Government consultation open on equal pay reform: what businesses need to know

Claire Treacy, Senior Associate

The Government has launched a consultation on reforming the equal pay and pay discrimination framework, with proposals that could significantly affect businesses. The consultation, which closes on 27 October 2026, seeks views on the most effective way to overhaul the pay discrimination framework so that protection against pay discrimination on the grounds of sex, race and disability is more consistent.

In particular, the consultation will look at proposals to improve pay transparency in businesses and strengthen enforcement of pay discrimination through a new regulatory unit.

The current equal pay regime

The law currently states that women and men have a right to equal pay for equal work. A worker pursuing an equal pay claim must identify an actual comparator who is being paid more than them, who is of the opposite sex, who is employed by the same employer, and who is doing like work, work rated as equivalent, or work of equal value.

Where a worker can establish this, employers can defend the difference in pay by showing that the difference is due to a genuine material factor that is not sex discrimination. For example, performance, length of service or location of work.

Claims are typically brought in the Employment Tribunal, but the process can be complex, evidence-heavy and lengthy, particularly where large groups of workers are involved.

The same legal test does not apply to pay discrimination on other protected grounds, such as race or disability. Instead, workers who believe they are being paid less because of their race or disability (or another protected characteristic) must pursue a claim of direct or indirect discrimination. This means there are different evidential requirements and remedies available.

What the Government consultation proposes

  1. Extending equal pay-style protections to other protected characteristics:

Whether disabled workers and/or ethnic minority, workers should be able to pursue an equal pay claim rather than having to pursue a claim of direct or indirect discrimination.

  2. The prevention of pay discrimination in outsourcing arrangements:

The Government is seeking views on how to prevent outsourcing arrangements being used to avoid equal pay obligations, particularly where workers doing comparable work are employed through different legal entities or service models.

  3. The creation of greater pay transparency in businesses:

Proposals include measures designed to make pay information more accessible in businesses, including transparency in recruitment and in workplace pay practices to the extent that employers may have to disclose salaries in job adverts or where there is no advert employers may have to give the candidate information about the salary in writing before the interview.

  4. The requirement of job evaluations and pay audits for businesses found to have breached equal pay   laws:

Where a worker successfully pursues an equal pay claim the business could be ordered to: implement a non-discriminatory job evaluation scheme (a formal scheme comparing jobs to ensure equal pay compliance across the business); and carry out a pay audit unless a valid audit has been done in the last three years.

  5. The implementation of a standardised questionnaire for businesses to complete if they are defending   an equal pay claim:

The Government proposes to re-introduce a standard questionnaire process in pay discrimination claims to help workers establish: a) information about pay; and b) who an appropriate comparator is. Employers will not be obliged to complete the questionnaire, however, if they do not the Tribunal will be able to draw inferences from this.

  6. The establishment of an Equal Pay Regulatory and Enforcement Unit to strengthen enforcement of   equal pay breaches:

The Equal Pay Regulatory and Enforcement Unit would have powers to support investigations into equal pay breaches, require businesses to disclose evidence and potentially require job evaluation schemes or equal pay audits where needed.

The potential impact on businesses and steps businesses should take now:

Although the proposals remain subject to consultation and implementation will not be immediate, the consultation demonstrates the Government’s commitment to changing this area of the law, so businesses should use this time to review their pay practices by taking the following steps:

1. review salaries, salary bands and pay structures to identify any possible issues;
2. review starting salaries to identify any issues if it were required that job adverts and recruitment processes set out starting salaries;
3. address any pay discrepancies that cannot be justified;
4. ensure that pay decisions are properly recorded;
5. businesses that use outsourced workers should identify and address any pay discrepancies between outsourced workers and workers of the business that carry out similar or equivalent work.

How to respond to the consultation

Employers can respond to the consultation before the 27 October 2026 deadline by completing the consultation questions published by the Government. The full list of questions is available at: https://www.gov.uk/government/consultations/equal-pay-and-pay-discrimination/annex-a-full-list-of-consultation-questions.

Should you have any questions about how to respond to the consultation or any concerns about how the outcome of this consultation could impact your business or equal pay compliance within your business more generally then please contact our employment team on 0161 832 3434, or at [email protected].