International Equal Pay Day was celebrated this month on 18 September, a day dedicated to the “longstanding efforts towards the achievement of equal pay for work of equal value”.
For this International Equal Pay Day, we look at where we are now with the gender pay gap and explore future EU and UK developments aimed at closing gender pay gaps.
Where Are We Now With the Gender Pay Gap?
From a global standpoint, UN Women reports that women only make 77 cents for every dollar men earn and at current rates it will take 70 years to close this gap.
Looking closer to home, in the UK the Office for National Statistics reports that the gender pay gap has been declining slowly over time. In April 2024, the gender pay gap among full-time employees stood at 7.0%, down from 7.5% in 2023, and among all employees decreased to 13.1% in April 2024 down from 14.2% in April 2023. It also reveals, however, that the gender pay gap is larger for employees aged 40 years and over than those aged under 40 years, and is also larger among high earners than lower-paid employees.
Despite declining gender pay gaps in the UK, gender pay gaps still exist and the global projections for gender pay parity are significant. It is no surprise, therefore, that some lawmakers are pushing harder to close gender pay gaps by introducing new measures, including gender pay gap reporting, pay transparency and information rights and requirements to take remedial action in some circumstances.
Legal Developments – EU
Looking first to the EU, commitments to close the gender pay gap can be seen. One key development is the EU Pay Transparency Directive (read more about this here), which EU member countries will need to implement into local law by 7 June 2026. The Directive introduces a host of new obligations, which will intersect with all aspects of an employer’s recruitment and people processes, including remuneration, pay structures, and job frameworks. Key obligations include:
- The right for workers to receive information about their pay and the average pay levels for workers doing the same work or work of equal value.
- The right for job applicants to receive information about the role’s pay or pay range.
- The requirement for certain employers to report on gender pay gaps (including by categories of workers performing the same work, or work of equal value).
- The requirement for certain employers to carry out a ‘joint pay assessment’ if gaps of at least 5% are identified, cannot be justified on the basis of objective, gender-neutral criteria and remain unaddressed within six months of pay reporting.
The UK1, of course, is not required to implement the Directive but is considering its own measures.
Legal Developments – UK
By way of background, the UK already has gender pay gap reporting obligations. Broadly speaking, organisations in Great Britain with 250 or more employees have been required to calculate and publish specific gender pay gap data annually. At present, the information required to be shared is limited, including comparisons of the average pay and bonuses of men and women across an organisation.
However, the Labour Government has committed as part of its ‘Plan to Make Work Pay’ to tackling the gender pay gap and pay discrimination at work. The Employment Rights Bill includes some measures in respect of gender pay gap reporting, with the remainder to be included in a draft Equality (Race and Disability) Bill following the UK Government’s call for evidence on potential equality law reforms (now closed).
First, the Employment Rights Bill (due to pass very soon) will introduce two changes:
- Organisations subject to gender pay gap reporting will be required to develop and publish equality action plans showing the steps they are taking about certain matters related to gender equality, including addressing the gender pay gap and supporting employees going through the menopause. Details are awaited, but the Government has said that this will be introduced first on a voluntary basis in April 2026 before taking full effect in 2027, although a specific date is not provided.
- Employers going forward will be required to provide certain information about outsourced workers in gender pay gap reports. The detail of what type of information is to be included will be set out in regulations but may (among other things) include the identity of the providers of contract workers engaged by the employer. Further detail will follow and timings for implementation will be dependent on the anticipated draft Equality (Race & Disability) Bill, which is awaited.
The call for evidence on potential equality law reforms (now closed), includes additional proposed measures in respect of equal pay and pay transparency (see here for our full discussion on this), that will likely inform the content of the draft Equality (Race and Disability) Bill. The call for evidence suggests that the Government is proposing to:
- Enhance enforcement of equal pay rights potentially through the establishment of a new Equal Pay Regulatory and Enforcement Unit.
- Improve pay transparency including potential measures requiring employers to provide salary information on hiring, publish or provide certain information on pay and pay levels in comparison to those doing the same role or work of equal value, and identifying actions to avoid equal pay breaches.
- Extend the right to bring equal pay claims and mandatory pay gap reporting (as well as the potential new transparency measures above) to race/ethnicity and disability.
As the call for evidence above notes “without transparency, it can be hard for underrepresented candidates to know what they need to make progress, or to question unfair employment practices” and pay transparency measures have the “potential to prompt employers to resolve underlying equal pay issues”. These proposals are still in the early stages of policy development, but the outcome of the call for evidence will inform the provisions to be included in the anticipated draft Equality (Race and Disability) Bill.
The Future
While progress has been made, the data shows that significant gender pay gaps still exist. The global projection that it will take 70 years to close the gap highlights the need for continued efforts. In the UK, the slow but steady decline in the gender pay gap is encouraging, yet the larger gaps among older employees and high earners indicate areas that may need more focused attention.
Looking ahead, the introduction of the EU Pay Transparency Directive and, in the UK, the potential additional obligations in respect of gender pay reporting and proposed transparency measures, signal a shift towards greater accountability and transparency, and are designed to drive more equitable pay structures and practices, potentially accelerating the reduction of the gender pay gap. The UK at least is also looking to take this further to better understand and improve race and disability pay gaps. It will no doubt take some time before we see whether these measures help realise the aims of closing the gender (and other) pay gaps and ultimately achieving equal pay.
If you have any questions about the content of this article, or about how the EU Pay Transparency Directive or the proposed UK measures might affect your business, please reach out to your usual Littler United Kingdom contact.
Footnote
The UK is made up of England, Wales, Scotland and Northern Ireland. However, employment law in Northern Ireland and Scotland varies from England and Wales. This publication refers to the UK but focuses on the law in England and Wales. The UK is not a Member State of the EU and is therefore not required to implement the Directive (although the position is different for Northern Ireland and is outside the scope of this publication). The UK is included for comparative purposes. ↩︎
