Employment LawGender Pay Gap & Pay Transparency in India – 2025 Outlook

INTRODUCTION 

The gender pay gap continues to be a prominent challenge in India’s labor market, reflecting disparities in remuneration not only for comparable work but also across roles, seniority levels, sectors, and career trajectories. These gaps are influenced by a combination of systemic factors such as occupational segregation, differences in access to leadership roles, interruptions in careers due to caregiving responsibilities, and variations in professional experience.

The equal pay idea has long been acknowledged by India’s legal system. In terms of compensation, hiring, and advancement, gender-based discrimination is explicitly prohibited by the Equal Remuneration Act, 1976 (hereinafter referred to as the “Act”). The Act is reinforced by constitutional provisions, particularly Article 14, which guarantees equality before the law, and Article 16, which ensures equality of opportunity in public employment. While these statutory and constitutional mandates provide a foundation, enforcement and practical implementation remain uneven, especially in the absence of statutory pay transparency requirements.

The discourse on gender pay gap has evolved over-time and it is no longer limited to ethical or social considerations but is increasingly integrated with corporate governance, compliance obligations, and strategic human resource management.

UNDERSTANDING INDIA’S GENDER PAY GAP

The gender pay gap in India remains a persistent issue across industries, roles, and seniority levels. Despite decades of legal protections, women continue to earn less than men, with disparities becoming sharper in leadership positions. Data from the Periodic Labor Force Survey (April–June 2024) shows average monthly earnings of ₹26,105 for men versus ₹19,879 for women in urban areas, and ₹18,200 versus ₹12,396 in rural areas, highlighting the universality of the gap across geographies.

Several structural factors drive these inequities. Women are concentrated in lower-paying roles and underrepresented in leadership, while career breaks for maternity or caregiving further widen long-term earnings differences. Sectoral analysis reveals pronounced gaps in technology and financial services at managerial levels, as well as in manufacturing, healthcare, and retail, where occupational segregation and subjective promotions contribute to inequity.

At the same time, some startups and progressive firms show progress by adopting structured HR policies, transparent pay bands, and merit-based appraisals. These initiatives demonstrate that deliberate policy design can reduce disparities, particularly in junior and mid-level roles. However, international and domestic evidence underscores that deeper causes career trajectories, occupational concentration, and social barriers require sustained attention.

Organizations are responding with pay audits, structured appraisals, and transparent salary frameworks. Yet, systemic disparities are unlikely to disappear without long-term, intentional reforms that address workplace practices, cultural norms, and opportunities for women across all levels of employment.

THE LEGAL FRAMEWORK IN INDIA

India’s framework for ensuring gender pay equity is built on a blend of statutory law, constitutional guarantees, and supporting labor legislation. Together, these provisions seek to prevent gender-based discrimination in wages, hiring, and career progression.

1. Equal Remuneration Act, 1976

• Core Protection: Prohibits discrimination on the basis of gender in pay, recruitment, training, and promotions.
• Coverage: Applies across government, public sector undertakings, and private companies.
• Requirement: Men and women performing the same or similar work must be paid equally.

2. Judicial Interpretation

• Expanded Scope: Courts have applied the principle of work of equal value.
• Practical Test: Instead of just looking at job titles, judges examine skills, responsibilities, effort, and working conditions.
• Impact: Prevents employers from evading compliance by making superficial changes to job descriptions or titles.

3. Constitutional Guarantees

• Article 14: Equality before law.
• Article 16: Equal opportunity in public employment.
• Judicial Recognition: Courts treat discriminatory pay even through biased appraisal or promotion systems as violating these rights.

4. Supporting Labor Law

• Maternity Benefit Act, 1961: Safeguards women’s employment and continuity during/after pregnancy.
• Industrial Disputes Act, 1947: Establishes standards for fair treatment and provides dispute resolution forums.
• State Laws: Various state-level labor rules add further protections, though effectiveness varies.

5. Gaps in Enforcement

• Unlike the UK or Germany, India does not mandate gender pay gap reporting.
• This limits systemic oversight, placing the burden on individual employees to challenge pay discrimination.

6. Influence of Global Standards

• Multinational Corporations (MNCs) in India often adopt voluntary pay transparency measures aligned with global norms.
• These practices, though not legally binding, set benchmarks and shape corporate governance.

7. Compliance Expectations for Employers

• Employers must ensure parity not only in basic wages but also in allowances, bonuses, incentives, and benefits.
• Any disparity in these components may amount to indirect discrimination.

