For years, the conversation around workplace equality has been gaining momentum. Now, with the UK government having actively consulted on mandatory race and disability pay gap reporting for large employers, that conversation is turning into a critical business imperative. This proposed legislation, set to mirror the existing gender pay gap reporting rules within the new Equality (Race and Disability) Bill, signals a clear shift towards greater transparency and accountability.
However, viewing this simply as another compliance hurdle would be a missed opportunity. For forward-thinking organisations, this is a chance to move beyond box-ticking and build a truly equitable and inclusive workplace. The key to unlocking this potential lies in robust salary and benefits benchmarking. It is no longer enough to assume your pay structures are fair; you must have the data to prove it.
The drive for transparency
The government’s consultation aims to make pay gap reporting for disability and race mandatory for employers with over 250 staff. This initiative is about more than just numbers; it aims to shine a light on the systemic barriers that disabled workers and workers of colour often face, from being channelled into lower-paying roles to encountering obstacles in career progression.
For businesses, this means the time to prepare is now. Waiting for the legislation to become law is a reactive strategy. A proactive approach involves getting your house in order by understanding your current pay landscape in granular detail. This is where salary and benefits benchmarking becomes an indispensable tool.
The reality of the pay landscape
To understand the current climate, our sister company Reed, surveyed 5,000 UK workers at the end of 2025, as part of its annual salary guide campaign, regarding their attitudes towards salary, benefits, and job satisfaction. The findings paint a complex picture of the UK labour market.
While over six-in-ten (61%) workers report being happy with their salary, a significant portion are not. Of those who are unhappy, the primary reason - cited by 52% - is that their pay has not kept pace with the rising cost of living. This dissatisfaction is compounded by stark inequalities evident in the data.
Reed’s research also revealed an average annual salary of £40,638 across the board, but this figure masks a significant gender pay gap. The average salary for men was £48,367, while for women it was just £33,852. This disparity has tangible consequences on quality of life. Men reported having £983.38 left over each month after essential bills, whereas women had only £626.61.
These statistics highlight a fundamental truth: without transparent and equitable pay structures, organisations risk fostering a culture of inequity. If such gaps exist clearly within gender data, it is practically guaranteed that similar, perhaps even wider, disparities exist for disabled employees and employees of colour who often face compounded economic disadvantages. This is without even taking into account the intersectional circumstances of, for example, Black women, who encounter multiple, intersecting barriers.
Why benchmarking is a fundamental part of the solution
Effective benchmarking goes beyond simply looking at salary figures on a spreadsheet. It is a strategic process that helps you build a more equitable and attractive workplace for all.
1. Identifying and addressing hidden gaps
The first step to fixing a problem is admitting it exists. By comparing salaries for roles of equal value across your organisation, you can identify disparities linked to disability, gender, or ethnicity. Benchmarking provides the objective data needed to justify salary adjustments and create a consistent, fair pay structure before you are legally compelled to publish your data.
2. Attracting and retaining diverse talent
In today's competitive job market, salary is more important than ever. Reed’s study found that 73% of workers consider salary a more critical factor now than before the cost-of-living crisis began in 2021. To attract the best talent, your offers must be competitive.
Furthermore, demonstrating a commitment to pay equity is a powerful differentiator. Nearly a third (32%) of employees Reed surveyed are open to new job opportunities if approached. A transparent and fair pay policy can be the deciding factor that convinces top candidates from diverse backgrounds to join your team.
3. Building inclusive benefits
Compensation is not just about the monthly pay slip. Benefits play a crucial role in an employee's overall financial wellbeing. Our research showed that common benefits include onsite parking (27%) and hybrid working (23%).
However, a one-size-fits-all approach to benefits can inadvertently exclude certain groups. For example, while a cycle-to-work scheme is a popular perk, it may not be accessible for an employee with a physical impairment. An inclusive benefits strategy involves offering a flexible range of options that cater to the diverse needs of your workforce. Benchmarking reveals what benefits are standard in your industry, allowing you to innovate and offer packages that truly support disabled workers.
Preparing for the future
With disability and race pay gap reporting on the horizon, organisations that have already implemented robust benchmarking practices will be at a significant advantage. You will not only have the data required for compliance but also a clear action plan to address any identified gaps.
This proactive stance demonstrates a genuine commitment to equity, diversity, and inclusion (EDI), strengthening your employer brand and building trust with employees, customers, and investors.
The upcoming legislation is a catalyst for change. It presents an opportunity for UK businesses to critically examine their pay structures and commit to creating a more equitable society. The average pay rise needed for an employee to feel it is "worthwhile" is nearly £4,000 according to our research, but fairness and transparency are priceless.
By embracing salary and benefits benchmarking, organisations can move beyond mere compliance. It is about doing the right thing. In the end, a commitment to pay equity is a commitment to your people, and that is the most valuable investment any business can make.
If you need help benchmarking your salaries or improving the quality of your diversity data, contact a member of our talent advisory team today.
