UK government confirms mandatory ethnicity and disability pay gap reporting

Following last year’s consultation exercise, the government intends to introduce mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees.

Reporting metrics and equality action plans

As envisaged in the consultation exercise, employers will report against the metrics used in gender pay gap reports using the same snapshot date:

• Mean and median ethnicity and disability pay gap;
• Mean and median ethnicity and disability bonus pay gap;
• The proportion of employees receiving a bonus by ethnicity and disability; and
• The proportion of employees in each pay quartile by ethnicity and disability.

Employers will also report their workforce composition by ethnicity and disability, including an indication of the proportion of employees that have declared their ethnicity/ disability.

In line with the requirement to provide gender pay gap action plans, employers will need to publish ethnicity and disability pay gap action plans, outlining the steps they are taking to tackle pay gaps.

Collecting data

Employers should collect ethnicity data using the categories in the government statistical service harmonised standard, aggregated to one of five higher-level groups (currently Asian or Asian British; Black, Black British, Caribbean or African; mixed or multiple ethnic groups; white; other ethnic group). Different groups may need to be aggregated if they contain fewer than a threshold number of employees, to protect anonymity. A binary comparison between the pay gap of white and other employees will be required as a minimum if the numbers of employees in individual higher-level groups do not meet the threshold. The government is still considering what the appropriate threshold would be.

Disability reporting will compare the pay of disabled and non-disabled employees, using the Equality Act definition of disability.

Enforcement

The consultation says that the government will take a “harmonised” approach to enforcement across gender, ethnicity and disability pay gap reporting. Currently, it’s the EHRC’s responsibility to enforce reporting and in some cases investigate implausible data to ensure employers are reporting properly. The consultation paper is not explicit about whether the government intends to change the existing enforcement framework.

Next steps

Ethnicity and disability pay gap reporting requires primary legislation, which will presumably be announced in the King’s Speech expected in May. Regulations will contain the detailed requirements. This means that the first reports are unlikely to be due before April 2028 at the earliest.

Authored by Jo Broadbent and Stefan Martin.