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Mandatory ethnicity and disability pay gap reporting

A consultation has been published seeking views on how to introduce mandatory ethnicity and disability pay reporting for large employers (those with 250 or more employees).

Such a move was foreshadowed in Next Steps to Make Work Pay published in November 2024. Responses to the consultation, which closes on 10 June, will help to shape proposals which will be included in the Equality (Race and Disability) Bill.

The government is aiming to use the same processes and systems for ethnicity and disability to that already in place for gender pay gap reporting, i.e. reporting the same set of pay gap measures, using the same reporting dates and doing so online.  The EHRC will be responsible for enforcement.

It is also proposing to make it mandatory for employers to report on:

  • the overall breakdown of their workforce by ethnicity and disability, and
  • the percentage of employees who did not disclose their personal data on their ethnicity and disability

For ethnicity pay gap reporting, it’s proposed that there should be a minimum of 10 employees in any ethnic group that is being analysed, and acknowledges that this may involve grouping ethnic groups together to meet the threshold. It also proposes an option for ‘binary classification’ where an employer has smaller numbers of employees in different ethnic groups, allowing them to report their figures for two groups, e.g. comparing White British employees with ethnic minority employees.

For disability pay gap reporting, it’s proposed taking a wholly binary approach, measuring the disability pay gap by comparing the pay of disabled employees with non-disabled employees. Again, it is proposed that there should be a minimum of 10 employees in each group being compared.

The consultation also seeks views on whether employers should have to produce action plans for ethnicity and disability pay gap reporting.

Public bodies may be subject to further requirements re ethnicity (and disability). The consultation asks whether they should report:

  • ethnicity pay differences by grade or salary bands, and/or
  • data relating to recruitment, retention and progression by ethnicity