What could the Equal Pay Consultation mean for your business?
A practical guide for employers preparing for a more transparent and potentially more onerous equal pay regime.
by Ella Nourmand.
The Government’s ongoing consultation on equal pay and pay discrimination signals stronger transparency, wider protection and tougher enforcement, which could have a considerable impact for businesses.
The consultation coincides with the Employment Appeal Tribunal’s (EAT) ruling in Thandi & others v Next. Next argued that warehouse staff commanded a higher market rate because of recruitment and retention pressures that did not apply to store staff. The EAT overturned the earlier finding that differences in market conditions justified paying warehouse operatives and shop assistants’ different basic rates. The decision is likely to affect ongoing retail-sector litigation and may influence how employers seek to justify pay differences in future equal pay claims.
Taken together, the consultation and recent case law show that equal pay and pay discrimination is an area that proves to be constantly changing. Businesses should understand both the proposed reforms and the growing scrutiny of how pay differences are justified.
The equal pay consultation remains open until 27 October 2026, and the Office for Equality and Opportunity is seeking views on the proposed reforms.
Why employers should pay attention
The consultation reflects concerns about “systemic, interconnected failings” in the way pay equality is promoted and enforced. The proposals are intended to make it easier to identify pay discrimination, resolve disputes, and encourage employers to address pay structures and policies before claims arise.
For employers, the practical message is simple: pay decisions may need to become more transparent, better documented, and more consistently justified internally.
What could change
The consultation includes several proposals that could materially affect how businesses recruit, set pay, respond to disputes, and evidence compliance.
Wider protection could mean more claims. Equal pay protection currently applies only to sex but may be extended to race and disability pay discrimination. This could broaden the scope for claims and require employers to review pay practices through a wider equality lens.
Stronger investigatory powers may increase scrutiny. A dedicated enforcement body could have powers to require evidence, pay data, and information before or during investigations into unfair pay practices. Breaches and Tribunal claims could also trigger company-wide equal pay audits.
Job evaluation schemes may become more important. Employers may need to show that roles have been assessed fairly and consistently before Tribunal proceedings begin, reinforcing the importance of accurate job descriptions and robust evaluation processes.
Pay gap reporting may expand. Employers may need to prepare for more detailed reporting obligations beyond the current gender pay gap framework, promoting greater transparency in the system.
Pay transparency in recruitment could become standard. Businesses may be required to publish salary ranges or other pay information in job adverts or provide that information before interview.
Hypothetical comparators may become relevant. The consultation considers whether workers should be able to rely on comparators such as predecessors or individuals whose terms improved after they left or moved roles, rather than only on existing comparators. This could widen the scope for potential claims.
Equal pay obligations may influence commercial arrangements. Businesses may need to consider how pay equality is promoted in contractual arrangements, outsourcing and supply-chain relationships.
What should businesses do now
Even though the proposals are not yet law, employers should use this period to assess whether their pay practices would withstand greater transparency and scrutiny:
Review pay structures and identify areas where pay differences may be difficult to explain.
Audit recruitment practices, including whether salary ranges and benefits are consistently communicated.
Check whether job evaluation schemes are current, objective, and properly documented on a consistent basis.
Prepare leadership teams for the reputational and employee relations risks linked to pay transparency.
Final thought
The direction of travel is clear: businesses may need to move from reactive equal pay compliance to proactive pay governance. Employers that review their pay structures and decision-making now will be better placed to respond if the proposals become law.