Search

How can we help?

Icon

Ethnicity Pay Gap Reporting

The Government have released guidance on 17 April 2023 called Ethnicity Pay Reporting: guidance for employers. This guidance is intended to help employers voluntarily report and to provide a consistent approach to measuring pay differences between ethnic groups.

  • The Guidance was published in response to the Commission on Race and Ethnic Diversities’ Report Inclusive Britain published in March 2022.
  • In Inclusive Britain the Government said that ‘We recognise the significant obstacles for employers looking to create ethnicity pay gap mechanisms, including employee confidentiality, that allows meaningful comparisons to be made. So we will work with experts to produce guidance which will enable employers to identify the causes of pay disparities and take relevant steps to mitigate them.

Why do we need guidance?

According to the Living Wage Foundation’s latest report ‘London Low Pay Landscape’: ‘Almost a third (29.7 per cent) of Pakistani/Bangladeshi workers in London earn less than the Living Wage, while the same is true for around a quarter (23.1 per cent) of Black workers. White workers, on the other hand, face a much lower risk of being low paid (10.4 per cent), as do Indian workers (13.4 per cent).

It is believed that one of the best ways to tackle the issue of ethnic pay disparity is to first have accurate information regarding this pay gap. To do this, the earnest is on employers to voluntarily collate and report on this information.

What does the guidance say?

  • This publication provides guidance on:
  • collecting employees’ ethnicity data in a reliable and consistent manner;
  • considering issues including comparison pools, confidentiality, and location of employees;
  • gathering the required payroll data for ethnicity pay calculations;
  • making ethnicity pay calculations including consideration of working hours, bonus schemes, time off and relevant periods;
  • analysing and understanding the results of these calculations;
  • reporting these findings;
  • developing an action plan to address any identified disparities.
Lucy Densham Brown

Solicitor

View profile

+44 118 960 4655

Reporting on the ethnic pay gap helps employers to develop a reputation as a fair and progressive employer, who acts to address workplace inequalities.

The guidance includes helpful tips such as using the census wording when asking employees about their ethnicity to maintain consistency, and using only ethnic groups of large numbers to maintain confidentiality.

Do employers need to report ethnicity pay gaps?

Reporting pay gaps between ethnic groups is not a legal requirement for employers, however many employers already choose to include this information in their gender pay gap report in the interest of transparency. Reporting on the ethnic pay gap helps employers to develop a reputation as a fair and progressive employer, who acts to address workplace inequalities. As the national focus is more and more concentrated on equality and inclusion, this is key for employers to attract and retain talent, and create a more inclusive and supportive workplace culture. The Government guidance provides concise advice for employers for best practice to help ensure that reporting is consistent and reliable.

In their Inclusive Britain paper, the government confirmed that it did not intend to make ethnicity pay gap reporting compulsory at this time, due largely to the complexity of reporting on ethnicities which may include a large number of ethnic groups, and data concerns where individuals may be identifiable due to their inclusion in an ethnic group.

If you would like more information, or assistance with implementing this guidance in your workplace, our team would be happy to help.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Lucy Densham Brown

Solicitor

View profile

+44 118 960 4655

About this article

Read, listen and watch our latest insights

art
  • 01 June 2023
  • Employment

Facts employees should know about their personal data

We previously published an article on facts an employer should know about holding personal data, so it is only fair that we also write about the other side of the coin – facts employees should know as individuals whose personal data is held by their employer.

art
  • 26 May 2023
  • Employment

Avoiding discrimination in flexible working requests

The right to request flexible working is currently available to employees with at least 26 weeks’ service and is set to be extended further under new Government reforms.

art
  • 25 May 2023
  • Employment

Carer’s Leave Bill set to become law

On 19 May 2023, the Carer’s Leave Bill had its third reading in the House of Lords, and upon receiving Royal Assent, will become law. There is not yet a date for the implementation of this bill, however it is likely that this will happen relatively quickly upon receiving Royal Assent, so is definitely one to keep an eye on.

art
  • 16 May 2023
  • Employment

10 facts an employer should know about holding personal data

Personal data is any information that can be used to identify an employee.

art
  • 11 May 2023
  • Employment

Employment Law Changes – Spring 2023

The government has just announced that it plans to scrap the Sunset Clause, which would have revoked almost all retained EU law at sunset at the end of 2023.

art
  • 10 May 2023
  • Employment

Reasonable adjustments for mental health in the workplace- FAQs

Acas has recently released guidance for employers and employees on reasonable adjustments for mental health in the workplace.