The United Kingdom’s Labour Party introduced a new Employment Rights Bill Oct. 10, 2024 that would expand pay gap reporting for applicable UK employers.
The bill seeks to take the current pay gap reporting requirement another step further by requiring the development and publishing of equality action plans. This includes steps the employer plans to take to address their gender pay gap and how they support employees through menopause.
The former proposal mirrors what is asked of employers under the EU Pay Transparency Directive. The proposed requirements would apply to employers with 250 or more employees.
UK’s Evolving Pay Equity Landscape
The Employment Rights Bill is the second significant legislation proposed by the Labour Party as part of its Plan to Make Work Pay. The party previously released a Draft Equality Bill that would expand current pay gap reporting responsibilities to:
- Enshrine in law the full right to equal pay for ethnic minorities and disabled people; and
- Introduce mandatory ethnicity and disability pay reporting for large employers (i.e., those with 250 or more employees).
Conduct an Intersectional Pay Equity Analysis of Your Workforce
Thus, employers would need to include mean and median pay gaps across race/ethnicity and gender.
Other proposals on equal pay and pay gap reporting were included in the party’s Plan to Make Work Pay. These proposals included:
- To include outsourced workers in gender pay gap and pay ratio reporting.
- Ensuring outsourcing services can “no longer be used by employers to avoid paying equal pay.”
- Requiring large employers to develop, publish and implement action plans to close gender pay gaps.
The third bullet is addressed in the most recent Employment Rights Bill. The current version of the bill is missing specific details to regulations that are yet to be developed. However, if the current version of the bill is adopted without this portion being significantly amended, it would impose significantly more regulatory burden on UK employers with 250 or more employees.
Current UK Pay Gap Reporting Requirements
UK employers currently must submit pay gap percentage calculations and data to the UK’s Gender Pay Gap Service, along with a link to your public statement. Employers are required to calculate six metrics measuring the difference in compensation by gender:
- Percentage of men and women in each hourly pay quarter,
- Mean gender pay gap of hourly pay,
- Median gender pay gap of hourly pay,
- Percentage of men and women receiving bonus pay,
- Mean gender pay gap of bonus pay, and
- Median gender pay gap of bonus pay.
Eliminate the Complexities of Pay Transparency Reporting
The UK government encourages all employers to include an accompanying narrative to add context to any pay gaps, together with an action plan setting out what steps will be taken. Neither the narrative or action plan are mandatory. All organizations may voluntarily submit ethnicity pay gap data as well.
The Labour Party’s recent legislation and intention is to make the above a requirement, rather than optional.
Leverage Robust Pay Equity Software to Streamline Your Efforts
While any changes in legislation aren’t likely to take effect until 2026, applicable UK employers should begin taking steps to comply. This includes performing intersectional pay equity analyses and leveraging data to formulate cohesive action plans to remediate existing unexplained pay gaps.
Trusaic’s premier pay equity software is the only SaaS solution that performs a true intersectional analysis on the market. This means, our software enables you to conduct a pay equity analysis across your workforce at the intersection of gender, race/ethnicity, age, disability and more in one statistical regression analysis.
By offering an all-encompassing view of your workforce’s compensation, PayParity not only identifies pay inequities but also uncovers their root causes. This invaluable insight will inform your action plan to close pay gaps where necessary.
Employers with reporting obligations in the UK can leverage Trusaic’s three-pronged approach, which is a cut above other software solutions:
- Leverage PayParity® and OpportunityParity™ to understand, explain, and resolve pay and opportunity disparities. And now, with R.O.S.A., you can optimize the spend of your remediation budget to ensure you are maximizing the ROI of each dollar spent.
- Leverage the Regulatory Pay Transparency Reporting™ solution and easily complete required reporting by compliance deadlines.
- Leverage the Workplace Equity product suite to communicate narratives, the sources of your pay gaps, progress objectives, and corrective measures as required by law. You can show data-backed progress in your pay gaps over time.
Our comprehensive workplace equity software solutions and on-demand expert support is with you every step of the way. With Trusaic, you can proceed with confidence, knowing you are working toward achieving pay equity with the backing of a robust methodology that is accurate and explainable to comply with fast changing regulations.
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