Equal pay reform: Why it is no longer just an HR issue

The Government’s consultation on equal pay reform, launched on 14 July 2026, signals one of the most significant proposed changes to the equal pay framework in many years. More importantly, it reflects a fundamental shift in the way equal pay is viewed, moving it beyond a litigation issue and into the wider sphere of organisational governance, recruitment and workforce strategy. In doing so, it signals a clear change in direction.

A shift from reaction to prevention

Traditionally, equal pay issues tend to emerge once a complaint has been raised or a claim has been issued. By then, the employer is usually trying to reconstruct decisions that may have been made years earlier, often by different managers and in a very different business or economic context.

The Government says it wants to move the focus away from reactive litigation and towards proactive prevention.

One of the most immediate proposals is a new legal requirement to provide pay information during recruitment. This may require employers to include salary or pay ranges, together with information about collective bargaining arrangements, annual pay adjustments, bonuses and other financial benefits in job advertisements or otherwise provide that information in writing before interview.

Public sector employers may already have relatively transparent and structured pay arrangements. However, they will still need to consider whether their recruitment materials accurately explain progression, allowances, market supplements and other elements of total reward. In the private sector, pay arrangements may be less standardised and may involve greater individual discretion, which could make it more difficult for employers to provide clear and comprehensive information at the outset of the recruitment process.

Outsourcing is likely to come under greater scrutiny as a result of the consultation. The Government proposes a new duty that could require parties throughout the labour supply chain to take all reasonable steps to uphold pay equality in qualifying outsourcing arrangements. For organisations that commission or procure services, this means pay equality may become a more explicit consideration when services are designed, procured and contractually managed, rather than being viewed solely as the responsibility of the provider.

More broadly, the consultation points towards both additional legal requirements and more proactive regulatory scrutiny. The proposed Equal Pay Regulatory and Enforcement Unit could obtain pay data and documents before a formal investigation, require audits or job evaluation studies and monitor employers’ implementation of its recommendations.

Taken together, the proposals suggest employers will increasingly be expected not only to comply with equal pay legislation, but also to demonstrate that they understand how their pay systems operate, why differences exist and how those decisions are governed. That has implications beyond HR, extending to senior leadership, finance, payroll, procurement and those responsible for workforce planning and reward.

Why employers should pay attention now

Employers rarely set out deliberately to discriminate. More often, the problem is that pay structures have evolved over time or developed incrementally and are no longer applied or documented consistently.

The consultation is not asking employers to rewrite their reward structures overnight. Rather, it encourages employers to look carefully at the systems and processes that sit behind pay outcomes.

That includes the obvious areas, such as salary bands, bonuses, progression and recruitment, but also the less visible factors. These may include discretionary pay decisions, historic arrangements, market supplements, location based differences and the way outsourced labour is managed.

The broader legal context

The consultation does not sit in isolation. It forms part of the Government’s wider programme of employment law reform, much of which is being delivered through the Employment Rights Act 2025, representing the most significant overhaul of workplace rights in a generation. Whilst many of those reforms are already being implemented, the Government has made clear that tackling pay inequality remains a key priority.

Against that backdrop, the consultation proposes a phased programme of reform. The initial proposals focus on transparency, enforcement and tribunal processes, followed by potential measures intended to address pay inequality beyond sex, by strengthening protections for other protected characteristics of disability and race and addressing issues affecting outsourced workers.

The Government also wants to address weaknesses in the existing equal pay framework, while bringing the protections and remedies available in race and disability pay discrimination claims more closely into line with those available in sex-based equal pay claims.

For many public sector employers, one of the most significant proposals concerns equal pay audits and job evaluation schemes. Where a tribunal finds an equal pay breach, the consultation proposes that an audit should ordinarily be ordered unless the employer has completed a compliant audit within the previous three years. Employers may also be required to implement a non-discriminatory job evaluation scheme unless an up-to-date scheme is already in place.

Whilst many public sector organisations already operate formal job evaluation arrangements, private sector employers may rely on less formal mechanisms for determining pay and grading. Regardless of sector, employers should consider whether existing arrangements remain current, whether roles continue to be evaluated consistently and whether local practices, allowances or other pay decisions have developed outside the organisation’s established framework.

The proposed reintroduction of statutory questionnaires for pay discrimination disputes would increase the importance of accurate records. Although employers would not be compelled to answer, a tribunal could draw adverse inferences from a failure to respond or from evasive answers.

In addition, the Government intends to review the procedural rules for equal pay claims and the operation of independent expert panels in equal value litigation. The detail is not yet known, but any reforms could materially affect the cost, duration and management of complex equal pay claims.

What employers should be thinking about

The practical response at this stage is not to panic, and not to overreact. It is to take stock. Whilst the proposals remain subject to consultation, they provide a clear indication of the Government’s direction of travel and the areas employers should begin considering now.

Employers can start preparing for reform by asking themselves a few simple questions:

• Does our recruitment information accurately explain pay, progression and any additional payments or benefits?
• Do we understand how pay decisions are made across the organisation and can we explain them consistently?
• Who has overall responsibility for pay governance and oversight?
• Do our existing job evaluation arrangements remain current and reflect the work employees actually undertake?
• Are pay supplements, allowances and historic local arrangements clearly documented, with a sound business and legal rationale?
• Could any aspect of our pay arrangements give rise to concerns about race or disability pay discrimination, as well as sex-based equal pay?
• Are recruitment, progression and reward processes aligned, or have they developed inconsistently over time?
• Do our outsourcing arrangements create potential pay equality risks, and are those risks properly understood by those responsible for procurement and contract management?

Final thought

Although the proposals are still subject to consultation, they provide a clear indication of the Government’s direction of travel and offer employers an opportunity to begin preparing now rather than reacting later.

The consultation remains open until 27 October 2026, providing employers with an opportunity to help shape the future of equal pay law. The consultation document and details of how to submit a response are available on the Government’s website.