As part of the government’s Plan to Make Work Pay, it committed to strengthening equal pay and ending pay discrimination. On 14 July, the government launched a consultation seeking views on how to deliver a comprehensive reform of the current equal pay framework, including measures designed to proactively prevent pay discrimination, ensure enforcement agencies are empowered to drive good practice, and simplify the resolution of disputes when they arise. The consultation follows a call for evidence on equality law in April 2025 which invited feedback on areas of existing equality legislation and possible equality law reform. The government sees that there are two phases: fixing the system and making the right to equal pay effective for all.
Phase 1: Fixing the system.
Pay transparency.
The government believes that pay transparency measures can shift the focus to proactive prevention by encouraging employers to resolve underlying pay discrimination issues proactively and prevent pay discrimination. As a result, the government has set out various proposals:
- Pay Transparency in recruitment: The government proposes introducing a statutory requirement for employers to publish information about pay and conditions in job adverts, believing that this empowers candidates to make informed decisions about where to apply, and that the visibility helps to create a more engaged and empowered workforce. For employers, it can improve the recruitment process, by filtering out candidates with misaligned pay expectations before the interview stage. The consultation seeks responses on what information should be included beyond basic salary, if any.
- Job evaluations and pay audits: Equal pay audits are a systematic process used to identify and address pay disparities between employees performing the same or equivalent work within an organisation. An Employment Tribunal is required to order equal pay audits after finding an equal pay breach unless one of the exceptions applies. The government intends to reduce the exceptions as these are such that very rarely has an equal pay audit been required. In addition, the government intends to allow an Employment Tribunal to order the implementation of a non-discriminatory job evaluation scheme if an up-to-date scheme is not already in place. Currently, job evaluation schemes are not mandatory and cannot be ordered by the Employment Tribunal.
- Standard questionnaire in pay discrimination disputes: Under the Equality Act 2010, prior to 2013, a potential claimant in a discrimination case could ask specified questions either before or after starting proceedings. The government feels that such questionnaires allowed claimants to identify an appropriate comparator or get information about components of pay thus reducing bureaucracy and burden in pay discrimination disputes and supporting early resolution of some cases. The government proposes reinstating the use of the standard questionnaire, which would be optional, but a court or tribunal could draw an inference from a failure to answer a question. The new questionnaire would be simpler and will be designed in partnership with employers, trade unions and other stakeholders.
Many of these proposals are directed at improving the operation of the current system and making potential pay disparities easier to identify and address at an earlier stage. For employers this means that there will be increased scrutiny of pay practices and organisations will have to maintain more robust records of pay decisions and job evaluation processes.
Enforcement
There are also proposals to improve enforcement, including setting up a new Equal Pay Regulatory and Enforcement Unit whose remit will apply to pay discrimination under equal pay, direct or indirect discrimination (where relating to sex, disability or race), discrimination arising from disability, or reasonable adjustment provisions.
- Rules of procedure and independent panel of experts: The consultation points out that many aspects of equal pay claims are complex and highly fact specific. Such claims will often involve the use of the independent panel of experts, which advises the Employment Tribunal as to whether the work of claimants and comparators is of equal value and this very much depends on the availability of experts. These problems have led to complex, costly and time-consuming litigation. The government therefore proposes launching reviews into the rules of procedure for pay discrimination claims and the operation of the independent panel of experts.
- The establishment of the Equal Pay Regulatory and Enforcement Unit: This unit is intended to have the powers and mandate needed to uphold pay equality by seeking to improve the enforcement of pay discrimination and by adopting a preventative approach. The Unit will also have the remit to improve the tools available to help employers and workers to uphold the law, including clear guidance on points of contention such as what factors may or may not be relied on by employers. Alongside this guidance, the statutory code of practice for equal pay, will be replaced. The government is also seeking responses on the extent of the new Unit’s power, such as whether it should have the ability to require the disclosure of evidence before triggering a formal investigation process. The government has not yet decided on whether the Unit will fall within the EHRC or the Fair Work Agency or any other government agency.
Phase 2: Making the right to equal pay effective for all.
