Get ready: race and disability pay gap reporting is coming

The government has launched a consultation seeking views on how to introduce mandatory ethnicity and disability pay gap reporting for large employers. 

Responses to the consultation will help shape proposals which will be included in the Equality (Race and Disability) Bill, which it hasn't yet published. 

Let's take a look at the consultation in more detail. 

Background

Large employers across Great Britain have been required to report their gender pay gap data since 2017. Now the government plans to extend this to reporting on their ethnicity and disability pay gaps.

The rationale is to force large employers to collect comprehensive data which will help them to take steps to address inequalities within their own organisations. 

But it's not the first time a government has explored the idea of ethnicity pay gap reporting. You can find more information about it here. 

Reporting requirements: who is included? 

The government proposes to include the same organisations who currently have to report their gender pay gaps. These are:

• large private and voluntary sector employers in Great Britain
• large public sector bodies in England; and
• certain public authorities operating across Great Britain in relation to non-devolved functions

Large employers are those with 250 or more employees. 

Data to report 

The government has said that they are keen to minimise any additional burdens on businesses by using the same processes and systems that they already have in place to report their gender pay gaps.  

This means they will have to report on the:

• mean differences in average hourly pay  
• median differences in average hourly pay
• pay quarters - the percentage of employees in four equally sized groups, ranked from highest to lowest hourly pay
• mean differences in bonus pay
• median differences in bonus pay; and 
• the percentage of employees receiving bonus pay for the relevant protected characteristic 

Additionally, the government plans to require large employers to report on the overall breakdown of their workforce by ethnicity and disability, and the percentage of employees who don't disclose their ethnicity or disability. 

The consultation also seeks views on whether public bodies should have additional reporting obligations to report ethnicity pay differences by grade or salary bands, as well as data on recruitment, retention and progression by ethnicity. It also asks if these reporting requirements for public bodies should extend to disability. 

Data collection

1. Ethnicity

The government believes the most effective way for employers to collect ethnicity data is by asking employees to self-report their ethnicity, while also providing an option for employees to opt out. They propose using the detailed ethnicity classifications in the Government Statistical Service (GSS) ethnicity harmonised standard. 

To protect employee privacy, the government proposes a minimum of ten employees per ethnic group for analysis. Employers may need to combine some ethnic groups to meet this threshold. 

2. Disability

The government proposes using the definition of a ‘disability’ under the Equality Act 2010 which is widely defined: 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. 

In terms of reporting, it suggests that the best option is to adopt a binary approach to measure the disability pay gap by comparing the pay of disabled employees with that of non-disabled employees. This will minimise the risk that certain individuals will be identified by their condition, and avoid the complications involved where someone has multiple impairments.

The consultation says that employers will have to rely on information provided by their staff (but they won't be under a legal duty to identify or report their disability to their employers). Again there will need to be a minimum of 10 employees in each group compared.

Action Plans

The government is also seeking opinions on whether large employers should be required to create action plans for ethnicity and disability pay gap reporting. They believe these plans can help employers identify the reasons behind pay gaps and outline steps to address them. Additionally, action plans can inform employees about their employer's efforts and hold them accountable.

Reporting deadlines

Large employers in the private and voluntary sectors across Great Britain collect gender pay data annually on 5 April, known as the ‘snapshot date’. They are required to report their pay gap data within 12 months, by 4 April. Public bodies have a snapshot date of 31 March and a reporting deadline of 30 March the following year. 

The government proposes using the same two sets of dates for mandatory ethnicity and disability pay gap reporting as those used for gender pay gap reporting. Employers will be required to report this data online, similar to the existing gender pay gap service. 

What's next?

This consultation will close at 11:59pm on 10 June 2025. Following this, the government will review the responses. They emphasise that this is just the beginning of the process, as they plan to engage further with stakeholders. For example, they will issue a call for evidence to inform other aspects of the Equality (Race and Disability) Bill, including measures to ensure the right to equal pay for ethnic minorities and disabled people. 

Large employers should begin assessing what information they currently gather and determine any additional data they will need. Although it may be some time before they are required to report on ethnicity and disability pay gaps, large employers must stay informed about developments in this area to ensure they are prepared for the new legislation. 

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