Ethnicity and disability pay gap reporting: government responds to consultation

It has now published its response. 

What did the consultation cover?

The government launched the consultation to gather views on the key features of a potential reporting framework, including: 

• which pay gap calculations employers would need to carry out and publish
• how employers should define and compare different groups
• whether the framework should align with existing mandatory gender pay gap reporting requirements; and
• whether employers should be required to produce action plans

You can read more about the questions the consultation covered here. 

What feedback did the government receive?

Most respondents supported the government's proposals. There was broad agreement that large employers (with 250 or more employees) should be required to:

• publish information about the ethnicity and disability make-up of their workforce
• report their ethnicity and disability pay gaps, and
• disclose how many employees chose not to share their ethnicity or disability. 

Most also agreed that large employers should produce ethnicity and disability action plans to tackle the causes of any pay gaps identified. 

There was agreement that employers should collect ethnicity data using the Government Statistical Services (GSS) ethnicity harmonised standard. They also agreed that employers should only report ethnicity pay gaps where each group contains at least ten employees.  

For disability pay gap reporting, there was agreement that a binary approach should be used (disabled and non-disabled) and the definition of disability should follow the Equality Act 2010. Under that Act, a person is disabled if they have a physical or mental condition that has a substantial and long-term impact on their ability to carry out normal day to day activities. As with ethnicity pay gap reporting, employers should only publish disability pay gap data where there are at least ten employees in each group, to ensure individuals cannot be identified. 

There was also agreement that, where possible, ethnicity and disability pay gap reporting should mirror the existing gender pay gap reporting framework. This would mean using the same snapshot dates and statutory reporting dates, and reporting on the following: 

• the mean difference in average hourly pay
• the median difference in average hourly pay
• pay quarters (the percentage of employees in four equal groups, from highest to lowest hourly pay)
• the mean difference in bonus pay
• the percentage of employees receiving a bonus 

What is the government's response?

The government says that introducing ethnicity and disability pay gap reporting will help employers create more inclusive workplaces. It plans to take forward all but one of the proposals set out in the consultation. 

The exception relates to a proposal requiring public bodies to publish additional information, such as more detailed pay breakdowns by grade or salary band, and data on recruitment, retention and progression. After feedback raised concerns about how complex and burdensome this approach would be, the government decided not to make these extra requirements mandatory. Instead, it will encourage organisations to publish this information on a voluntary basis. 

What are the next steps?

The government plans to introduce these new reporting duties through primary legislation, with supporting regulations setting out the detailed requirements. It has not yet confirmed when it will bring the legislation forward or when the new rules will come into force.

Alongside this, the government has said it will produce guidance for employers. This guidance will explain you can encourage employees to declare their ethnicity and disability, provide step-by-step instructions for calculating pay gaps, and offer practical advice on steps you can take to address any pay gaps identified.

You should now consider whether you fall within the large employer category (250 or more employees). If you do, you should start preparing for this new requirement. This includes reviewing how you currently collect pay and workforce data, and identifying any changes you may need to make to ensure you can gather the information required to comply.

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