Over 25 years advising on pay discrimination cases, for employers and employees alike, I’ve seen first-hand how much time, cost and reputational risk a poorly evidenced pay decision can create for a business. That’s why the Government’s new consultation on reforming the equal pay and pay discrimination framework deserves a close read from every HR and legal team, not once it becomes law, but now, while the shape of it is still being decided.
At present, sex-based pay claims are dealt with under the distinct equal pay provisions of the Equality Act 2010, while claims based on race or disability are brought as ordinary discrimination claims. The Government wants to bring the two regimes closer together, and in practical terms that means extending equal-pay-style obligations, audits, tribunal powers, evidential thresholds, to race and disability pay claims as well. For employers, that’s not a technical footnote. It’s a meaningful expansion of the equal pay regime.
What’s Actually Changing
The Government isn’t merging the two systems into one. Sex-based pay claims will still go through the equal pay mechanism, and race and disability pay claims will still be brought as ordinary discrimination claims. What’s changing is that both routes are being brought closer together in substance, so that the tools and remedies available to a claimant look broadly similar regardless of which characteristic is in play. For employers, that means the compliance and audit obligations currently associated mainly with equal pay are likely to extend to race and disability pay claims too.
The reform comes in two phases.
Phase one focuses on transparency and enforcement: a duty to publish pay information in job adverts or share it with candidates before interview, wider circumstances in which a tribunal can order an equal pay audit, and the return of a statutory questionnaire procedure for pay discrimination cases (scrapped back in 2013). Tribunals will be entitled to draw adverse inferences if an employer’s answers are vague, evasive or simply don’t arrive – an unwelcome prospect for employers already familiar with how costly and time-consuming the questionnaire process can be.
Phase two is the more structurally significant stage. Tribunals will gain the power to rewrite discriminatory contract terms in race and disability cases, much as they already can in equal pay cases. Race and disability pay claims will be allowed on the basis of work rated as equivalent or of equal value, rather than needing to be near identical, materially lowering the evidential bar for claimants. And, for the first time, limited hypothetical comparators will be introduced into equal pay claims themselves.
Why Employers Should Be Acting Now, Not Waiting for the Legislation
The consultation closes on 27 October 2026, and it’s tempting to treat that as the point at which this becomes relevant. Several of these proposals point clearly enough in one direction that employers are better placed getting ahead of them on their own terms:
- Pay transparency is coming, one way or another. Publishing salary ranges in job adverts is fast becoming the norm regardless of what the final legislation says. Get ahead of it now and it’s a managed change; wait, and it becomes a compliance scramble.
- The audit “get-out clauses” are shrinking. Almost every exception to the mandatory equal pay audit is being removed, bar one: having completed a compliant audit within the last three years. If you haven’t run one, or it’s been a while, this is your window to do it voluntarily, on your own terms, rather than under tribunal order.
- The material factor defence will face closer scrutiny. A new enforcement unit is expected to issue clearer guidance on what constitutes a defensible material factor. Employers should be reviewing now whether their pay differentials are properly evidenced, rather than assuming historical practice will hold up when tested.
- Outsourcing arrangements are now in scope. A proposed duty on all parties to an outsourcing contract to take reasonable steps to uphold pay equality has real implications for facilities, catering, cleaning and similar outsourced functions. Start the conversation with contractors and suppliers before any duty takes effect.
- Race and disability pay claims will become significantly easier to bring. Once claims can rest on equivalent or equal-value work rather than near-identical roles, the volume and viability of claims employers face is likely to increase. Don’t wait for phase two to test whether your own pay structures and job evaluation methodology would hold up.
Our Take
There is a clear direction of travel in these proposals. But getting the policy right and actually implementing it well are two different things, and that’s really what employers should be focused on.
A new enforcement body with real investigatory powers. A much bigger mandatory audit regime. Hypothetical comparators in equal pay claims. The return of the statutory questionnaire. Put together, that’s a lot more compliance work and a lot more litigation risk, and it won’t land evenly. The employers who’ve kept their pay governance in decent shape have the least to worry about.
That’s really the message we’d want employers to take from this: the businesses that come out ahead won’t be the ones with the strongest opinion on the policy, they’ll be the ones that treat this consultation period as advance notice and use the time before legislation lands to get their house in order.
We advise employers and, where instructed, employees on pay discrimination matters, and we’re well placed to help you prepare for what’s coming, whether that’s a pay audit, a review of your job evaluation scheme, a look at your outsourcing arrangements, or a response to the consultation itself.
The consultation is open until 27 October 2026. If you’d like to discuss how these proposals might affect your organisation, get in touch with our Employment team.
Dan Wilde is Head of Employment Law at Harding Evans. He has worked in employment law for over 25 years, representing clients across both the public and private sectors in high-profile, complex discrimination cases.
