The government has proposed to make reporting ethnicity and disability pay gaps mandatory for large employers (i.e. those with 250 employees or more).
The plans were originally introduced in the Kings’ Speech in July 2024 and are currently in the consultation stage. The government has invited feedback on the proposals from a wide variety of bodies, including employers, trade unions, race and ethnicity stakeholders, disabled people’s organisations etc. Insights gathered from this consultation will inform the proposals for the forthcoming Equality (Race and Disability) Bill.
The new requirement plans to build on the existing mandatory obligation for large employers to disclose data on gender pay gaps which has been in force since 2017. It is similarly intended to increase transparency in organisations, to help identify disparities in pay between groups, analyse the reasons behind them and to ultimately find ways to reduce them.
The consultation document states that the government intends to use a similar reporting framework as is currently in place for gender pay gap reporting such as requiring employers to make the report online, using the same reporting date and reporting the same set of pay gap measures. However, seeking to replicate existing processes will not be straightforward (or even possible) as reporting on ethnicity and disability will be far more complex. The data gathered on ethnicity will have to be reconciled against several different benchmarks as the disparities for different ethnic groups will vary between the various groups and also geographically. For both disability and ethnicity, employers will also have to rely on employees to self-identify as there is no obligation on employees to share this data. Therefore, for many businesses strides may first have to be made to foster a greater relationship of trust with their employees to encourage them to disclose this data.
Employers may wish to start thinking about how they might collate and calculate such data. They can then take proactive steps to address any gaps that they identify before any requirement to publish their pay gap data publicly comes into force.
Azrah Ahmed