Employers could soon be forced to disclose pay in job ads

The government may soon require businesses to include salary brackets in job adverts, and managers to disclose their salaries, as part of a broader push for pay transparency.

For employees, it’s a welcome move; openness around pay can help ensure fairer wages across the board. But for SME bosses, especially in lower-paid sectors like hospitality, the changes could pose a challenge.

Advertising salaries upfront might make it harder to attract top talent, particularly if budgets are tight and pay can’t match larger competitors.

What are the proposed pay transparency changes?

The government is reportedly proposing reforms to employment law aimed at closing pay gaps related to gender, race, class, and disability. In April, there was a call for evidence inviting opinions on six main areas of equality law, including equal pay and pay transparency.

One outcome has been the proposed creation of an Equal Pay Regulatory and Enforcement Unit. This new body would have the power to enforce equal pay standards, offer legal advice, and support the informal resolution of disputes. 

The legislation would bring the UK up to speed with the standards set out in the EU Pay Transparency Directive, currently being implemented across Europe.

According to The Times, Whitehall is also exploring a range of new measures to improve pay transparency and tackle structural inequalities, including:

• Mandatory salary brackets on job adverts
• Banning recruiters from asking candidates for their previous salary history
• Giving employees the right to know how their pay compares to others in similar roles
• Publishing clear criteria for pay and career progression

Although there are existing initiatives aimed at closing the Gender Pay Gap, the proposed reforms aim to expand upon these frameworks to also include efforts against discrimination based on ethnicity and disability, as well as addressing the Class Pay Gap. 

These measures are part of broader efforts in the government’s Plan to Make Work Pay, a manifesto intended to achieve pay parity in the workplace.

What could this mean for employers?

Pay transparency is an undeniably positive and necessary step towards equality in the workplace. However, some business groups have raised concerns about the practical implications, particularly around reduced flexibility in salary negotiations. 

When pay ranges are fixed and public, employers may have less room to tailor offers based on experience or market conditions.

For smaller firms, especially those in sectors like hospitality or retail, the reality is even more complex. Many of these businesses don’t formally advertise wages at all. Instead, they rely on informal recruitment or word-of-mouth hiring. 

With employment costs rising, from national insurance contributions to minimum wage increases, offering salaries that are competitive and transparent isn’t without its challenges.

In order to comply with new requirements around pay transparency, bosses will need to develop clearer pay structures and documentation around pay decisions. For SMEs, particularly those without formal HR teams, that means yet more red tape to grapple with. 

How should SMEs prepare and respond?

SMEs should start by reviewing current pay policies and introducing transparent pay bands or clearer progression criteria. Keeping good records of pay decisions, job evaluations, and any rationale behind pay differences is key for minimising future headaches. 

While the reforms are still in development, we’d recommend that firms, particularly those without formal HR functions, seek legal or HR advice early. This can help ensure they’re prepared, rather than caught off guard, when new requirements actually come into force.

Although implementing pay transparency may feel like a challenge, it’s ultimately a positive move toward reducing inequality at work. By starting early, SMEs can both minimise administrative strain and build fairer pay structures that align with current standards.