Effective from January 1, 2024, the UK’s Equality Act has been amended. Equality Act 2010 Amendment Regulations retain elements of EU law relating to specific discrimination protections. These would otherwise expire under the Retained EU Law (Revocation and Reform) Act 2023.
Below, we summarize the key points of the amendments, and consider potential future changes to UK gender pay gap reporting. Amendments are intended to maintain, rather than change, existing legislation.
Pregnancy and maternity rights:
- Women must be given special treatment relating to childbirth, pregnancy, or maternity rights, i.e., through enhanced occupational schemes. They are also protected against pregnancy and maternity discrimination at work.
- Women without statutory rights to maternity leave are also protected where they have similar rights under alternative occupational schemes.
- Protection also applies to women experiencing unfavorable treatment after their return from maternity leave if that treatment is related to pregnancy or a pregnancy-related illness occurring before their return.
- Less favorable treatment regarding breastfeeding in the workplace constitutes direct discrimination based on sex.
Indirect discrimination by association refers to individuals without a relevant protected characteristic who suffer similar disadvantages due to employer policies.
Extended definition of disability discrimination: Ensures that disability includes a person’s ability to participate in working life on an equal basis when considering “day-to-day activities”.
Single source tests: A “single source test” for equal pay comparators is confirmed. It means that employers do not have to work for the same employer to make an equal pay comparison. Single source provision forms the basis of several equal pay claims in the UK. These include claims against retail chain Next, and Birmingham City Council, among others.
Protections relating to discriminatory recruitment conditions are also included in the amendments.
Equality and Human Rights Commission raises concerns
Concerns have been raised about limited opportunities for scrutiny, not least from the Equality and Human Rights Commission (EHRC). The EHRC is committed to monitoring the impact of Equality Act 2010 Amendment Regulations. Its website states:
“While we welcome the government’s intention to maintain these protections, it is desirable that Parliament and other stakeholders have sufficient opportunity to scrutinize any proposals to avoid unintended consequences, such as through primary legislation.”
To a degree, EHRC caution is justified. The UK, once an innovator in pay gap reporting, is now falling behind its European neighbors. The future for UK pay transparency is also in doubt. Only half of all job listings include salary information, and a salary transparency pilot has been quietly dropped.
EU Law in the UK
Nearly 600 pieces of EU-derived legislation were due to be revoked on December 31, 2023. The power to prevent them from being revoked expired in October 2023.
As EU law in the UK is revoked, EU employers are preparing to comply with the Pay Transparency Directive. Key points of legislation include the requirement for a Joint Pay Assessment for unjustified pay gaps of 5% or more, and publication of gender pay gap reports. Pre-employment requirements include a salary history ban, and full salary transparency. Criteria used to determine pay levels and progression must also be made easily accessible to employees.
What’s next for UK gender pay gap reporting?
Uncertainty over Equality Act 2010 Amendment Regulations and post-Brexit equal pay protections persists, but change may be on the horizon. A UK general election must take place by no later than January 28, 2025. If elected, the Labour Party’s New Deal states the party will:
- Commit to tackling the UK’s gender pay gap. Office of National Statistics (ONS) data shows a pay gap of 14.3% among all employees in 2023.
- Implement a regulatory and enforcement unit for equal pay with involvement from trade unions.
- Require large companies to develop, publish and implement action plans to close their gender pay gaps. Employers would be required to include outsourced workers in pay data reports.
- Introduce mandatory ethnicity and disability pay gap reporting for organizations with more than 250 employees. Reporting on ethnicity pay gaps is currently voluntary.
- Introduce a Race Equality Act to address endemic issues such as low pay for ethnic minorities.
While not as comprehensive as the EU Pay Transparency Directive, these proposals are more rigorous than current legislation. In addition, they encompass steps towards pay transparency that go beyond gender pay gap reporting.
Staying ahead in the post-Brexit era
Closing the gender pay gap isn’t just about complying with legislation. Best-in-class employers commit to pay equity for the additional benefits it brings. Companies can take the initiative:
Hire and retain talent: Many UK sectors are facing a growing skills shortage which is predicted to continue in 2024. As well as attracting talent, HR’s focus is turning to retention. Nearly a quarter of workers intend to change jobs in the first six months of 2024. With one of Europe’s most dissatisfied workforces, employers can harness the benefits of pay equity to improve engagement and retention.
Differentiate your brand: UK employers operating in the EU may consider adopting Pay Transparency Directive requirements across their entire organization. A similar approach may also benefit businesses required to comply with the EU’s CSRD. UK companies are among the 10,000 non-EU organizations affected by sustainability reporting requirements. The first reports for foreign companies with more than 500 EU-based employees are due in 2025.
Begin with a pay equity audit: The UK’s Chartered Institute of Personnel and Development (CIPD) recommends employers check for transparency in pay structures. Suspected problems can be identified by an audit, and an action plan created to correct unjustified pay disparities. The UK must also consider an additional, unique factor in evaluating pay inequities; the class pay gap. Data suggests employees from working-class backgrounds are now paid 12% less per year than their more privileged colleagues.
Trusaic Payparity carries out a pay equity audit at the intersection of factors including race/ethnicity, age, disability and more.
Act on equal pay in your organization. Speak to one of our pay equity experts today.
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