Why is reform being proposed?
The government's view is that the current equal pay regime is no longer working effectively for either workers or employers. According to the consultation, equal pay claims can take many years to resolve, the system places too much reliance on individual claimants bringing complex litigation, and the existing framework does not adequately protect everyone who may experience pay discrimination.
The consultation highlights particular concerns about the experiences of ethnic minority workers, disabled workers and individuals working in outsourced arrangements. It also points to increasing tribunal backlogs and the cost and complexity of equal pay litigation.
The government therefore proposes a two-stage programme of reform:
- Phase 1 focuses on improving the current system through transparency and stronger enforcement.
- Phase 2 focuses on extending and strengthening protections against pay discrimination.
Phase 1: Fixing the system
Greater pay transparency
Perhaps the most immediately visible proposal is the introduction of mandatory pay transparency during recruitment.
The government is consulting on requiring employers to:
- include pay information in job advertisements; or
- where no advert is used, provide pay information in writing to candidates before interview.
The stated aim is to reduce information imbalances during recruitment, encourage employers to review pay arrangements before hiring and help prevent pay discrimination before disputes arise.
The consultation leaves open important questions, including the level of detail required and whether employers would need to disclose salary ranges, specific salaries or other reward information.
The proposals also reflect a broader international trend towards greater pay transparency. Although the EU Pay Transparency Directive does not apply directly in Great Britain, it is already driving significant changes across EU Member States, including requirements around salary information, pay reporting and greater transparency in recruitment processes. Employers operating internationally may therefore find that many of the consultation proposals align with measures already being introduced elsewhere. Further detail is available in DWF's global update on the EU Pay Transparency Directive.
Employers will also be considering the potential impact of mandatory pay disclosure on pay inflation. In competitive recruitment markets, employers may need to offer higher salaries to attract new hires. Greater visibility of those salaries could in turn increase pressure to review the pay of existing employees performing comparable roles, potentially accelerating pay harmonisation exercises and increasing overall workforce costs. While this may help address unjustified pay disparities, it could also have significant budgetary implications for some organisations.
New enforcement powers
A central theme of the consultation is the view that equal pay enforcement relies too heavily on individual tribunal claims.
To address this, the government proposes establishing an Equal Pay Regulatory and Enforcement Unit (“the Unit”). The proposed body would have a more proactive role in investigating potential pay discrimination and supporting compliance.
The consultation also suggests that the Unit could be given powers to:
- require disclosure of information before commencing a formal investigation;
- require employers to undertake equal pay audits or job evaluation exercises in certain circumstances; and
- monitor implementation of recommendations following investigations.
The government also intends to review both the rules of procedure for pay discrimination claims and the operation of the independent panel of experts, with the stated aim of reducing inefficiencies, addressing delays and avoiding the prospect of decade-long equal pay litigation.
Tougher consequences following pay discrimination findings
The consultation proposes changes designed to increase the use of equal pay audits.
Currently, tribunals can avoid ordering an equal pay audit in a number of circumstances. The government proposes removing most of these exceptions so that audits become the default position following a successful equal pay claim unless a compliant audit has already been completed within the previous three years.
The consultation also proposes requiring employers found to have committed pay discrimination to implement a non-discriminatory job evaluation scheme where an up-to-date one is not already in place.
Phase 2: Making the right to equal pay effective for all
Making pay discrimination protections more consistent
One of the most significant longer-term proposals is to bring greater consistency between protection against sex pay discrimination (under the equal pay scheme) and protection against race and disability pay discrimination.
Among the proposals being considered are:
- allowing tribunals to modify discriminatory contractual terms in successful race and disability pay discrimination claims;
- extending equal pay audit and job evaluation scheme requirements to successful race and disability pay discrimination cases;
- enabling claims based on work that is rated as equivalent or of equal value in certain race and disability pay discrimination cases; and
- introducing limited use of hypothetical comparators in specific equal pay scenarios.
The government believes these changes would address gaps in protection while retaining separate legal routes for equal pay claims and discrimination claims.
Time limits under review
The consultation also proposes giving Employment Tribunals discretion to extend the time limit for bringing equal pay claims where it considers it "just and equitable" to do so. Currently, equal pay claims must generally be brought within six months of the end of employment and, unlike other discrimination claims, there is no general discretion to extend that deadline. The government says this change would create greater consistency across discrimination claims and may improve access to justice where there has been a good reason for delay. The proposal also sits within a broader trend of extending limitation periods in employment law. From 1 October 2026, the time limit for bringing most Employment Tribunal claims will increase from three to six months. If implemented, this reform would further align equal pay claims with the government's wider objective of allowing more time for workers to bring employment-related claims and could extend the period during which employers face potential litigation risk.
Outsourcing and supply chains: a potential game changer
One proposal likely to attract particular attention from organisations that outsource services is the proposal to create a new duty to take reasonable steps to uphold pay equality in contractual arrangements.
The consultation acknowledges that the current legal framework can make it difficult for outsourced workers to compare their contractual terms with workers employed directly by a principal organisation. The government's view is that this creates opportunities for pay inequalities to persist within outsourced arrangements.
To address this, it proposes a new duty which would apply across outsourcing chains. The duty would potentially apply not only to the principal organisation, but also to service providers, contractors and intermediaries involved in the supply chain.
Importantly, the government is not proposing an automatic requirement to align pay across different employers. Instead, organisations would be expected to take reasonable and proportionate steps to promote pay equality within the arrangements.
The consultation suggests that expectations could vary depending on an organisation's size, resources and degree of influence over contractual arrangements. Potential examples discussed include requesting pay and workforce data from other parties within the supply chain.
Questions may also arise about how the proposed duty would operate in international outsourcing arrangements. While the consultation focuses on reforms to the UK pay discrimination framework and the position of outsourced workers, employers with global supply chains are likely to seek greater clarity on the territorial scope of any new obligations and whether differing compliance requirements across delivery models could influence decisions about where services are performed.
Enforcement would sit with the proposed Unit rather than individual workers, although organisations could be required to take remedial action if they fail to comply.
The proposals are particularly relevant for:
- outsourcing providers;
- facilities management businesses;
- cleaning, catering and support services contractors;
- organisations involved in large-scale TUPE transfers;
- businesses operating complex labour supply chains; and
- organisations regularly procuring outsourced services.
If implemented, organisations may need to revisit outsourcing contracts, supplier due diligence processes, workforce data collection and TUPE planning. The proposals could also increase scrutiny of workforce arrangements following outsourcing and retendering exercises.
What should employers do now?
These proposals remain at consultation stage and no final decisions have been made.
However, employers may wish to begin considering:
- the transparency of current pay and reward structures;
- whether current pay arrangements could withstand increased scrutiny if recruitment salary information becomes publicly available;
- how recruitment processes might operate if pay disclosure becomes mandatory;
- whether existing job evaluation and equal pay audit processes are fit for purpose;
- the potential impact of expanded pay discrimination rights; and
- whether existing outsourcing and supply chain arrangements would withstand greater scrutiny from a pay equality perspective.
For organisations involved in outsourcing, facilities management and service provision, the proposed duty relating to contractual arrangements may prove to be one of the most commercially significant aspects of the consultation, particularly where services transfer under TUPE or operate through complex multi-party supply chains.
The consultation closes on 27 October 2026, and employers should monitor developments closely given the breadth of the proposed reforms.
If you need any assistance in relation to the issues raised in this update please do not hesitate to get in touch.
