Pay Equity United Kingdom

Basic Summary

The United Kingdom requires mandatory gender pay gap reporting for organizations with 250 or more employees. The Equality Act 2010 provides the legal foundation for equal pay, while the 2017 Gender Pay Gap Information Regulations mandate annual public disclosure of pay gap statistics.

Key Legislation

Equality Act 2010

Consolidates discrimination law and establishes the right to equal pay for equal work. Key provisions:

Equality Clause: Automatically implied in every employment contract
Like Work: Same or broadly similar work
Work Rated as Equivalent: Job evaluation shows equal value
Work of Equal Value: Work equal in terms of demands (skill, effort, decision-making)

Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

Mandates annual reporting for employers with 250+ employees:

Required Metrics (as of snapshot date: April 5 annually)

Mean gender pay gap: Average hourly pay difference (%)
Median gender pay gap: Middle value hourly pay difference (%)
Mean bonus gap: Average bonus pay difference (%)
Median bonus gap: Middle value bonus difference (%)
Proportion receiving bonuses: % of men vs. women receiving any bonus
Pay quartiles: Distribution of men and women across four pay bands

Employer Obligations

Scope

Threshold: 250+ employees in Great Britain on snapshot date
Snapshot Date: April 5 each year
Publication Deadline: By April 4 the following year (12 months later)
Public Disclosure: Must publish on company website (3 years minimum) and government portal

Who Counts as an Employee

Includes:

Employees on full-time and part-time contracts
Many types of fixed-term contracts
Some workers on apprenticeships

Excludes:

Genuine self-employed contractors
Partners and LLP members

Calculations

Hourly Pay Includes:

Basic pay
Allowances (e.g., car, skills, shift premiums)
Pay for leave (annual, sick, maternity at full or partial pay)
Area allowances

Hourly Pay Excludes:

Overtime pay
Redundancy and termination payments
Pay in lieu of leave
Expenses and benefits in kind (e.g., company car, health insurance)

Bonus Pay Includes:

Incentive pay, bonuses, commissions
Long-service awards in cash
Any cash equivalent of vouchers/securities related to profit-sharing or performance

Reporting Portal

All reports must be submitted via the Gender Pay Gap Service: https://gender-pay-gap.service.gov.uk

Reports are publicly searchable, allowing:

Benchmarking across industries
Transparency for job seekers
Media and stakeholder scrutiny

Enforcement

Equality and Human Rights Commission (EHRC)

Monitors compliance and investigates non-reporting
Can issue formal notices compelling compliance
Potential enforcement action leading to unlimited fines

Individual Claims

Employees can bring equal pay claims in Employment Tribunals:

Time limit: Generally within 6 months of employment ending (complex rules apply)
Remedies: Back pay (up to 6 years), damages, declaration
Burden of proof: Shifts to employer once claimant establishes prima facie case

Pay Gap vs. Equal Pay

Important distinction:

Gender pay gap reporting: Measures overall difference in average pay (not unlawful in itself)
Equal pay claims: Address whether individuals doing equal work receive equal pay (unlawful if unjustified)

Reporting may reveal systemic issues but does not automatically prove discrimination.

Action Plans and Narratives

While not legally required, best practice includes:

Publishing a narrative explaining the gap
Action plan with specific measures to reduce the gap
Board-level accountability
Regular progress reviews

Leading employers publish detailed analysis including:

Root cause analysis (e.g., occupational segregation, part-time work patterns)
Initiatives to improve recruitment, progression, and retention of women
Targets and milestones

Key Statistics and Trends

Median UK gender pay gap (2023): Approximately 14.3% across all employees
Sectors with largest gaps: Financial services, construction, manufacturing
Sectors with smallest gaps: Accommodation and food services, health and social work
Trend: Gradual narrowing over time, but progress slow

Topics Covered

Pay Gap Reporting ✅ (Annual public reporting for 250+ employers)
Equal Pay Audits ✅ (Not mandatory, but strongly recommended)
Employer Thresholds ✅ (250+ employees)
Reporting Deadlines ✅ (April 4 deadline)
Protected Characteristics ✅ (Gender focus; Equality Act covers other characteristics)
Penalties & Enforcement ✅ (EHRC enforcement, tribunal claims)

Compliance Calendar

Date	Action
April 5	Snapshot date - capture employee data
April 5 to April 4 (next year)	Calculate metrics, prepare report
By April 4	Publish report online and submit to government portal
Ongoing	Maintain report on website for 3 years minimum

Best Practices

Data Quality

Maintain accurate pay records throughout the year
Classify employees vs. workers correctly
Document exclusions and methodology

Governance

Board-level ownership of gender pay gap strategy
Regular monitoring between annual snapshots
Integration with broader EDI (Equality, Diversity, Inclusion) initiatives

Transparency

Publish a narrative alongside the numbers
Explain key drivers of the gap
Outline concrete actions to close the gap
Engage employees and stakeholders

Resources

Government Guidance: https://www.gov.uk/guidance/gender-pay-gap-reporting-overview
EHRC Guidance: https://www.equalityhumanrights.com/en/advice-and-guidance/gender-pay-gap-reporting
Gender Pay Gap Service: https://gender-pay-gap.service.gov.uk
Equality Act 2010: https://www.legislation.gov.uk/ukpga/2010/15/contents
ACAS Equal Pay Guidance: https://www.acas.org.uk/equal-pay

Future Developments

Ongoing debate about extending reporting to include:
- Ethnicity pay gap reporting (currently voluntary)
- Disability pay gap reporting
- Lowering the 250-employee threshold
Calls for mandatory action plans and enforcement of gap reduction

Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Organizations should consult UK employment law specialists for specific compliance guidance.