Mandatory action plans could reshape gender pay reporting

An analysis by Pinsent Masons of the most recent gender pay gap data published by large UK employers shows that progress toward reducing pay inequality between men and women is happening, but remains slow and uneven across industries.

For 2024–25, the average median hourly gender pay gap was recorded at 11.28%. This represents a reduction of almost 0.3% compared with the 2023–24 reporting cycle. While this is a modest improvement, the figures suggest that structural inequalities persist and remain deeply embedded across many sectors of the economy.

Some industries continue to show far wider gaps than others. The infrastructure sector reported the highest median hourly gap at 21.04%, only a marginal decrease of 0.36% from the previous year. Financial services followed closely, with a gap of 20.36%, again reflecting only a slight year-on-year improvement. Energy, manufacturing, higher education, and telecommunications also report persistent disparities, though to varying degrees.

Representation in Senior and Lower-Paid Roles

One positive trend can be seen in the proportion of women occupying the top quartile of salary ranges. In 2024–25, women made up 41.71% of the highest-paid roles. This builds on the steady upward trend over recent years: 40.54% in 2021, 41.07% in 2022–23, and 41.38% in 2023–24. The figures suggest a gradual improvement in women’s representation at senior levels.

However, this progress is undermined by the fact that women continue to be disproportionately represented in the lowest-paid positions. In the most recent reporting year, 54.72% of employees in the bottom quartile were women. Although this represents a very slight reduction of 0.14% compared to last year, it highlights the persistence of occupational segregation and the challenges in ensuring fair progression opportunities throughout the workforce.

The Role of Mandatory Action Plans

Since mandatory gender pay gap reporting was introduced in 2017, most industries have shown at least incremental improvement when compared with their 2017–18 baselines. This suggests that public reporting, combined with employer-led initiatives and wider scrutiny, has encouraged change. Nevertheless, the framework has faced criticism for lacking sufficient enforcement powers, particularly because employers have not been required to explain how they intend to address disparities.

The proposed Employment Rights Bill (ERB) could change this dynamic significantly. At present, fewer than half of reporting employers voluntarily publish action plans outlining steps to reduce the gender pay gap. The ERB would make such plans mandatory for large employers – defined as those with 250 or more employees. This would mark a shift from transparency alone toward accountability, as businesses would need to set out concrete measures and track their progress.

The ERB also proposes the introduction of menopause action plans, aimed at ensuring that workplaces better support women affected by menopause. Alongside this, the government has signalled its intention to make ethnicity and disability pay gap reporting mandatory, with draft legislation expected in the near future.

Strengthening Accountability and ESG Alignment

If implemented, the new requirements will oblige employers not only to publish their gender pay data but also to detail the measures they are taking to close the gap. Over time, the publication of these plans could serve as a benchmark of business success and an indicator for investors, employees, and other stakeholders.

Globally, gender pay gap reporting is already recognised as a key metric within environmental, social and governance (ESG) frameworks. Notably, gender is the only pay gap category specifically included within the EU’s Corporate Sustainability Reporting Directive. By making action planning mandatory, the UK government would be aligning reporting practices more closely with international ESG standards.

Wider Measures for Pay Equity

The ERB also contains measures that extend beyond gender pay gap reporting. Employers with large workforces will be required to disclose the identities of outsourced service providers. Outsourced roles are often filled by lower-paid, predominantly female workers, meaning that outsourcing can obscure pay inequalities. The government hopes greater transparency will expose these disparities and prevent businesses from using outsourcing to sidestep equal pay obligations.

The government has further launched a call for evidence on potential equality measures. This includes proposals for mandatory pay transparency, such as requiring salary ranges to be listed in job adverts and banning employers from asking candidates about their salary history. Such measures aim to reduce information asymmetries during recruitment and help women negotiate pay on a more equal footing.

Another proposal is the creation of a dedicated equal pay regulatory and enforcement unit. This body would work with trade unions and other stakeholders to strengthen compliance and ensure that obligations translate into real improvements.

Developments in the EU

The UK is not alone in pursuing stronger pay transparency. The EU Pay Transparency Directive, adopted in 2023, requires member states to transpose its provisions into national law by June 2026. Like the UK’s proposals, it mandates gender pay gap reporting and introduces pay transparency obligations. For companies operating across the EU, compliance with these rules will become a pressing priority over the next few years.

A Shift Toward Robust Data-Driven Regulation

Together, these developments in the UK and EU suggest a move toward more structured and data-driven strategies for tackling pay inequality. While progress to date has been limited, the combined effect of mandatory reporting, action planning, and greater transparency could accelerate meaningful change. Over time, the challenge will be not only to measure gaps but also to ensure that reporting requirements translate into measurable improvements in workplace equality.

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