Businesses could be forced to tell you how much your colleagues are paid

Businesses could be forced to disclose salary bands on job adverts and tell workers what their colleagues are earning.

Ministers are discussing the possible changes as part of plans to overhaul equality laws as the government seeks to end pay discrimination.

This could include a new Equal Pay Regulatory Unit, which would have the power to issue fines and change employees’ contracts if needed, with legislation to expand on gender-based equal pay rules to include race and disability discrimination too, The Times reports.

The body may also be able to offer advice and offer mediation if required.

The move to potentially enforce the publication of salaries would be a notable shift, with business groups showing initial concern that it would make it difficult to attract and retain staff.

A suggestion from the Conservatives that such a move would penalise middle-class and privately educated people was rejected by the government, saying “positive discrimination is not permissible under the Equality Act”.

“Our research shows that businesses of all sizes are taking proactive steps to create equitable workplaces. That includes proactively identifying and removing all barriers to employment and progression opportunities,” said Jane Gratton, deputy director for public policy at the British Chambers of Commerce.

“While always ensuring fairness in pay, employers need to retain the flexibility to reward individuals for performance and experience. This agility is also crucial to help firms compete for skills and talent in a competitive labour market.”

Jack Kennedy, senior economist at recruitment site Indeed, said job seekers would welcome the need for businesses to finally show what they intend to hire for all jobs, with expectations being set on both sides ahead of interview time, a key factor in building trust and saving time.

“The news of potential legislation around pay transparency, particularly on job postings, will be welcome news to workers across the UK,” Mr Kennedy said. “Displaying salaries not only helps employees to feel more valued and empowered to address pay discrepancies, but also helps people identify where better opportunities may lie, supporting a healthier labour market that drives productivity and economic growth.

“Legislation will also help to set expectations for job seekers. Being aligned from the outset helps ensure candidate relevancy, making for a more efficient recruitment process, while it can also boost employer brand. So, by having stronger rules around transparency, both candidate and hiring teams can build trust from the first interview and help drive better matches.”

Tina McKenzie, policy chair for the Federation of Small Businesses, said: “Encouraging greater pay transparency is a good thing in principle but some of the measures being suggested simply don’t fit the reality of small business life. It’s also important to remember that many small firms don’t formally advertise roles at all; they hire through word of mouth or their own networks.

“This is a clear case where it would be excessive for government to impose detailed regulatory rules on small employers who simply don’t have HR departments.”