On 14 July, the UK government launched a consultation paper to seek views on how it can deliver a comprehensive reform of the current equal pay framework in the UK (in line with its manifesto commitments), including:

• making the right to equal pay effective for ethnic minority and disabled people
• establishing an equal pay regulatory and enforcement unit with the involvement of trade unions
• ensuring that outsourcing of services can no longer be used by employers to avoid paying equal pay

Part of the consultation, entitled "Fixing the system" is designed to prevent pay discrimination from happening in the first place through targeted preventative measures including pay transparency.

The story so far:

1. May 2024: Labour publishes its 'Plan to Make Work Pay', committing to expand pay reporting requirements and equal pay protection across gender, ethnicity and disability.
2. October 2024: The government publishes 'Next Steps to Make Work Pay' and introduces the Employment Rights Bill, which includes provisions requiring large employers to produce gender pay gap action plans.
3. March 2025: The government launches a consultation on mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees, broadly mirroring the existing gender pay gap framework. The consultation closes in June 2025.
4. April 2025: The government launches a call for evidence on equality law reform, including detailed questions on equal pay enforcement and proposed pay transparency measures such as salary disclosure in job adverts and banning salary history questions.
5. December 2025: The Employment Rights Act 2025 receives Royal Assent, including provisions for gender pay gap and menopause action plans to become mandatory from April 2027.
6. March 2026: The government launches voluntary gender pay gap action plans for employers with 250 or more employees, with recommended actions including greater transparency on pay, promotion and rewards (subject to secondary legislation). These will be mandatory from 2027.
7. July 2026: The government launches a 15-week formal consultation on reform of the equal pay framework, covering proposals to strengthen equal pay rights for ethnic minority and disabled workers and to introduce allied pay transparency measures.

Proposed Pay Transparency Measures:

The July 2026 consultation paper proposes:

• introducing a statutory requirement for employers to publish information about pay and conditions in job adverts. In the absence of a job advert, the employer must give the candidate this information in writing before the job interview.
• strengthening measures applying to employers found to have committed pay discrimination, or where there is reasonable suspicion of pay discrimination
• reinstating a statutory questionnaire procedure to be used in pay discrimination cases

Other proposals include:

• increasing the occasions where, if an employer loses an equal pay tribunal claim, the Employment Tribunal must order both an equal pay audit and the implementation of a non-discriminatory job evaluation scheme (and expanding this beyond sex into ethnicity and disability).
• addressing the time taken and costs involved in lengthy employment tribunal "equal value" claims by reviewing the procedures for these claims and the process of appointing independent experts
• creating a new Equal Pay Regulatory and Enforcement Unit to enforce equal pay rights and obligations, creating additional guidance and tools for employers and a revised statutory code of practice. The consultation invites views as to whether this should sit under the Equality and Human Rights Commission or the Fair Work Agency or something new and independent
• allowing the use of hypothetical comparators in claims in two scenarios - comparison with a successor or based on an improvement of terms.

New Equal Pay Enforcement Unit

The enforcement unit would have the ability to:

• require the disclosure of evidence before triggering a formal investigation process, including pay data
• require that a job evaluation scheme and/or equal pay audit is undertaken where this would help to establish whether pay discrimination has occurred
• require those subject to inquiry recommendations to respond to them and provide updates on implementation.

The consultation is open for 15 weeks and can be found here.

What this may mean for UK employers (subject to consultation and final legislation), and what steps could employers take now

• Pay transparency in recruitment: review your current recruitment practices and assess whether pay ranges are already being disclosed. Where they are not, consider what work may be required to establish consistent, transparent pay ranges across roles, and whether those ranges are supported by a coherent, up-to-date, and defensible job evaluation framework. Disclosing pay ranges to applicants will make them visible to your employees as well. Consider what communications and change management steps are needed for employees.
• Expanded scope of equal pay rights: Assess the quality and completeness of your workforce data on ethnicity and disability. Where data collection is limited, consider how to improve response rates in a way that supports meaningful analysis, and begin scoping what an expanded pay equity review across these protected characteristics would involve.
• Strengthened enforcement and increased litigation risk: Consider conducting a privileged pay equity audit to identify and address any potential vulnerabilities in your current pay arrangements before regulatory scrutiny arises. Ensure your job evaluation framework is current, consistently applied, and capable of supporting your pay decisions across all relevant protected characteristics. Bear in mind that losing an equal pay tribunal claim could trigger mandatory equal pay audits and the requirement to implement a non-discriminatory job evaluation scheme. Pay equity analysis can be complex, consider investments in pay equity technology such as Deloitte’s Pay Equity Platform (PEP).
• Outsourcing arrangements: Review existing outsourcing arrangements, particularly where service contracts involve roles that could be compared with in-house roles doing work of equal value and take legal advice on the potential implications of the proposed changes.
• Restructuring and changes to terms: When making changes to pay and terms and conditions, including in the context of TUPE transfers, restructuring, or role redesign, consider whether those changes could give rise to equal pay exposure, including in relation to successors, given the proposed expansion of hypothetical comparator claims.

Overall recommendation: regardless of the final shape of the legislation, the direction of travel is clear: the regulatory and litigation environment for equal pay is set to become significantly more demanding. Employers who take proactive steps now to understand their pay equity position, strengthen their data and analytical capabilities, and ensure their job evaluation and pay frameworks are robust will be better placed to navigate what is coming, and to demonstrate their commitment to fair pay to employees, regulators, and other stakeholders.

Your contacts

At Deloitte, we understand that navigating the demands and complexities of pay equity and transparency can be daunting. Our proposition is designed to help you overcome this challenge and achieve your goals. Our aim is to enable you to pay employees equitably and help you demonstrate that you are doing so.

With our deep multi-disciplinary expertise in reward, employment law, technology & analytics, and behaviour change, we are well-placed to be your trusted partner on this journey. Get in touch to discuss your challenges and needs.

Kathryn Dooks, Partner, Deloitte Legal, 020 7303 2894

Deepinder Lamba, Partner, Deloitte Global Employer Services, 020 7007 2689

Note: The information provided is for general informational purposes only and may not be complete or up-to-date. Do not rely on this information without seeking professional advice. Deloitte LLP accepts no liability for any loss occasioned by any person acting or refraining from action as a result of this content.