Equal pay is an increasingly high profile issue for employers with a noticeable rise in equal pay claims in the private sector in the UK. This was underscored recently in a high profile case estimated to result in around £30 million in backpay.
With the implementation of the EU Pay Transparency Directive on the horizon, and the UK’s Labour government proposing to expand the right to equal pay to ethnic minorities and those with disabilities, this is a topic that employers can’t ignore.
Link to Tune in HERE as we explore some tricky points and key takeaways that apply for UK and multinational employers. Tune in HERE as we explore some tricky points and key takeaways that apply for UK and multinational employers.
Link to Background and References Background and References
- The EU Pay Transparency Directive mandates equal pay for equal work and will be enforced across EU member states starting June 7, 2026, with the first reports due by June 7, 2027. Notably, the PTD requires extensive reporting on pay gaps and mandates transparency in pay structures. Employers will need to assess all roles for equal value and publish detailed information on any identified pay gaps. Joint pay assessments with employee representatives will be triggered if gaps of 5% or more are found. Additionally, the PTD prohibits asking job applicants about their pay history and requires employers to provide clear criteria for pay determination, accessible to both workers and their representatives. Reporting thresholds vary according to employer headcount, with annual or triennial reporting obligations for those with 100 or more employees. The PTD also demands public disclosure of pay gap data and remediation of unjustified differences in pay.
- The Corporate Sustainability Reporting Directive is the new and expanded version of the existing EU ESG reporting directive (the so-called Non-Financial Reporting Directive). In-scope businesses will need to report on cross-cutting ESG issues, and to make specific disclosures in relation to a wide range of issues such as labor relations, lobbying activities, climate neutrality plans and targets, etc. It mandates that companies report on their pay practices, including the gender pay gap. This involves breaking down the average gender pay gap by employee category and distinguishing between full-time and part-time workers. Additionally, companies must disclose any actions taken to rectify pay difference. More than 50,000 EU and non-EU companies are covered, including a very large number of US-headquartered companies.
- The new UK Employment Rights Bill includes a provision requiring large employers (one employing 250 employees or more) to produce annual equality action plans on how to address their gender pay gaps and on how they will support employees through the menopause.
For support conducting proactive pay equity analyses or equal pay audits, understanding your pay transparency obligations globally, and fulfilling your reporting obligations, please contact your Baker McKenzie employment lawyer.