Should the UK adopt some of the measures in the EU Pay Transparency Directive? Employers have been wrestling with this when preparing for the Directive and now it seems that the UK government is too.
As its flagship Employment Rights Bill gets ever closer to becoming law, the UK government is beginning to look ahead to a new package of employment law reforms – all related to equality. Hot on the heels of its consultation on ethnicity and disability pay gap reporting, the government has opened a call for evidence about wider reforms to equality law. Among the ideas listed in this document are measures to increase pay transparency which have not been mentioned before. These measures would – if the government goes ahead with them – import some of the EU Pay Transparency Directive requirements into UK law.
Possible new UK pay transparency measures under consideration
The government is asking about the impact of introducing the following additional pay transparency measures:
1. providing the specific salary or salary ranges of a job in the job advert or prior to interview
2. not asking candidates their salary history
3. publishing or providing employees with information on pay, pay structures and criteria for progression
4. providing employees with information on their pay level and how their pay compares to those doing the same role or work of equal value
5. identifying actions that they need to take to avoid equal pay breaches occurring or continuing.
Note that 'pay' in this context includes bonuses – in fact, the call for evidence asks specifically about the potential impact on pay equality across types of pay such as bonuses.
How does this compare to the EU Pay Transparency Directive?
The first four measures closely resemble the pay information rights in the EU Pay Transparency Directive.
The Directive requires employers to provide information about pay or pay ranges to job applicants, bans employers from asking what job applicants are currently/were previously paid, requires employers to share the criteria used to determine pay, pay levels and progression and gives employees the right to written information on their pay level and the average pay level for categories of workers performing the same work as them or work of equal value to theirs.
The first four measures suggested by the UK government are very similar – although the distinction between "salary" information (the UK proposal for job applicants) and the wider-ranging "pay" information (the EU requirement) is significant.
The UK is, of course, no longer an EU member state so is not obliged to implement the Pay Transparency Directive (although there is an unresolved argument about its status in Northern Ireland). This looks to be the first sign of the UK government considering rolling out any aspect of the Directive anywhere within the UK. Interestingly, however, the Directive isn't actually mentioned in the call for evidence.
Adopting Pay Transparency Directive measures in the UK
The adoption of the Pay Transparency Directive throughout the EU is already having a pronounced impact on employers with a presence in both the EU and the UK. We think it is likely to change what's perceived as good practice in the UK, regardless of legislation. This might mean, for example, that providing salary ranges to job applicants and not asking about salary history (the first two suggested measures) become increasingly normal in the UK in any event. These requirements already exist in parts of the US, and there's good evidence that they benefit women.
Adopting all of these measures from the Directive would, however, be very challenging in the UK. The fourth suggested measure (providing information about pay of others doing the same role or work of equal value) would be especially difficult. This would require employers to categorise workers according to which jobs would be legally regarded as "of equal value". The Pay Transparency Directive requires employers to go even further and report gender pay gaps within each such category, as well as providing employees with information on the average pay within the category. The challenge of categorising workers in this way is consistently ranked highest by employers out of all the challenges of preparing for the Pay Transparency Directive, and is the focus of many of our discussions with employers. Many (if not most) UK employers lack robust systems for assessing equal value and putting employees into categories in this way.
Equal pay to cover race and disability?
The UK equal pay framework currently applies only to pay equality as between men and women. Similarly, the EU Pay Transparency Directive is focussed on gender pay equality. However, the UK government is also planning to make the right to equal pay "effective" for ethnic minority and disabled people. The call for evidence also asks for input about this (we're covering these measures in a separate insight). It's worth noting that the pay transparency measures suggested above are presumably intended to promote equal pay for ethnic minority and disabled employees as well as women.
Next steps
At this stage, the government is apparently just exploring the options. The call for evidence acknowledges that the suggested measures are not straightforward and come with operational and financial implications. The government says it's seeking to build the evidence base before deciding whether any changes in this area would be appropriate.
The call for evidence closes on 30 June 2025, but the pace at which the government plans to consider the case for change and take forward any of these pay transparency ideas is unclear. We expect a draft Equality (Race & Disability) Bill for consultation by Autumn this year. We'll see how committed the government is to introducing these pay transparency measures by whether they make it into that draft Bill.
The call for evidence can be downloaded here - call for evidence document: HTML - GOV.UK
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