Pay Gap Reporting

The Government has said it wants to tackle equal pay and sees gender pay gap reporting as a way of achieving this. The ERA 2025 includes some measures in respect of gender pay gap reporting, with the remainder to be included in the Equality (Race and Disability) Bill.

ERA 2025 Changes

The ERA 2025 makes amendments to the Equality Act 2010 (both of which will be subject to regulations) to:

• Require large employers (those with 250 or more employees) to develop and publish equality action plans showing the steps they are taking in relation to their employees with regard to prescribed matters related to gender equality, which includes addressing the gender pay gap and supporting employees going through the menopause
• Introduce the ability to make regulations on the information about outsourced workers that needs to be included in gender pay gap reporting, including, “among other things,” the identity of the providers of contract workers with whom the employer engages

The Government published guidance on 4 March 2026 on equality action plans, which states that from April 2026, employers on the gender pay gap reporting service will have the option to produce and publish a voluntary action plan alongside their gender pay gap data. It notes that no employers are required to publish an action plan for the 2026 to 2027 reporting year (although are encouraged to do so), but these will become mandatory from Spring 2027 (subject to regulations).

The guidance includes a list of 18 recommended actions that employers may include in their equality action plans, including actions to support women with health conditions and menopause. According to the guidance, as part of developing an action plan, employers must choose at least one action to address their gender pay gap and at least one action that supports employees experiencing menopause, although they are encouraged to include more. Actions are grouped around: recruiting staff, developing and promoting staff, building diversity into an organisation, increasing transparency, and supporting women with health conditions and menopause.

Action plans will be required to be submitted and published on the gender pay gap service and will be publicly available. Employers may also choose to publish them on their own websites.

Further guidance for employers on creating an action plan was published on 7 April 2026. This includes a six-step guide for employers, covering (i) understanding the issues in the organisation, (ii) choosing actions (which will either be “new or in progress” or “embedded”), (iii) writing a supporting narrative for each action (up to 100 words) and overall action plan (up to 200 words), (iv) submitting the action plan, (v) tracking the outcomes and (vi) reviewing the plan (noting the Government plans to require interim progress reviews after the first two years after submission and a more detailed review after the third year). The guidance states that employers in the private and voluntary sectors must include the name of a “responsible person” when the action plan is submitted, who should usually be a director, partner or senior officer and will confirm that the information submitted is accurate.

In respect of group companies, the guidance states that businesses must submit an action plan for each separate legal entity with 250 or more employees. They can choose to submit (i) a separate plan for each entity with different actions/supporting narratives relevant to that part of the business or (ii) the same actions/supporting narratives copied into separate action plans for each entity.

It is unclear if further menopause guidance will be published, and therefore this may not be the final position.

Further Reforms

Additional reforms to pay gap reporting, anticipated in the Equality (Race and Disability) Bill, include extending pay gap reporting (applicable to large employers with 250 or more employees) to include mandatory ethnicity and disability pay gap reporting. The Government opened a consultation on 18 March 2025 and published its response on 25 March 2026. The consultation response commits to introduce mandatory ethnicity and disability pay gap reporting for large employers (with 250 or more employees), using a similar framework already in place for gender pay gap reporting but with distinct considerations for ethnicity and disability, particularly in data collection and analysis. The Government has confirmed:

• That it will apply key aspects of the gender pay gap reporting rules to ethnicity and disability pay gap reporting, including using the same set of pay gap measures, using the same reporting dates, and applying the same enforcement policies.
• That data collection for race and disability will be in line with the GSS harmonised standards, but the list of ethnicity classifications will be set in secondary legislation to enable flexibility to make changes in the future. In practice, individual ethnic groups will be aggregated into one of five broader ethnic groups: (i) White, (ii) Asian or Asian British, (iii) Black, Black British, Caribbean or African, (iv) Mixed or multiple ethnic groups and (v) Other ethnic groups.
• That covered employers should also have to report on the overall ethnic breakdown of their workforce, the breakdown of their workforce by disability status and the percentage of employees who did not disclose their personal data on ethnicity and disability.
• That a de minimis threshold for reporting will be applied for employees in each ethnic group for ethnicity reporting and in each group being compared (e.g. disabled/non-disabled) for disability reporting for data privacy and identification reasons. A threshold of 10 employees was suggested, however the Government is considering this further in conjunction with the Information Commissioner’s Office.
• That employers should report a binary comparison on ethnicity as a minimum, provided they have the minimum threshold number of employees to make the comparison without compromising confidentiality. The binary comparison will be between White (including White Other) and all other ethnic groups combined. Employers will also be required to report comparisons between the five broad ethnic groups if they meet the minimum employee threshold in each of the broad ethnic groups. The White ethnic group would be the main ‘comparator’, against which the other four groups would be compared. Employers are encouraged to conduct a more detailed analysis where possible.
• That employers should report on disability using a binary approach reporting on differences in pay between disabled employees and non-disabled employees.. Disability will be defined in line with the Equality Act 2010 definition.
• That equality action plans will be required to be produced by employers about what they are doing to improve workplace equality for ethnic minority employees and for disabled employees. This will be aligned with the new requirements for large employers to produce an action plan covering steps to reduce the gender pay gap and support employees going through the menopause (see ERA 2025 Changes above). Once all of the reporting requirements are in force, employers will need to produce a single equality action plan covering sex, race (including ethnicity) and disability. Further details are anticipated on how this will be implemented.

The Government’s response confirms that they do not plan to mandate additional reporting requirements for public bodies, as had been considered in the consultation. However, the Government have said that they will encourage organisations to publish this additional information through guidance.

Reporting on ethnicity and disability poses inherent challenges. People are often reluctant to disclose that they are disabled or do not accurately report their status because they do not to understand the legal definition of disability. Also, there is a tension between balancing the risk of being able to identify individuals, and reporting meaningful data, particularly where there are smaller data groups.

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Timing and developments

Equality action plans for gender equality

Included in the ERA 2025.

Further regulations will be required as to the detail of the action plans (including the form and manner and how frequently they should be produced) and what information is required in relation to outsourced workers.

The Government’s updated timeline and guidance indicates that the measure regarding gender pay gap reporting and menopause action plans was introduced on a voluntary basis on 6 April 2026 and then will formally take effect in spring 2027, although a specific date is not provided. The guidance suggests that for private companies, the first voluntary deadline for publishing an action plan will be 4 April 2027 (in respect of the 2026-2027 reporting year) and the mandatory deadline for publishing an action plan will be 4 April 2028 (in respect of the 2027-2028 reporting year), however confirmation is awaited in the regulations.

The Government’s updated timeline also indicated that menopause guidance would be provided on 6 April 2026. As noted above, some menopause guidance was published on 4 March 2026, but it is unclear if further guidance is expected. The guidance does note that from April 2026, organisations will be able to share evidence with the Government about actions taken and the Government will review and develop the actions to ensure they evolve alongside new evidence.

However, implementation of the gender pay gap outsourcing measure will be depending on timelines for the draft Equality (Race & Disability) Bill (further details will follow in due course).

Extending pay gap reporting to ethnicity and disability

Not included in the ERA 2025.

Consultation opened 18 March to 10 June 2025 and the Government’s response was published on 25 March 2026. The consultation response will inform the provisions to be included in the Equality (Race and Disability) Bill. Timing for implementation is unknown, however the Government has confirmed that it intends to publish further information in due course on supporting regulations that will set out the detailed reporting requirements for employers. Guidance is also expected, including a detailed step-by-step guide for employers on collecting ethnicity and disability data and calculating the pay gap, guidance on how to improve employee declaration rates and advice on actions to address ethnicity and disability pay gaps.