The government has launched a 15-week consultation on wide-ranging reforms to the equal pay framework. The proposals would increase transparency obligations, strengthen enforcement and expand protection beyond sex discrimination. Although implementation is likely to be some way off, employers should consider reviewing their pay practices, grading structures and outsourced workforce arrangements now.
The government proposes a two-phase approach. The first would strengthen transparency and enforcement within the existing system. The second would extend protections to address perceived gaps in the law.
Phase one: transparency and enforcement
The first phase would focus on preventing pay discrimination and strengthening enforcement. Employers would have a statutory duty to publish pay information in job adverts. If there is no job advert, employers would have to provide pay information to candidates in writing in advance of their interview.
The government also proposes reinstating the statutory questionnaire procedure, which was repealed in 2013, for pay discrimination disputes. Its use would be optional, but a tribunal could draw an adverse inference where an employer failed to respond or provided an evasive answer.
The consultation also proposes changes to equal pay audits. The government would narrow the exceptions to the requirement to order an audit after finding an equal pay breach. The only exception would be where an employer had completed a compliant audit within the previous three years.
Under the consultation’s proposals, tribunals would also have to order a non-discriminatory job evaluation scheme after finding pay discrimination, if an up-to-date scheme is not already in place. This could be particularly significant for employers with informal grading arrangements or historic pay structures, as implementing a job evaluation scheme can be time-consuming, costly and operationally sensitive.
The government is considering establishing a new Equal Pay Regulatory and Enforcement Unit (the Unit)to drive enforcement. The consultation seeks views on whether it should sit within the Equality and Human Rights Commission or the Fair Work Agency, or be a new, independent body. The proposed Unit could compel disclosure of pay data before a formal investigation, require a job evaluation scheme or equal pay audit during an investigation and require organisations to respond to recommendations following an inquiry.
The government also plans to review tribunal procedure and the role of the independent panel of experts. The review will focus on equal value claims, which can require detailed expert evidence of the demands of different roles, and material factor defences, where cases often face the greatest delay. The government also expects to replace the 2016 statutory code of practice on equal pay.
Phase two: wider pay protection
The second phase would extend comparable protection to pay discrimination because of race and disability, while keeping those claims legally distinct from sex-based equal pay claims.
Tribunals would be able to modify discriminatory contractual terms as a remedy in race and disability pay claims. Claimants would be able to compare their work with work that is rated as equivalent or of equal value. This would broaden the circumstances in which workers could challenge pay differences and could require employers to consider pay risk across a wider range of roles and protected characteristics.
The consultation also proposes two notable changes to comparator and limitation rules. First, a claimant could use a “hypothetical” comparator in two limited circumstances based on an identifiable real person, such as a higher-paid successor.
Second, tribunals would have discretion to extend the time limit for equal pay claims where they considered it just and equitable to do so. This would replace the current six-month limit, which does not include an extension mechanism.
Outsourced workforces
Employers using outsourced labour should pay particular attention to the proposed new duty on all contracting parties, including principals, intermediaries and service providers, to take all reasonable steps to uphold pay equality across sex, race and disability. What steps are reasonable would depend on the specific circumstances of each contracting party, including their size and resources, and their ability (or lack of it) to dictate the terms and conditions of the companies with whom they contract.
Individual workers would not be able to enforce the duty or recover compensation for a breach. Instead, enforcement would sit with the proposed new Unit, which could bring a claim in the employment tribunal or use its other enforcement powers. Employers may need to revisit supplier due diligence, access to pay information, audit rights and contractual cooperation obligations. They may also need to consider how contracts allocate responsibility for identifying and addressing pay disparities. If this proposal proceeds, the government plans to publish guidance for employers to help them understand their responsibilities under this new duty.
What employers should do now
Although the reforms remain at consultation stage and the government has indicated that employers will have an extended implementation period, organisations should begin assessing their readiness.
- Review current pay data, grading structures and the evidence supporting pay decisions. Consider whether pay structures are objective, documented and capable of justification.
- Assess whether your existing job evaluation arrangements remain appropriate. A voluntary equal pay audit may help identify areas of risk and, under the proposals, a compliant audit completed within the previous three years would remain a recognised exception to a tribunal-ordered audit.
- Review how you gather and retain pay information. The proposed questionnaire procedure and the potential powers of the new Unit would make it more important to retrieve accurate data quickly and explain the basis for individual pay decisions.
- Consider your wider workforce. This includes staff whose claims may arise because of race or disability, as well as workers engaged through outsourcing arrangements.
- If you rely on outsourced labour, map relevant supply chains and review supplier due diligence, contractual audit rights, access to pay information and cooperation obligations.
- Consider how to scope, document and report on any internal review, particularly where it may identify historic pay disparities. The proposals could create material financial and employee relations risks where historic pay structures are poorly documented or difficult to justify.
Employers who have an interest in shaping the outcome can respond to the consultation, which runs until 27 October 2026. The consultation document is available here.
