Warner Goodman Solicitors banner
Services
People
News and Events
Other
Blogs

I wonder How the Employment Rights Bill Will Transform Diversity, Pay Gap Reporting, and Workplace Flexibility in the UK

  • Posted
  • Author

As we progress through 2025, the UK employment law landscape is on the verge of substantial change. The proposed Employment Rights Bill (ERB) introduces several transformative measures aimed at reducing workplace inequality, enhancing pay transparency, and improving access to flexible working arrangements.

In this article, we explore how the ERB and related proposals will impact gender and ethnicity pay gap reporting, discrimination law, and family-friendly employment policies, offering practical advice for UK employers to stay ahead of the curve.

Gender Equality in the Workplace: Key Challenges

Despite ongoing discussions and policy developments, gender inequality remains a serious issue - particularly in traditionally male-dominated industries like the legal sector. Women continue to be under-represented in senior roles and often face significant pay disparities and barriers to progression.

According to the Trades Union Congress (TUC), the average woman in the UK effectively works for free for 48 days a year compared to the average male salary. While mandatory gender pay gap reporting for employers with over 250 staff has been in place since 2017, compliance and enforcement remain patchy. In 2022/23, the Equality and Human Rights Commission (EHRC) issued 732 warning notices to organisations that failed to comply with pay gap reporting and respire regulatory requirements.

Mandatory Gender Pay Gap Action Plans

A central feature of the proposed ERB is the requirement for large employers to publish not only gender pay gap data but also mandatory gender pay action plans. While some businesses already produce these voluntarily, the Bill aims to make them a legal requirement, ensuring that reporting translates into meaningful change.

Ethnicity Pay Gaps: Addressing Intersectional Inequality

The issue of pay inequality is compounded for women from ethnic minority backgrounds. The Fawcett Society's "Double Trouble" report highlights concerning statistics:

  • Over 50% of Black women surveyed reported earning less than white colleagues for the same role.
  • Bangladeshi women earn 14.7% less than white British women and 28.5% less than white British men.

Although ethnicity pay gap reporting is currently voluntary, the government has released guidance to encourage greater transparency. Although the ERB does not yet legislate on this issue, the forthcoming Equality (Race and Disability) Bill is expected to address it.

Proposed measures under this Bill include:

  • Mandatory ethnicity and disability pay reporting for employers with 250+ employees;
  • Simplified procedures for bringing equal pay claims based on race or disability;
  • Proactive employer responsibilities to address race and disability pay disparities.

If implemented, these reforms would align ethnicity and disability pay reporting with the existing gender pay gap framework, advancing efforts to eliminate intersectional workplace inequality.

The Motherhood Penalty: Rebalancing Work and Care

A major contributor to pay and progression gaps is the so-called motherhood penalty. Women continue to face discrimination during pregnancy, maternity leave and upon returning to work, despite protections under the Equality Act 2010.

A 2024 report by the Fawcett Society revealed:

  • One-third of parents in England struggle to afford childcare;
  • Around 250,000 mothers have left their jobs due to childcare pressures or work-family conflict.

While the ERB does not directly address childcare affordability, it coincides with growing parliamentary discussions on:

  • Increased access to affordable Early Childhood Education and Care (ECEC);
  • Shared parental leave policies that promote equal parental participation;
  • Support measures for mothers returning to the workplace.

Flexible Working as the Default: A Shift in Workplace Culture

Since April 2024, employees have had the day-one right to request flexible working. However, many argue this does not go far enough. The ERB proposes to make flexible working the default position for all roles, representing a potential paradigm shift in UK employment law.

If passed, this change would require employers to justify why a role cannot be performed flexibly, placing the onus firmly on the employer rather than the employee.

Looking Ahead: What Should Employers Be Doing?

While many of the proposed reforms will not take effect until 2026, businesses must begin preparing to ensure legal compliance and maintain workplace competitiveness.

Here's how UK employers can get ready:

  1. Audit pay gap reporting – Ensure compliance with current gender pay gap requirements and consider voluntary ethnicity and disability pay gap reporting.
  2. Develop diversity and inclusion action plans – Make them specific, measurable and regularly reviewed.
  3. Train managers and HR leaders – Help them understand and address unconscious bias in promotions, pay, and work allocation.
  4. Support flexible working proactively – Embed flexible arrangements into job design and recruitment.
  5. Invest in return-to-work support and childcare solutions – Improve retention and attraction of working parents.

These steps will help future-proof organisations and demonstrate a commitment to equity and inclusion in the workplace.

The Make Work Pay Programme: Supporting Employers Through Change

With sweeping legislative changes on the horizon, Warner Goodman has developed the Make Work Pay Programme - a structured, fixed-price service helping employers navigate the evolving legal landscape.

Delivered over six months, this expert-led programme equips UK businesses with the tools and guidance to implement best practices and remain fully compliant with the incoming legislation.

Need Support with Employment Law Compliance?

If you need advice on how the Employment Rights Bill or related reforms could affect your business or if you'd like support reviewing your policies, our expert Employment Law Team is here to help.