UK pay transparency: What employers need to know about the proposed reforms

The implementation of the EU Pay Transparency Directive is making UK employers look at practical steps to strengthen their own pay frameworks.

Within the next few years, salary information may become compulsory on all UK job adverts. Many employers are familiar with the EU Pay Transparency Directive, but fewer are aware of the significant reforms now being considered by the UK government.

In August, the government launched a consultation to comprehensively reform the current equal pay framework. There are two planned phases: “fixing the system”, and subsequently “making the right to equal pay effective for all”.

The first phase focuses on increasing pay transparency and strengthening equal pay enforcement.

Pay transparency

The proposal is to require pay and conditions information in job adverts, or to provide this information in writing before interview where no advert exists.

The government believes this would encourage employers to evaluate roles before recruiting and ensure consistency and fairness in setting pay. Candidates would be able to make more informed decisions about where to apply and may have greater negotiating power.

The government also highlights the role of pay transparency in reducing biased negotiation outcomes and unequal starting salaries, helping to create a fairer, more consistent recruitment process.

While the exact format and level of detail required have not yet been defined, the change would be significant for employers. Currently, only around 40% of UK job adverts include salary information, and this figure has been decreasing in recent years.

Tightening equal pay enforcement

Although job evaluation schemes would not become mandatory, the consultation includes a requirement that Employment Tribunals must order the implementation of a non-discriminatory scheme for employers found to have breached equal pay legislation.

This would be in addition to the current requirement for an equal pay audit. Although this would affect only a small number of employers, the proposal signals a clear recognition of job evaluation schemes in assessing pay fairness.

There is also a proposal to create a new Equal Pay Regulatory and Enforcement Unit with strengthened powers. The consultation proposes stronger investigatory powers, enabling the new unit to request evidence proactively and intervene earlier where pay practices raise concerns.

Future phase: Expanding the right to equal pay claims

Currently, claims relating to race or disability discrimination are brought under the direct or indirect discrimination provisions of the Equality Act 2010, whereas sex discrimination cases can be pursued as equal pay claims. The government is proposing retaining these two approaches while ‘levelling up’ protection for race and disability discrimination.

Pay gap reporting

Earlier this year, it was announced that pay gap reporting would be expanded to include ethnicity and disability reporting, and, from 2027, action plans and menopause support plans will also become mandatory elements. Together, these changes add to the growing requirement for pay transparency.

What should employers do?

Although the consultation is ongoing, the direction of travel is clear. With Phase 1 measures potentially coming into force from late 2027, employers can take practical steps now to strengthen pay frameworks and prepare for greater transparency.

Key areas to focus on include:

Reviewing and updating job descriptions. These would be used in the event of an equal pay claim, so it is important they are accurate and up to date. They also help ensure candidates and employees understand the role and support performance management.
Implementing a job evaluation scheme (if one is not already in place). These schemes are increasingly the bedrock of compliant pay frameworks and help ensure consistency.
Reviewing your wider job architecture to ensure it clearly shows how pay progresses and how pay decisions are made. Fair pay structures can increase engagement and help attract and retain talent.
Assessing how advertised salaries align with current pay levels to avoid compression issues or inconsistencies, as greater external transparency will increase internal scrutiny and expectations.
Preparing salary ranges for publication by reviewing market alignment and planning communications for current employees.

The direction of travel is unmistakable. Pay transparency is becoming a core expectation of employees, regulators and policymakers. The UK consultation signals a decisive shift towards clearer pay structures, stronger enforcement and more consistent protection across protected characteristics. Employers who act now will be better placed to navigate these changes and use transparency as a competitive advantage.

With solid foundations in place, pay and reward can move from a compliance obligation to a strategic differentiator in attracting and retaining talent. Early preparation will smooth the transition and position employers ahead of the curve.