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.

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.

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.

Author profile

Lucy White

Senior Solicitor

View profile

+44 118 960 4655

About this article

Read, listen and watch our latest insights

art
  • 29 April 2026
  • Employment

Employment Rights Act: Changing key contract terms will be harder from January 2027

The Employment Rights Act 2025 (“ERA 2025”) introduces a new regime that restricts how employers can change certain core contractual terms, with the key provisions now expected to commence on 1 January 2027.

art
  • 14 April 2026
  • Employment

Updates to Vento Bands 2026: Injury to feelings awards

For discrimination and detriment cases, compensation can also cover non-financial losses, which, in most cases, will include an injury to feelings award.

art
  • 09 April 2026
  • Employment

Bereaved Partner’s Paternity Leave: the new statutory right explained

The new statutory right is not inconsequential, and so to ensure that everyone is up to date: here is what you need to know about this new right.

art
  • 30 March 2026
  • Employment

Legislative Changes – What Employers Need to Know for April 2026

With the phased implementation of the Employment Rights Act 2025 (ERA), alongside other legislative updates, April 2026 brings a wide range of important changes for employers.

art
  • 16 March 2026
  • Employment

Trade Union Law Changes from April 2026

April brings the next tranche of reforms under the Employment Rights Act 2025 including changes to the statutory recognition scheme making it easier for trade unions to be recognised in the workplace.

art
  • 13 March 2026
  • Employment

When Immigration compliance becomes discrimination: The UK’s uncomfortable workplace balance

UK employers today operate under powerful, and some may say conflicting, legal pressures. On one hand, they must prevent illegal working under UK immigration laws.