UK government launches consultation on major equal pay reforms

The consultation, launched on 14 July, signals the government’s intention to strengthen protections against pay discrimination in the UK and address long-standing concerns that the current system is overly complex, costly and slow.

This follows a recent call for evidence and supporting research, which concluded that the existing equal pay regime is failing both workers and employers, with many claims taking years, and in some cases decades, to resolve.

The research also highlighted that pay discrimination continues to affect women, ethnic minority workers, disabled people and some outsourced workers despite existing legal protections.

The consultation proposes to adopt a two-phased approach to develop a modernised pay discrimination framework that enhances worker protections and reduces the potential for protracted litigation for both employers and claimants.

In the first phase, views are being sought on measures to increase pay transparency and streamline pay discrimination claims.

These include proposals to introduce more transparency in recruitment by requiring all employers to publish transparent pay information in job adverts or, in absence of that, requiring the employer to provide potential candidates with salary information in writing prior to interview. 

Although the government acknowledges that many employers already publish pay ranges voluntarily, it said introducing a statutory requirement would “ensure all employers meet this level” with little additional administrative burden placed on businesses.

It also intends to strengthen measures applying to employers found by an employment tribunal to have committed pay discrimination, or where there is reasonable suspicion of pay discrimination.

There are also plans to improve enforcement in the current equal pay system, which has been criticised for placing too much burden on individuals rather than encouraging proactive and preventative action. The consultation proposes a new equal pay regulation and enforcement unit with enhanced powers and the involvement of trade unions, employers and other relevant stakeholders.

The government has also proposed reinstating a statutory questionnaire procedure to be used in pay discrimination cases to promote early resolution of potential pay discrimination claims that would help reduce bureaucracy and ease backlogs in the employment tribunal system.

Although the government said there has been significant progress on workplace equality in the UK since the Sex Discrimination Act 1975 and the implementation of the Equal Pay Act 1970, it acknowledged that today’s equal pay framework was still “excessively complex, costly and protracted” and required action.

Lesley Makin, an employment expert at Pinsent Masons, said the current framework was not working well for employees or employers. “Equal pay claims are notoriously complex, and the current system leads to very lengthy delays, uncertainty over a prolonged period and, of course, added expense,” she said. “Any improvements therefore to the current framework are likely be welcomed by all parties, although achieving a more streamlined system may, in reality, be hard to achieve.”

The consultation paper said once the government is satisfied that the first phase of measures has improved the system and broadened protections to close gaps in the law, it will embark on a second phase to promote pay equality.

The second phase appears to go even further by proposing that pay discrimination on the basis of race and disability would be regarded by law as seriously as pay discrimination on the basis of sex.

There are also further proposals that would require employers to take all reasonable steps to uphold pay equality in their contractual arrangements, including outsourcing arrangements.

Under the Equality Act 2010, many outsourced workers are prevented from comparing their contractual terms with so-called in-house employees and therefore are unable to seek potential redress in the event of any inequality. This proposal therefore raises the prospect of a significant expansion of equal pay obligations beyond the traditional equal pay framework established under the Equality Act.

The consultation will run for 15 weeks until 27 October and sits alongside the government's continuing commitment to introduce mandatory ethnicity and disability pay gap reporting, although legislation for that has not yet been introduced and no implementation timetable has been confirmed.

This consultation comes as the deadline has now passed for EU countries to introduce legislation under the EU Pay Transparency Directive, which requires employers to disclose the initial salary or salary range for new roles before interviews, with some local law requiring the salary ranges to be published on job adverts. 

As Makin notes, however, the directive’s requirements are still far more extensive than the current UK proposals in relation to pay transparency, prohibiting employers asking candidates about their current salary or salary history and banning pay secrecy clauses. “Under the directive employees will also have the right to pay information and, most significantly, a mandatory joint pay assessment will need to be undertaken in some circumstances,” she added.