article / 27th May 2026

Gender Pay Gap Reporting: a practical guide for UK SME employers

SECTION GUIDE

Gender Pay Gap Reporting is a critical issue for UK employers, highlighting differences in average pay between men and women across an organisation. While it is currently a legal requirement for employers with 250+ employees, the importance of Gender Pay Gap Reporting is increasing rapidly for SMEs-particularly in light of the upcoming Employment Rights Act reforms.

From 2027, employers will not only need to report their gender pay gap data but also publish clear action plans explaining how they intend to address it. This represents a significant shift from transparency alone to accountability and measurable change.

For SME business owners and HR leaders, this means preparing now. Even if your organisation is below the reporting threshold, expectations from employees, clients and regulators are moving in the same direction.

In this guide, we explain what Gender Pay Gap Reporting involves, why it matters more than ever, how upcoming legal changes will impact employers, and what practical steps SMEs should take to stay compliant and competitive.

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What is Gender Pay Gap Reporting?

Gender Pay Gap Reporting is the process of measuring and publishing the difference in average earnings between male and female employees across an organisation.

Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, employers with 250 or more employees must report annually on:

Mean and median gender pay gaps

Bonus pay gaps

The proportion of men and women receiving bonuses

Pay distribution across quartiles

This differs from equal pay, which ensures men and women are paid equally for the same work. Gender Pay Gap Reporting looks at overall workforce pay distribution.

Gender Pay Reporting

What’s changing under the Employment Rights Act?

Historically, reporting has focused on publishing data. However, new government guidance confirms a clear shift:

From April 2026: Employers can voluntarily publish action plans alongside their data

From 2027: Action plans will become mandatory for employers with 250+ employees.

These action plans must set out the steps employers are taking to reduce their gender pay gap and improve workplace equality.

This change reflects a move away from simply reporting figures towards demonstrating real, measurable progress.

Why Gender Pay Gap Reporting matters for UK businesses

A shift from reporting to accountability

Previously, employers could publish data without explaining it. Under the new framework, this will no longer be enough. Employers will need to show what action they are taking to address pay gaps, making Gender Pay Gap Reporting a strategic business issue rather than a compliance exercise.

Key business impacts include:

Talent attraction and employer brand

Candidates increasingly assess employers based on fairness and transparency. Organisations that publish clear data and action plans are more attractive to diverse talent.
Employee engagement and retention

Employees are more likely to trust and stay with organisations that demonstrate fairness and take action on inequality.
Legal and compliance risk

Gender pay gaps can highlight underlying equal pay risks. With stronger enforcement expected, unresolved gaps may lead to claims.
Reputational exposure

From 2027, action plans will be publicly available alongside pay data, increasing scrutiny from stakeholders.
Commercial competitiveness

Many clients and partners now assess suppliers based on ESG and diversity metrics, including gender pay transparency.
Real-world implication

An organisation that publishes a gender pay gap without an action plan may be seen as passive. From 2027, this will not be acceptable, employers must demonstrate how they are actively closing the gap.

Gender Pay Reporting

Current requirements

Employers with 250 or more employees must:

Publish annual Gender Pay Gap Reporting data

Submit data to the government portal

Provide a signed accuracy statement

New requirements from 2027

Under the Employment Rights Act 2025:

Employers must publish gender equality action plans alongside their gender pay gap data

These plans must outline specific, measurable actions to reduce pay gaps

Plans will be publicly accessible and subject to scrutiny

This represents a major shift from reporting to mandatory action and accountability

What action plans must include

Action plans are expected to:

Identify root causes of the gender pay gap

Set out clear actions to address inequalities

Include measurable outcomes and timelines

Address related issues such as career progression and menopause support

Employee rights

Employees retain the right to:

Equal pay for equal work

Raise concerns about inequality

Bring claims under the Equality Act 2010

SME risk areas

Lack of structured pay frameworks

Poor documentation of decisions

Informal promotion processes

Limited workforce data analysis

Even SMEs not currently required to report should prepare for future expansion of these obligations.

Best practice: how employers should manage Gender Pay Gap Reporting

With mandatory action plans approaching, employers should take a proactive approach.

Conduct a robust pay audit
- Analyse pay by gender, role and seniority
- Identify structural causes of gaps
- Benchmark against industry data
Build your action plan early
- Define clear, measurable objectives
- Focus on recruitment, progression and retention
- Align with wider business strategy
Strengthen policies and procedures
- Implement structured pay frameworks
- Ensure transparency in promotions and bonuses
- Update employee handbooks
Train managers
- Address unconscious bias
- Standardise hiring and promotion decisions
- Ensure accountability
Improve recruitment and progression
- Advertise salary ranges
- Develop diverse talent pipelines
- Support flexible working
Invest in HR systems
- Track pay and progression data
- Monitor trends over time
- Prepare for mandatory reporting requirements
Communicate transparently
- Share findings internally
- Explain gaps clearly
- Publish meaningful action plans
Key takeaway

From 2027, it will not be enough to understand your gender pay gap-you must demonstrate how you are addressing it.

Common mistakes employers make

Treating reporting as a tick-box exercise
Future requirements demand action, not just data.
Failing to prepare for 2027 changes
Delaying action increases compliance risk.
No clear action plan
Without a structured plan, gaps persist and scrutiny increases.
Inconsistent pay decisions
Unstructured processes create long-term inequality.
Poor data quality
Inaccurate data undermines reporting and decision-making.
Lack of manager training
Untrained managers introduce bias and inconsistency.
Weak communication
Failure to explain pay gaps damages trust and engagement.
Assuming a pay gap favouring women is acceptable
Any gender pay gap, regardless of direction, signals imbalance; the goal should always be a neutral position.

Practical checklist for SME employers

Conduct annual gender pay analysis

Start developing an action plan now

Review pay structures and policies

Train managers on fair decision-making

Document all pay and promotion decisions

Monitor workforce data using HR systems

Communicate transparently with employees

Prepare for 2027 mandatory action plan requirements

What will your business do when Gender Pay Gap Reporting becomes more demanding in 2027?

impact HR can help you stay compliant, reduce risk and create meaningful change through practical support including audits, reporting, action plans, manager training and HR compliance reviews.

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Your Questions Answered

Everything you need to know about Gender Pay Gap Reporting

What does Gender Pay Gap Reporting mean in HR?
Gender Pay Gap Reporting measures the difference in average pay between men and women across an organisation. It helps identify structural inequalities and informs strategies to improve fairness and workforce diversity.
What are the new legal requirements from 2027?
From 2027, employers with 250 or more employees must publish gender equality action plans alongside their gender pay gap data. These plans must outline how the organisation will reduce its pay gap and improve equality. Currently from April 2026 it is voluntary for employer to publish their gender equality action plans.
Why are action plans becoming mandatory?
The government has recognised that reporting alone does not drive change. Mandatory action plans ensure employers take measurable steps to address gender inequality rather than simply publishing data

What should a gender pay gap action plan include?
An effective plan should identify root causes of pay gaps, set measurable objectives and outline practical actions such as improving recruitment, progression and flexible working practices.
How can SMEs prepare for Gender Pay Gap Reporting changes?
SMEs should begin conducting internal pay audits, improving data tracking, implementing structured pay policies and developing action plans now. Early preparation reduces risk and strengthens competitiveness.

Where to find out more A collection of hand-picked useful resources for Gender Pay Gap Reporting from impact HR and beyond

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