would become more likely, whether ordered by an employment tribunal following a successful claim or as part of an investigation by the new Equal Pay Regulatory and Enforcement Unit.  Employers, especially those with large, diverse or outsourced workforces, may want to plan for the process of auditing their pay practices and assessing risk exposure across all three relevant protected characteristics sooner rather than later.