UK employers face a step change in pay gap reporting as the Employment Rights Act 2025 has introduced new requirements that shift the dial from reporting pay gap numbers to addressing the causes and explaining the actions they intend to take to address equality.

Large employers with 250 or more employees already have to publish gender pay gap data and many already provide a narrative explaining pay gaps and steps being taken to address them in their annual report. From 2027 – expected from spring and subject to secondary legislation – these organisations will be required to produce gender pay gap action statements and broader equality action plans.

These documents should explain the reasons why a pay gap exists, provide evidence of actions taken to close the gap and set targets to reduce the gap further. Employers must also publish their support plans for employees experiencing menopause.

What info should action statement and plans include?

Effective gender equality action plans move beyond intent and set out clear, evidence-based actions tailored to the organisation. They will usually include a clear narrative explaining the figures, including:

• mean and median pay gaps,
• bonus gaps,
• bonus participation, and
• pay quartile distribution.

They should also identify the likely causes of the gap, explains Nick Henderson-Mayo, Head of Compliance at VinciWorks. “For example, is the issue underrepresentation of women in senior or higher-paid roles, lower bonus participation, occupational segregation, part-time penalties, progression barriers, return-to-work issues after maternity leave, or a lack of flexible working in senior roles?” He says.

Each action should include a realistic timeline with clear rationale and measurable outcome. “Organisations should analyse how women and men are distributed across different pay levels, as imbalances often stem from recruitment into junior or senior roles,” says Sheila Attwood, Senior Content Manager, Data and HR Insights, at Brightmine.

To help employers take effective action, the government has provided a list of recommended, evidence-informed actions that they can include in their plans relating to recruitment, promotion, gender representation and pay transparency.

Menopause is another important factor, with potential impacts on attendance, performance and wellbeing, especially if support is inconsistent or not formalised, Attwood adds. “A concise narrative that links workforce data, key challenges and intended outcomes signals a genuine commitment to change, rather than a compliance exercise.”

How should you collect the information?

A data-led approach is essential. Employers should draw on a broad range of data including pay gap figures, recruitment, progression and retention trends, analysed by gender and other relevant factors, such as job level or length of service. “Recruitment and promotion outcomes, uptake of flexible working, performance ratings, and grievance or disciplinary patterns can all add important context,” Attwood says.

Combining this with qualitative insights, from staff surveys, exit interviews and outcomes for part-time employees helps keep actions relevant, targeted and focused on lasting change. For menopause action plans, practical insight from wellbeing teams and occupational health can be just as important as headline absence data.

Collecting information requires structured cross-function collaboration, Henderson-Mayo says. “HR will usually hold data on workforce demographics, job levels, recruitment, promotion, and retention. Payroll and finance will hold the pay, bonus, overtime, allowance, and reward data needed to accurately calculate the figures. Legal and compliance should help ensure the methodology is defensible, the narrative is carefully framed, and personal data is handled appropriately.”

Overcoming potential sticking points

Poor data quality or limited insight can make it difficult to pinpoint root causes, while unclear accountability can slow progress. Investing in better data collection can help. “Training managers, involving employees in shaping actions and piloting initiatives before scaling them up will help ensure efforts are both practical and effective,” Attwood says.

Action plans also become another compliance exercise if ownership isn’t clear, says Katherine Flower, a Partner in the employment team at law firm Burges Salmon. “The employers who are likely to be most successful will use this period before the plans become mandatory in 2027 to test what works, get leadership buy in early and build action planning into wider workforce strategy.”

Bear in mind that the reasons for a pay gap may shift over time based on action taken and workforce movements. “This will require organisations to carry out multiple data tests to identify the causes, re-checking these each year to understand the impact on the pay gap,” says Simon Cook, Lead Consultant at reward consultancy Innecto.

The role of finance

In addition to ensuring that pay data is accurate and robust, finance teams are often key to understanding trends or anomalies in the figures that will help employers investigate the potential issues they face in reducing their pay gap, Flower says.

Finance teams can also assess the cost and sustainability of proposed actions, so plans are deliverable rather than aspirational. “They can also provide valuable insight into trends and support scenario planning to assess the potential impact of different actions,” Attwood adds.

Ensuring meaningful change rather than box-ticking

A common challenge is avoiding one size fits all actions that look good on paper but don’t tackle the real issues. Flower says: “The purpose of action plans is to shift the focus from ‘what is our pay gap?’ to ‘what are we doing about it?’.

“That only happens if plans treated as living documents, with specific goals where progress can be monitored and measured, and there is clear ownership for their implementation.”

To support cultural change within an organisation, action plans will require commitment from senior leadership and honest communication with employees. Vague commitments to “support women’s progression” will not be enough, Henderson-Mayo warns.

Stronger actions might include:

• reviewing promotion criteria,
• auditing bonus decisions,
• tracking progression rates by gender,
• analysing maternity returner retention,
• training managers on inclusive progression decisions, and
• reviewing how high-value work and client opportunities are allocated.

The key questions for organisations to consider are:

• What does the data show?
• Why is it happening?
• What are we doing about it?
• How will we know if it is working? 

“Employers that can answer those four questions credibly will be in a much stronger position when action plans become mandatory,” says Henderson-Mayo. “They will be better placed to show employees, regulators and stakeholders that pay gap reporting is driving real workplace change.”