In his recent article for ICAEW, Simon Cook explains the practical implications of new rules on publishing gender pay gap action statements and equality action plans. Find out about the role of finance teams and how to ensure meaningful change.
Key takeaways:
- Organisations with 250 employees will need to publish mandatory gender pay gap action statements and equality action plans in 2027.
- Plans will need to include evidence-based actions and likely causes of pay gaps.
- Data-led approach is vital. Finance teams have key role in ensuring quality of information and in analysing trends.
- Finance teams can also ensure planned actions are deliverable and achieve meaningful change.
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
- pay quartile distribution
They should also identify the likely causes of the gap, and each action should include a realistic timeline with clear rationale and measurable outcome.
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.
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.
Overcoming potential sticking points
Poor data quality or limited insight can make it difficult to pinpoint root causes, while unclear accountability can slow progress.
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. They play a key role in ensuring meaningful change rather than box-ticking, and avoiding a one size fits all actions that look good on paper but don’t tackle the real issues.
Finance can also support by:
- reviewing promotion criteria
- auditing bonus decisions
- tracking progression rates by gender
- analysing maternity returner retention
- training managers on inclusive progression decisions
- reviewing how high-value work and client opportunities are allocated.
Before embarking on expanded reporting, 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?
If you've been left with more questions than answers, we're here to help! Get in touch with Simon and the team today.
