The UK government has recently initiated a consultation process to explore the implementation of mandatory ethnicity and disability pay gap reporting for large employers, defined as those with 250 or more employees. This initiative is part of a broader legislative effort encapsulated in the proposed Equality (Race and Disability) Bill, which aims to extend the existing gender pay gap reporting framework to include ethnicity and disability. The consultation, which was launched in March 2025, is set to close on 10 June 2025, and seeks to gather input from a wide range of stakeholders, including employers, public sector bodies, trade unions, and representatives from ethnic minority and disabled communities.
Framework and objectives
The proposed reporting framework mirrors the existing gender pay gap reporting regime, which has been mandatory for large employers since 2017. This framework requires employers to report on six key pay gap measures: mean and median differences in average hourly pay, pay quartiles, mean and median differences in bonus pay, and the percentage of employees receiving bonus pay for the relevant protected characteristic. The government intends to use the same snapshot and reporting dates as those used for gender pay gap reporting, namely 5 April for private sector employers and 31 March for public bodies, with reporting deadlines of 4 April and 30 March the following year, respectively.
The primary objective of this initiative is to enhance transparency and accountability in pay practices, thereby promoting equality in the workplace. By requiring employers to disclose pay gaps based on ethnicity and disability, the government aims to provide a clearer picture of existing disparities and encourage employers to take proactive steps to address them. This initiative is also expected to support broader equality goals by fostering a more inclusive work environment where individuals can thrive regardless of their background.
Data collection and reporting
A significant aspect of the proposed framework is the collection and reporting of data on ethnicity and disability. Employers will be required to collect data using the detailed ethnicity classifications from the Government Statistical Service (GSS) ethnicity harmonised standard, as used in the 2021 Census. This approach is intended to ensure consistency and comparability across different employers and over time. To protect employee privacy and produce statistically robust data, the government proposes a minimum threshold of ten employees in each ethnic group being analysed. Where this threshold cannot be met, employers may aggregate groups or use binary comparisons, such as comparing White British employees with ethnic minority employees.
For disability pay gap reporting, the government proposes a binary approach, comparing the pay of disabled employees with non-disabled employees. The definition of disability will be based on the Equality Act 2010, and employees will be asked to self-report their disability status. As with ethnicity data, a minimum of ten employees in each group is required to ensure privacy and statistical robustness. The government acknowledges the challenges associated with self-reporting and is seeking views on how to encourage higher disclosure rates among employees.
Action plans and enforcement
The consultation also seeks input on whether employers should be required to produce action plans to address any identified pay gaps. These action plans would outline the reasons behind the pay gaps and the steps employers are taking to improve equality in their workforce. While the production of action plans is currently encouraged for gender pay gap reporting, it is not mandatory. The government is considering making it a requirement for ethnicity and disability pay gap reporting to ensure that employers are not only identifying disparities but also taking concrete actions to address them.
Enforcement of the new reporting requirements is proposed to be carried out by the Equality and Human Rights Commission (EHRC), which currently oversees gender pay gap reporting. The EHRC would be responsible for ensuring compliance, issuing warning notices to non-compliant employers, and potentially naming and shaming those who fail to report. This enforcement mechanism is intended to ensure that employers take their reporting obligations seriously and that the data collected is accurate and meaningful.
Challenges and considerations
While the proposed framework aims to promote equality and transparency, it also presents several challenges for employers. One of the primary concerns is the reliance on self-reported data, which may be incomplete or inaccurate due to low disclosure rates. Employers will need to build trust with their employees to encourage them to share sensitive personal data on ethnicity and disability. This may involve developing a strong communications plan and ensuring that data collection processes are transparent and secure.
Another challenge is the potential complexity of data collection and analysis, particularly for employers with diverse workforces. Employers will need to carefully consider how to classify and aggregate ethnic groups to ensure that the data is meaningful and statistically robust. This may require additional resources and expertise, particularly for employers who are not currently collecting this data.
Next steps and implications
The consultation process is an opportunity for stakeholders to provide feedback on the proposed framework and to influence the final legislation. Employers, in particular, are encouraged to participate in the consultation to ensure that their perspectives and concerns are taken into account. The feedback received will help shape the final provisions of the Equality (Race and Disability) Bill, which is expected to be introduced later this year.
In the meantime, employers should begin preparing for the potential implementation of mandatory ethnicity and disability pay gap reporting. This may involve reviewing current pay gap reporting processes, identifying any gaps, and ensuring that systems are in place to accommodate the new requirements. Employers may also wish to consider voluntarily reporting their ethnicity and disability pay gaps in advance of the legislation to gain experience and demonstrate their commitment to equality and transparency.
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