8. Practical Implementation

Organizations are encouraged to adopt:

• Pay audits to identify disparities.
• Documented role evaluations to justify wage structures.\
• Clear promotion and appraisal systems to prevent indirect bias.

These practices both ensure compliance and align with international best practices.

EMPLOYER RESPONSIBILITIES IN PROMOTING PAY EQUITY

Employers in India must go beyond statutory compliance and adopt proactive measures to ensure gender pay equity. Key responsibilities include:

1. Leadership Accountability

• Incorporate pay equity indicators in managerial performance reviews.
• Link promotions and incentives for leaders with demonstrated equity outcomes.

2. Talent Development and Inclusion

• Actively include women in leadership tracks and succession planning.
• Introduce mentorship, sponsorship, and rotational assignments to reduce structural barriers.

3. Technology and Data-Driven Oversight

• Use HR analytics, pay equity dashboards, and workforce modeling tools.
• Track disparities in real time and forecast future risks.

4. Equitable Workplace Culture

• Conduct awareness campaigns and bias training.
• Encourage inclusive decision-making and empower employee resource groups to shape equity initiatives.

5. External Transparency and Stakeholder Trust

• Voluntarily disclose pay equity progress and inclusion initiatives.
• Align reporting with investor, client, and regulatory expectations.

By combining accountability, inclusive pipelines, technology, culture, and transparency, employers can build a sustainable and high-performing workforce rooted in fairness

STRATEGIC GOVERNANCE AND FUTURE-FOCUSED INITIATIVES

1. Board-Level Oversight

• In 2025, boards and senior executives are expected to integrate gender pay equity into corporate governance frameworks.
• Formal oversight of policies, performance evaluations, promotions, and remuneration practices ensures accountability beyond HR.

2. Scenario Planning & Workforce Modeling

• Organizations must proactively assess how emerging trends, remote work, automation, mergers, and restructuring impact pay equity.
• Scenario planning in 2025 helps prevent unintentional inequities and keeps policies adaptive to evolving work arrangements.

3. ESG Alignment

• Gender pay equity is increasingly tied to Environmental, Social, and Governance (ESG) reporting standards.
• By 2025, investors are prioritizing companies with transparent pay equity disclosures and measurable DEI outcomes.
• Firms showcasing progress gain credibility, attract responsible investment, and enhance long-term competitiveness.

4. Public Reporting & Transparency

• Even in the absence of mandatory reporting in India, many companies in 2025 are adopting voluntary pay transparency frameworks.
• Publishing progress reports signals commitment and strengthens reputation with regulators, investors, and employees.

5. Talent Development Programs

• Strategic initiatives such as rotational leadership roles, mentorship for high-potential women, and targeted up skilling workshops are critical.
• These programs ensure career continuity, bridge experience gaps, and reduce cumulative pay disparities over time.

6. Long-Term Monitoring & Metrics

• 2025 organizations are embedding continuous pay equity assessments, employee feedback surveys, and industry benchmarking.
• Regular reviews ensure that initiatives remain effective, responsive to workforce shifts, and aligned with organizational strategy.

7. From Compliance to Strategic Priority

• The shift in 2025 is from treating pay equity as a reactive compliance obligation to positioning it as a strategic business priority.
• Companies that lead in this space benefit not only in employee morale and retention but also in investor trust and market reputation.

AMLEGALS REMARKS

Gender pay equity is no longer just an ethical concern, it has become a legal and business imperative in India. Organizations must actively monitor compensation practices, identify disparities, and implement clear, transparent policies to ensure fairness at every level. Regular audits, structured promotion pathways, well-defined roles, and proper documentation are essential tools for maintaining compliance and minimizing legal and reputational risks.

Beyond legal obligations, pay equity strengthens organizational culture, boosts employee engagement, and improves talent retention. Companies that address gaps proactively signal a commitment to inclusivity, fairness, and good governance qualities that are increasingly valued by investors, clients, and employees alike.

In 2025, adopting a deliberate, structured approach to pay equity is not optional. It is a strategic necessity that aligns with statutory requirements, corporate governance expectations, and evolving societal standards. Organizations that take these steps position themselves for long-term growth, credibility, and a stronger workforce.

– Team AMLEGALS assisted by Ms. Tanisha Khandelwal (Intern)

For any queries or feedback, feel free to reach out to laksha.bhavnani@amlegals.com or hiteashi.desai@amlegals.com