From 2026, UK employers face a step change in pay gap reporting. The Employment Rights Bill (ERB) is set to introduce new requirements, including mandatory gender pay gap action statements and broader Equality Action Plans for organisations with 250+ employees. But what does this mean in practice and how can HR leaders turn compliance into meaningful change?

Key changes in gender pay gap reporting

Mandatory action statements

From April 2026, employers will be encouraged to publish gender pay gap and menopause action plans. By April 2027, this becomes a legal obligation for larger employers. These plans must be published on both the employer’s website and the government’s gender pay gap reporting portal.

Menopause support

Action plans must outline how organisations support employees through menopause, reflecting a growing focus on wellbeing and inclusion. This includes policies, training and workplace adjustments.

Outsourced providers

Employers will also be required to name outsourced service providers in their gender pay gap reports, increasing transparency across supply chains.

Ethnicity pay gap

While not yet mandatory, ethnicity pay gap reporting is gaining traction as a voluntary best practice. RSM encourages employers to prepare for future expectations by improving ethnicity data quality and piloting internal reporting.

Why HR leaders should use pay gap reporting strategically

Forward-thinking organisations are using pay gap insights to drive their diversity, equity and inclusion (DEI) strategies. By analysing and acting on this data, they are building greater transparency and trust, improving employee engagement and enhancing their reputation with stakeholders. In turn, these efforts contribute to better talent retention and attraction and progress on broader sustainability and social impact goals.

For many, pay gap reporting is more than a tick-box exercise; it’s a reflection of values and a commitment to fairness.

Common myths about the gender pay gap

Myth 1: Equal pay = no gender pay gap

Not true. Equal pay means same job, same pay. 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: It’s just about base salary

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

What should your action plan include?

Regulators and stakeholders expect clear, measurable plans to reduce the gap and promote gender equity. 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.

Integrating menopause support into DEI strategies

Menopause support is now recognised as a critical component of gender equality. Employers should establish menopause-friendly policies that detail flexible working arrangements, available support services and workplace adjustments. Organisations should also train managers for empathetic conversations and run awareness campaigns to reduce stigma, while integrating menopause support into broader wellbeing and DEI strategies.

Menopause support is not just a wellbeing issue, it’s a legal and reputational risk if ignored.

Ethnicity pay gap: preparing for voluntary reporting

Before reporting, assess the quality and completeness of your ethnicity data by conducting a data audit and gap analysis to spot inaccurate and missing information. Then create a plan to improve how this data is collected and managed. You can also test your approach by running an internal trial or mock report to understand your organisation’s baseline position and identify any issues before external reporting.

What do the new pay gap numbers say?

UK Gender Pay Gap (2024):

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

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

Long-term outlook:

The gender pay gap has declined by ~25% over the past decade, but projections suggest it may not fully close until 2044.

• The gender pay gap means that, from 20 November, women are effectively working for free compared to men. How can we change this?

What should people leaders do next?

• 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, what is their gender pay gap, and how might it affect your reporting obligations?
• Engage internal stakeholders, including HR, legal and leadership teams, to ensure readiness for compliance.

If you’re a provider yourself, consider how your own gender pay gap figures may affect your ability to win or retain contracts.

A win-win for compliance and culture

More than a compliance exercise, the Equality Action Plan requirement is a chance to embed intentional inclusivity into your organisation’s culture.

Organisations can use Equality Action Plans strategically by analysing root causes of pay gaps, implementing targeted interventions like mentoring and flexible working, making data-driven decisions using workforce analytics, and communicating transparently internally and externally to enhance trust and employer brand.

How we can help

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

• 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 diversity, equity, and inclusion (DEI) initiatives.

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

Related insights