How the Employment Rights Bill is further tightening gender pay gap reporting

By making employers more accountable, the new legislation aims to accelerate the pace at which the pay gaps close.

The Employment Rights Bill introduces the first major overhaul of gender pay gap reporting since it was launched in 2017. From 2027, compulsory narratives and action plans are set to heighten employer accountability and sharpen expectations around meaningful progress.

There will be two new obligations for employers to implement alongside existing reporting requirements.

1. Compulsory narratives and action plans

Only around 50% of employers currently publish a narrative alongside their gender pay gap figures. Under the Bill, this will become compulsory and must include the following:

An explanation of why any gap exists: Employers will need to provide evidence-based analysis of why any gender pay gap exists. They will need to draw on data and consider the factors that might lie behind it - such as recruitment practices, pay progression policies, or lack of career progression opportunities for part-time staff.

Evidence of actions taken to close the gap: Employers must demonstrate any steps they have taken in the last twelve months to close their gender pay gap. This may include initiatives such as manager training, refreshed policies, or recruitment practice changes. There is also a new requirement to publish menopause action plans, which can be included within this narrative rather than published separately.

Measurable commitments to close it further: This section may require the most consideration and preparation. Even those employers who already submit narratives with their report rarely publish measurable targets.

Government expectations include:

Targets or milestones
Information on how progress will be tracked
A timeline for delivery.

An example could be: “We will increase the proportion of women in our senior leadership roles to 50% by 2030. Our chief people officer will be responsible for implementing our actions on this, and we will report on progress towards this target each year.”

Action plans will need to be reviewed and updated annually, making it essential that commitments are thoughtfully considered, tracked, and monitored. The government hub offers guidance on how gender pay gaps can be reduced.

Some initiatives are supported by strong evidence (such as offering flexible working as a default in job adverts, or setting internal diversity targets), and some have mixed or limited evidence behind them (diversity statements, unconscious bias training).

However, it is important that your organisation’s context is considered alongside this - there is no approach that works for all.

2. Outsourced services

Employers should still only report on their own employees in their gender pay gap figures. However, they must also reference the gender pay gaps of any outsourcing providers in the report narrative, with measurable targets included in action plans.

Timeline

The Bill is currently progressing through parliament and is expected to be approved by the end of 2025. Employers will be encouraged to publish equality action plans from April 2026, with full mandatory implementation from April 2027. Even employers with no pay gap will be required to publish a narrative and action plan demonstrating how they will continue to monitor equity and support progression.

There is currently a separate consultation on implementing ethnicity and disability pay gap reporting in the next few years. Separately, the EU will introduce gender pay gap reporting requirements next year, underscoring the wider international shift towards transparency - although this will not apply to UK-based employees.

How employers can prepare and get ahead

Although publishing equality action plans in April 2026 will be voluntary, doing so could demonstrate proactivity and positive engagement toward increasing pay equity – positioning organisations as leaders rather than followers.

Strategic steps employers can take now to prepare include:

Analyse your recent gender pay gap reports to determine the true underlying cause of any gaps.
Document efforts throughout the year to close your gender pay gap to ensure ongoing initiatives are captured and can feed into reporting.
Engage other parts of your organisation when shaping action plans, ensuring initiatives are owned collectively and embedded in practice.
Plan which initiatives you will take to close the gap, who will be responsible for them and how long they will realistically take to make an impact. It is crucial here that you consider the evidence behind them and the context of your organisation. With employers now being measured on the outcomes of their action plans, every activity needs to be implemented with purpose.
Review procurement processes so that the gender pay gap of potential outsourcing partners is always considered.

Employers who begin preparing now – and who focus on the structural and cultural levers that will genuinely shift outcomes – will be best placed to meet the new requirements and to make meaningful, lasting progress.