Gender pay gap reporting is entering a new phase. The government, employees, investors and other stakeholders increasingly expect organisations to not only report their figures but also demonstrate how they intend to address gaps.

Employers with 250 or more employees can now publish voluntary Equality Action Plans through the government's Gender Pay Gap Reporting Service, alongside their annual gender pay gap submission. The government has indicated that publishing an Equality Action Plan is expected to become a mandatory requirement from April 2027. This reporting change marks an important shift towards greater transparency and accountability, allowing organisations to explain the factors behind their results and set out meaningful actions to improve gender equity.

The government has also published a framework and guidance to help employers prepare their action plans, including a step-by-step process and a list of evidence-based actions that employers can select from.

With increasing government focus on workplace compliance and transparency, organisations should expect greater scrutiny of pay gap reporting requirements and the actions taken to address identified disparities. HR leaders should see this change as an opportunity to move beyond compliance and use pay gap reporting as a strategic tool for demonstrating commitment, building trust with employees and driving organisational change.

Why is gender pay gap reporting no longer just a compliance exercise?

Publishing pay gap figures is only the starting point to improving equity. Organisations are increasingly expected to provide context around their results and demonstrate the practical steps they are taking to reduce pay disparities.

The government’s voluntary Equity Action Plan helps employers to share this detail, encouraging them to outline:

• The key factors contributing to their gender pay gap
• Actions already taken to improve gender equality
• Planned initiatives and measurable objectives
• Progress against previous commitments.

Why HR leaders should think strategically about pay gap reporting

Forward-thinking organisations are using pay gap reporting to support wider diversity, equity and inclusion (DEI) objectives. By analysing workforce data and implementing targeted interventions, employers can:

• Improve representation at senior levels.
• Strengthen recruitment and promotion practices.
• Increase employee engagement and trust.
• Enhance employer brand and reputation.
• Support talent attraction and retention.
• Demonstrate commitment to responsible business and ESG objectives.

Common myths about the gender pay gap

Myth 1: Equal pay = no gender pay gap

Equal pay means people doing the same job receive the same pay and is a legal requirement in the UK. Gender pay gap reporting looks at average earnings across the organisation, often revealing disparities due to underrepresentation in senior roles.

Myth 2: The data speaks for itself

Numbers alone don’t tell the full story. A widening gap might reflect positive change, such as hiring more women into entry-level roles. A narrative and action plan are essential to interpret figures and demonstrate accountability.

Myth 3: Gender pay gap reporting just looks at base salary

Bonuses, allowances and salary sacrifice schemes all play a role. Accurate reporting demands careful data validation and a robust methodology.

What should an Equity Action Plan include?

An effective action plan clearly explains the cause of any pay gaps, what the organisation will do to address them and how it will measure progress.

Under the current voluntary framework, eligible employers choose at least two actions: one focused on reducing the gender pay gap and another on supporting employees experiencing menopause. The government has published 18 recommended evidence-based actions that employers can use when building their plan. While the mandatory requirements will be confirmed through secondary legislation, this framework implies the minimum structure and level of detail employers should prepare for now.

To prepare for the increased level of reporting and take action to improve gender equity in the company, employers should consider:

• Reviewing recruitment and promotion practices for inclusivity
• Introducing flexible working policies
• Enhancing parental leave and return-to-work support
• Developing leadership pathways for women and underrepresented groups
• Monitoring performance and reward systems for bias
• Including outsourced provider data and accountability measures.

Supporting women throughout their careers

Many organisations recognise that supporting employees through various life stages contributes to greater gender equality.

As part of the Equity Action Plan, employers are encouraged to include at least one action relating to menopause, reflecting growing recognition of the impact this can have on employee wellbeing, retention and career progression.

These actions may include:

• Developing or reviewing menopause guidance.
• Providing training for managers to increase awareness and confidence when supporting colleagues experiencing menopause.
• Promoting flexible working arrangements or reasonable workplaces adjustments where appropriate.
• Improving access to wellbeing resources and employee support services.
• Raising awareness through internal communications and education initiatives to reduce stigma.

Employers should make sure any menopause commitments included within their Equity Action Plan are meaningful, proportionate and capable of being monitored over time.

How should employers prepare for ethnicity pay gap reporting?

Although ethnicity pay gap reporting remains voluntary many organisations are taking steps now to build confidence in their data and prepare for the introduction of mandatory reporting requirements.

A good starting point is to assess the quality and completeness of ethnicity data by:

• Conducting a data quality review
• Identifying gaps in employee disclosure
• Improving data collection processes
• Producing internal trial reports to understand current position
• Developing governance around ethnicity reporting.

What do the latest UK gender pay gap statistics show?

In 2024, the UK Gender Pay Gap showed:

• Median gap among full-time employees: 7.0% (down from 7.5% in 2023)
• Median gap among all employees: 13.1% (down from 14.2% in April 2023).

The gap is larger for employees aged 40+ and across high-earning roles.

It means that, from 20 November in a given year, women are effectively working for free compared to men.

Although the gender pay gap has declined by ~25% over the past decade, projections suggest it may not fully close until 2044. Businesses have the influence to accelerate this change and make more supportive working environments a compelling driver of employee trust.

What should people leaders do next?

To take meaningful steps to close gender pay gaps, organisations should consider these steps:

• Review your gender pay gap data, including recruitment, promotion and pay trends.
• Assess existing action plans – are they evidence-based, measurable and aligned with business strategy?
• Develop or update menopause policies and consider awareness training for managers and staff.
• Consider voluntary ethnicity pay gap reporting.
• Evaluate outsourced providers to assess their gender pay gap and how might it affect your reporting obligations?
• Engage internal stakeholders, including HR, legal and leadership teams, to make changes now that will help you be compliant for future requirements.

How gender pay gap reporting can improve compliance and workplace culture

Through voluntary Equity Action Plans, organisations now have an opportunity to demonstrate how they are addressing the underlying causes of inequality.

By combining robust data analysis with transparent action planning, employers can strengthen stakeholder trust, support a more inclusive workplace and demonstrate genuine commitment to gender equity.

Those organisations that embrace this opportunity now will be well positioned when action plans become a mandatory element of gender pay gap reporting from 2027/2028.

How we can help your business prepare

We offer tailored support to help organisations prepare for and comply with the new gender pay gap reporting requirements. This includes:

• Pay gap audits and analysis to identify trends and root causes.
• Equality Action Plan development, aligned with business goals and legal obligations.
• Menopause policy reviews and training for managers and staff.
• Outsourced provider assessments to support supply chain transparency.
• HR system optimisation for secure data collection and reporting.
• Strategic support on DEI initiatives.

For more information, please get in touch with Sharon Broughton or your usual RSM contact.

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