Government launches consultation on equal pay and pay discrimination reform

The Government has launched a 15-week consultation on wholesale reform of the equal pay and pay discrimination framework, covering pay transparency, a new enforcement unit and expanded protections for race and disability pay claims and outsourced employees. The reform will proceed in two phases: first improving preventative steps and fixing the system, then broadening protections once the foundations hold.

The consultation closes on 27 October 2026. For employers already navigating the Employment Rights Act 2025 (ERA 2025) and preparing for mandatory equality plans and ethnicity and disability pay gap reporting, this is a further sign that pay equality will remain a live legal and reputational risk, with increased focus on transparency and fairness.

Phase one: fixing the system

Pay information in job adverts 

Phase one targets prevention and streamlined enforcement. It includes a statutory requirement for employers to publish pay information in job adverts or provide it in writing before interview. This is similar to the requirements under the EU Pay Transparency Directive, although the level of detailed information to be provided in the UK is still up for consultation. Similar legislative changes in the US have seen recruits’ and existing employees’ leverage in pay discussions increase. Culturally, it will be interesting to see whether the drive for pay transparency will be difficult for UK employers, who traditionally have treated pay as confidential.

Reintroduction of the statutory questionnaire

The Government also wants to revive and adapt the statutory questionnaire procedure, abolished in 2013, providing a mechanism for employees to request information on comparators and pay components before litigating. Crucially, it will not be mandatory for an employer to respond, although a tribunal may draw adverse inferences where they do not or where employers are evasive. Those of us who remember the previous iteration of statutory questionnaires may query whether this will be effective in driving pre-action settlement where they are not mandatory and where there is no costs or other regime to penalise non-compliance.

New enforcement body

On enforcement, a new Equal Pay Regulatory and Enforcement Unit (EPREU) could have a standalone right to compel disclosure and oral evidence, order employers to conduct job evaluation schemes and equal pay audits, and chase compliance with its recommendations - taking the burden off individual claimants and the EHRC. These rights may be more effective than the questionnaire in driving equality of pay, subject to the availability of sufficient Government funding for the unit.

Review of tribunal procedure 

The Government will also review the tribunal rules of procedure for pay discrimination and the operations of the independent panel of experts, both blamed for delay in litigation, especially equal value cases. The aspiration is to end the time taken and costs involved in equal pay claims, which are ‘notorious’. This is perhaps one of the most ambitious aspirations under the Government’s plan and also one of the vaguest, as there is little detail as to what is proposed. It also ignores the more general delays in the tribunal system.

Phase two: levelling up protections

Levelling up protections

Phase two tackles a long-standing inconsistency: sex-based pay discrimination runs through the distinct equal pay scheme, while race and disability pay claims must be brought as ordinary discrimination claims, with different remedies and evidence rules. The Government wants broadly to “level-up" protection across all three protected characteristics but does not appear to anticipate that race and disability pay claims would have the same legislative structure as gender-based pay claims. In practice, in race and disability pay claims, this could involve tribunals gaining the power to modify contractual terms and order equal pay audits following successful race or disability pay claims. Claimants would also be able to rely on comparators whose work is "rated as equivalent" or of "equal value". The consultation is silent on whether employers would enjoy the material factor defence.

The consultation also proposes the use of hypothetical comparators in equal pay claims in two specific scenarios where there are gaps in the current protections. 

New duty to uphold pay equality in outsourcing

The Government is also considering a new duty for contracting parties to take all reasonable steps to uphold pay equality in outsourcing arrangements, addressing concerns that outsourcing has in some cases been used to avoid equal pay obligations owed to workers doing equivalent in-house roles. This would apply to sex, race and disability and potentially apply to all contracting parties in the chain, subject to the work in question meeting a minimum threshold and being connected to a task that is more than short-term in duration. The proposed duty is not intended to involve an automatic requirement to equalise wages across different employers, but to create a flexible, case-by-case framework. The detail in the guidance and regulations will be key to understanding its impact on commercial arrangements. The duty would be enforced by the new EPREU rather than individuals bringing tribunal claims.

The broader picture for employers

This consultation does not stand alone: it follows closely behind ERA 2025 reforms aimed at increasing protections relating to discrimination claims and in particular sexual and third-party harassment, and sits alongside the Government's requirement for the publication of action plans for gender equality (expected in 2027) and reaffirmed commitment to mandatory ethnicity and disability pay gap reporting, due to be operational by 2029. Taken together, employers are being steered away from reactive, claim-by-claim compliance towards demonstrable, data-driven pay governance across several protected characteristics. It will be interesting to see employers’ reaction to the required transparency and administrative burden the proposed changes will introduce.

What should employers be doing now?

Nothing here changes the law immediately, and the consultation does not provide any guidance as to when any changes may be brought in. However, phase two will not begin until the phase one reforms are embedded, so those changes are likely to be years rather than months away. But the scale of ambition, and its alignment with the wider equality agenda, marks pay governance out as a board-level risk, not a niche compliance issue.

Ahead of the closure of the consultation, HR professionals and lawyers should brief the business on the likely move towards transparency and consider a process of risk assessment of their existing pay structures, especially where these have evolved through acquisitions, restructuring or informal local pay decisions. They should also start to consider outsourcing and intermediary arrangements to assess exposure under the proposed all reasonable steps pay equality duty.

If you would like to discuss equal pay arrangements or receive advice on any of the issues mentioned in this legal update, please speak to your CMS employment team contact.

Co-authored by Kainat Shah, Trainee Solicitor.