Consultation on equal pay reform: strengthening protections against pay discrimination on the basis of disability and ethnicity

What recruiters need to know

The government has recently published a consultation proposing significant reforms to the equal pay system, including strengthening protections against pay discrimination on the basis of disability and ethnicity.

The consultation sets out a package of potential reforms that outline the government’s views on how equal pay protections should be strengthened, including for people working in outsourced arrangements. These proposals could therefore have implications for a range of working arrangements.

For recruiters, agencies, umbrellas, and labour providers, this consultation signals where government thinking is heading and where future obligations regarding equal pay may fall.

 

Context - what is equal pay?

Under the current equal pay framework, set out in the Equality Act 2010, men and women performing “equal work” must receive equal terms and conditions, including equal pay. Work is considered equal where it is “like work”, “work rated as equivalent” through a job evaluation scheme, or “work of equal value”.

The Government’s view is that this framework does not currently provide equivalent equal pay protections for race and disability, and that there are gaps relating to outsourced workers and enforcement.

 

Pay transparency

The government is proposing a new statutory requirement for all employers to publish information on pay and conditions in job adverts, in order to increase pay transparency. The consultation considers how detailed pay information should be required to be; for example, whether a pay range, specific salary, or benchmark rate should be required. In the absence of a job advert, the employer may be required to give this information in writing to the candidate before the job interview.

 

Standard questionnaire in pay discrimination disputes

The consultation also proposes introducing an optional questionnaire to be used in pay discrimination claims. A potential claimant would be able to use a prescribed form to ask the respondent – for example, an employer or agency - questions on relevant matters, during proceedings in a court or employment tribunal. This questionnaire would intend to help by promoting earlier resolution of possible pay discrimination disputes, and to reduce the number of spurious claims being brought forward.

 

Strengthened enforcement through Employment Tribunals

The consultation proposes new enforcement powers for Employment Tribunals, including mandating equal pay audits where discrimination is found, and mandating implementation of non‑discriminatory job evaluation schemes.

These changes, combined with the removal of a number of exceptions to regulations, could increase the number of equal pay audits.

 

A new Equal Pay Regulatory and Enforcement Unit

The Government proposes establishing a dedicated enforcement body, the Equal Pay Regulatory and Enforcement Unit, housed within either the Equality and Human Rights Commission or the new Fair Work Agency, with new investigatory powers. This signals a shift towards more proactive, targeted enforcement.

 

Levelling-up protections for race and disability

The consultation proposes to align race and disability pay discrimination rights with the sex‑based equal pay scheme.

They also propose to enable claims for pay discrimination where work is not materially similar but is “rated as equivalent” or of “equal value”, for race and disability.

Employers found to have discriminated in terms of pay on the basis of race or disability may be ordered to undertake an equal pay audit or job evaluation scheme.

 

Outsourcing and labour supply chains

The government say they aim to modernise equal pay protections to reflect current employment practices, without hindering the ability of employers to outsource services. They propose creating a duty on employers to take “all reasonable steps” to uphold pay equality in their contractual arrangements, including when outsourcing labour.

The term “outsourced workers” is used here to describe all workers whose labour is obtained by an organisation through one or more external intermediaries.

In such cases, more than one company could be classed as a principal in relation to a particular outsourced worker. The consultation also covers scenarios where workers may have been transferred from the principal to the external provider, as well as those where the workers have never been directly employed by the principal.

 

REC’s view is that, if the changes go ahead as proposed, the need for the outsourced party to take reasonable steps should, for the purpose of agencies, be limited to the agency obtaining pay information from the client.

The duty falls on the client to provide pay information which is consistent with equal pay. There should not be a need for agency workers to compare their work to workers in other undertakings.

 

What this could mean for recruiters

If taken forward as currently proposed, these changes could have significant impacts for recruiters. Job adverts, candidate communications and registration processes may need to be reviewed to reflect any new transparency requirements. Recruiters may also need to review their terms with clients and assignment processes to ensure pay information is provided where required and that temporary worker engagements comply with the new rules. A new enforcement unit may take a more proactive approach to investigating labour supply chains, meaning further compliance checks may be valuable.

 

REC’s actions

The REC have published our initial view on these proposals, and will respond to the consultation. We will continue to engage with government to ensure any future reforms are workable, proportionate, and support fair, flexible labour markets. We would value member input into this consultation - to provide your thoughts, contact Jacob.Flanagan@rec.uk.com.

 

The consultation closes on 27 October.