Gender pay gap persistently high

Analysis conducted by Pinsent Masons on the latest gender pay gap data provided by large UK companies shows some, albeit limited, progress in reducing gender pay practices but that gaps in many sectors also remain persistently high. In 2024-25, the average hourly median pay gap was 11.28%, representing a decrease of almost 0.3% from the data reported in 2023-24.

The infrastructure sector reported the highest median hourly pay gap at 21.04% when compared to the financial services, energy, manufacturing, higher education and telecommunications sectors. This is a small decrease of 0.36% from the previous year. Similarly, the financial services sector reported a significant hourly median pay gap of 20.36% in 2024-25, which also represents only a slight decrease when compared against 2023-24.

Overall, the proportion of women that hold positions in the top quartile of salary ranges has continued to rise, reaching 41.71% in 2024-25. This continues the steady upward trend from 40.54% in 2021, 41.07% in 2022-23 and 41.38% in 2023-24, suggesting gradual progress in improving representation at senior levels. However, women make up a disproportionate share of lower-paid roles, accounting for 54.72% of employees in the lowest paid quartile. While this is a slight decrease of 0.14% from the previous year, it highlights that women remain overrepresented in lower-paid positions and there is still considerable work to be done to achieve true gender parity across all levels of the workforce.

Mandatory gender pay gap action plans

Since the introduction of mandatory gender pay gap reporting in 2017, most industries have shown a least a modest improvement in their figures compared to the 2017-18 baselines. While this suggests that regular reporting, combined with internal initiatives and public scrutiny, may be contributing to gradual progress, the reporting regime has often been criticised for its limited effectiveness in driving real change, particularly in compelling employers to take meaningful action. However, the proposed Employment Rights Bill (ERB) could mark a turning point.

Employers are not currently obligated to publish action plans outlining steps to address the gender pay gap. According to the explanatory notes to the ERB, only half of reporting employers have voluntarily published such plans. However, the ERB introduces a new requirement for larger employers – those with 250 or more employees – to publish gender pay gap action plans. Menopause action plans will also address the needs of women affected by menopause in the workplace. The UK government has also proposed to make ethnicity and disability pay gap reporting mandatory for larger employers, and draft legislation is expected soon. 

It is likely that employers will need to publish details of the specific measures they are taking to tackle gender pay disparities. These action plans hold potential to help close the gender pay gap, though their full impact will become clearer over time as they are implemented. Employers and their stakeholders need to find ways to hold themselves accountable for successful implementation of the action plan by making it a key metric of business success. Gender pay gap measurement is already globally recognised as a key metric of social impact as part of economic, social and governance (ESG) frameworks. Gender is the only pay gap metric included in the EU’s Corporate Sustainability Reporting Directive, which aims to improve and standardise how companies report on ESG issues

Additional gender pay equity measures proposed

Further developments across the UK and the EU signal a greater shift towards pay equity. Under the ERB, large employers will also be required to publish the identities of outsourced service providers. Outsourced service sectors are often staffed by lower-paid and disproportionately female workers. The government believes that greater transparency will pass on accountability for pay gaps that exist in employer supply chains and motivate efforts to improve gender equality in organisations to which employers are linked. Further legislative measures may follow as the government has also called for evidence on introducing equality measures to ensure that outsourcing cannot be used by employers to avoid paying equal pay. Outsourced workers may be able to draw equal pay comparisons with those working directly for the customer organisation.

In its call for evidence the government is also asking for views around mandatory pay transparency regulations. Measures to improve pay transparency can involve employers providing the specific salary or salary ranges of a job on the job advert or prior to interview and not asking candidates their salary history. This is intended to help women negotiate better salaries.

The call for evidence also outlines plans to establish a dedicated equal pay regulatory and enforcement unit, which would work alongside trade unions to strengthen enforcement mechanisms.

Meanwhile, in the EU, the EU Pay Transparency Directive introduces a range of measures aimed at promoting pay equality across member states, including gender pay gap reporting and pay transparency measures similar to those the UK is considering.  EU member states are required to transpose the directive into national law by June 2026. These requirements will have a direct impact on companies with operations in the EU, particularly in terms of compliance, reporting obligations and transparency in pay structures.

Together, these developments signal a shift toward more robust, data-driven approaches to tackle pay inequality.