Government launches consultation on ethnicity and disability pay gap reporting

Adrian Fryer

The Government’s flagship Employment Rights Bill has, quite rightly, been the focus of employment law commentators since it was first announced last July. However, it wasn’t the only proposed employment legislation referenced in the King’s Speech. The Government also used the King’s Speech to announce its intention to bring forward the Equality (Race and Disability) Bill, introducing a requirement for large employers (those with 250 or more employees) to report on ethnicity and disability pay gaps. It has now launched a consultation seeking views on how it should be implemented.

Large employers already have an obligation to report gender pay gap data on an annual basis. The Government proposes to use the same set of pay gap measures as the basis for ethnicity and disability as are currently in place for gender pay gap reporting:

• mean and median gender pay gap,
• mean and median bonus gap,
• bonus proportions and
• quartile pay bands

In addition, ethnicity and disability pay gap reporting will require data relating to:

• the overall breakdown of their workforce by ethnicity and disability

• the percentage of employees who did not disclose their personal data on their ethnicity and disability

For ethnicity pay gap reporting, the Government proposes 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 – for example, comparing White British employees with ethnic minority employees.

For disability pay gap reporting, the Government proposes 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 runs until 10 June 2025.

Contact our Employment Team.