It’s time to close the gender pay gap – How should businesses do this?
For business owners already working to prepare for the announcements made in the Autumn Budget, it can feel like there is already a lot to juggle.
The Employment Rights Act is also beginning to take effect on a similar timeline, which could add to the current challenges.
However, knowing what changes are coming down the line could allow businesses to be more proactive and do more than just act for the sake of compliance.
While it is still only a voluntary measure, it may be worth businesses doing more to tackle the gender pay gap this year, ahead of the stricter legislation in 2027.
What is the gender pay gap?
There is some nuance to the definition of the gender pay gap that should be noted so businesses know what needs addressing.
Colloquially, the gender pay gap tends to refer to the notion that men will earn more money for the same job when compared to equally skilled and qualified women counterparts.
However, according to the Office for National Statistics, the UK Government define the gender pay gap as “the difference between median hourly earnings (excluding overtime) of men and women, as a proportion of men’s median hourly earnings (excluding overtime).”
The latest data centres on April 2025, where it was determined that the “median hourly earnings (excluding overtime) were £20.27 for men and £18.87 for women. The resulting gender pay gap for employees was 6.9 per cent.”
The gender pay gap has been decreasing over time and is smaller for younger employees, but its continued presence in society remains a barrier to social mobility and economic success.
What should businesses be doing to tackle the gender pay gap?
From April 2027, it will be necessary for all businesses to have a plan in place to tackle the gender pay gap.
However, it is possible to voluntarily create and enact a plan from April 2026 as per the Employment Rights Act.
Given that the gender pay gap is often the result of long-term decisions made in the workplace, it is not reasonable to assume that the problem can be solved quickly.
As such, giving your business as much time as possible to tackle the issue means you will be better positioned to be successful.
The best place to start would be a review of your payroll records.
This will allow you to determine whether there is a gender pay gap within your business.
It is also worth considering how promotions and pay rises are awarded and whether this is impacted by factors that could be beyond a person’s control.
The reason why the gender pay gap widens as employees get older is that birthing parents find that they miss out on opportunities due to taking time away for maternity leave.
While technically it is not legal to discriminate against someone for being pregnant, a person on maternity leave may miss out on a chance to demonstrate capability that could lead to someone else getting promoted in their stead.
The ongoing impact of menopause, another issue challenged by the Employment Rights Act, may also disadvantage some employees and lead to eventual disparities in pay.
If the time has come to adjust the pay you provide to employees, then we can help you to manage the impact this will have on your business’s finances.
We encourage all businesses to review their payroll early so that they can take control of tackling the gender pay gap before they are made to do so by the law.
For confidence in giving your employees the pay they deserve, speak to our team today.
