Susannah Donaldson

In light of the shifting legal landscape and market trends, both under the new Labour government in UK and across the EU, employers will face ever more onerous pay gap reporting duties across different diversity strands and should consider putting in place a pay equity strategy.

In 2023-24, around 10,862 employers with 250 or more employees reported their gender pay gap figures. Analysis conducted by Pinsent Masons on the latest gender pay gap data provided by large UK companies shows that the difference in the pay gap between male and female workers has been reducing in recent years.

The average hourly median gender pay gap is 11.6 per cent, which represents a 0.4 per cent decrease from the 12 per cent reported in the previous year. This difference represents a further decrease from 12.4 per cent in 2020-21, and 12.2 per cent in 2021-22.

The infrastructure sector reported the biggest pay gap of 21.4 per cent, (up 0.3 per cent from the previous year) when compared against the financial services, energy, manufacturing, universities and telecommunications sectors. The financial services sector posted a similarly significant gap, of 21 per cent, but this marks a small year-on-year decrease.

Although the figures show that positive changes are happening in businesses across the UK, there is still more work to be done towards levelling the playing field and eliminating the Gender Pay Gap (GPG).

It is notable that all of the FTSE 100 and 222 of the FTSE 250 have signed up to the 2024 Parker Review, which asks signatories to make various commitments, including publishing their ethnicity pay gap and action plan within two years of joining the campaign.

There is greater focus on improving equal pay under the new Labour government’s legislative agenda – employers will have more obligations to improve equal pay for different genders, ethnicities, and people with a disability.

The government has pledged to make pay equity and transparency key areas of focus, as reflected by the draft Equality (Race and Disability) Bill announced in the 2024 King’s Speech at the state opening of parliament.

The bill will enshrine in law the full right to equal pay for ethnic minorities and disabled people to make it easier for them to bring equal pay claims by introducing a new statutory framework which mirrors that currently in place for equal pay claims based on sex. It will also introduce mandatory ethnicity and disability pay reporting for employers with 250 or more employees. It is intended that the new legislative regime will mirror that currently in place for GPG reporting.

The Labour government is also expected to introduce proposals included in the party’s election manifesto, including requiring businesses to put in place gender pay gap action plans and introducing civil enforcement of GPG auditing.

The introduction of mandatory GPG reporting across EU member states will add additional pressure on the UK government and UK businesses to take a more proactive approach to mirror the EU regime, and make pay equity and transparency a focal point for law makers and businesses alike.

Susannah Donaldson is partner and co-head of Pinsent Masons’ global equality law practice.