The initial phase will be followed by a second phase which is more far reaching with the extension of pay discrimination to ensure that the treatment of those who experience pay discrimination on the basis of sex, race or disability is equalised. The government’s proposal is to level up the Equality Act 2010’s protections against pay discrimination on the basis of race and disability, and those it provides under the equal pay scheme against pay discrimination on the basis of sex. This means that while the two regimes would remain distinct in that equal pay claims would relate only to sex and pay discrimination relating to race or disability would be brought as discrimination claims under the provisions of the Equality Act 2010, but that each regime would be levelled up so that the advantages currently available to different claimant groups (sex, disability and race) would be equalised as far as possible.
There are five proposed measures to level up the protections against pay discrimination:
- Modification of contractual terms: Under section 66 of the Equality Act 2010 which covers equal pay, a sex equality clause is automatically included in a person’s contract if they are doing equal work to that of a comparator of the opposite sex. However, this is not the case for claims brought under the direct discrimination, indirect discrimination, discrimination arising from disability, or reasonable adjustment provisions. To rectify this an Employment Tribunal would be entitled to require the modification of the terms of a claimant’s contract in those circumstances.
- Equal pay audits: As set out above when an Employment Tribunal finds an equal pay breach it is required to order the respondent to conduct an equal pay audit, subject to limited exceptions. This only applies in relation to sex and a similar requirement does not exist for other protected characteristics. The government proposal is to widen the existing requirements so that employers found to have discriminated in terms of pay on the basis of race or disability can be ordered to undertake an equal pay audit and a job evaluation scheme.
- Equivalence of work: Currently where there is a claim of race or disability discrimination based on pay, it is unlikely that claimant could bring a successful direct or indirect discrimination claim which is comparable to a type of equal pay claim based on the ‘rated as equivalent’ or ‘equal value’ claim since under section 23 of the Equality Act 2010, a comparator in discrimination claim must have no material differences to the claimant. This will therefore clearly impact on the ability of disabled workers and those from ethnic minority groups to challenge the undervaluation of their work. The government therefore intends to enable claims for pay discrimination where work is not materially similar but is ‘rated as equivalent’ or of ‘equal value,’ for race and disability.
- Hypothetical comparators: In equal pay claims there must be an actual comparator . However, in direct discrimination claims, a hypothetical comparator can be used. The government therefore proposes permitting the use of hypothetical comparators under the equal pay scheme in limited scenarios: First, where the comparator can be comparison with the terms of a successor. For example, where a male employee is paid more than his female predecessor (for the same role). Secondly, where there is an improvement to terms precipitated by the employment of someone who does not share the claimant’s protected characteristic and who receives higher pay for equal work.
- Time limits: Under the Equality Act 2010, an Employment Tribunal can extend the time limit for bringing direct and indirect discrimination claims if it is deemed “just and equitable”. This general discretion is not available for equal pay claims. The government proposes providing for discretion to extend time limits for equal pay claims ‘on a just and equitable basis.’
Pay equity in contractual arrangements.
The final area is to create a duty on contracting parties to take all reasonable steps to uphold pay equality in their contractual arrangements which will have the effect of extending equal pay considerations beyond the traditional employment relationship. Currently the equal pay scheme cannot prevent the outsourcing of services being used by employers to avoid equal pay obligations. Although the equal pay scheme can use a comparator if there are different employers but only where one is a company of which the other has control (directly or indirectly), or both are companies of which a third person has control (directly or indirectly). This means that an individual working for one party cannot compare their contractual terms with someone working for another unless the limited circumstances apply and so outsourced workers cannot compare their contractual terms with those of ‘in house’ employees. The new duty would apply to all parties to contractual arrangements, where they relate to work that is performed by an outsourced worker for a ‘principal’ employer, so no worker performing work for a principal should receive less favourable terms than another doing equal work, because of sex, race or disability. The reasonable steps that an employer would be required to take would depend on the individual circumstances such as size. If there is a breach of the duty the employer will not be required to pay compensation but will be required to take whatever steps are reasonable in the future. The duty will be enforced by the Equal Pay Regulatory and Enforcement Unit which will be able to bring a claim in the Tribunal or use its other enforcement powers, such as its investigation power.
What next?
As set out above this proposal is in two phases. The second phase will only take place once the current system has been improved. In addition, the government has made it clear that there will be an extended implementation period so that all parties have time to prepare for the change. It is important to remember that the government has not committed to implementing all the proposals and the consultation is seeking views on the detailed design of the reforms. The consultation closes on 27 October.