Getting ahead with ethnicity pay gap reporting

Mandatory ethnicity pay gap reporting could become the norm, as calls for its introduction intensify.  

The Government’s consultation on the issue closed over two years ago, but pressure in favour of a legal requirement has been building in recent months – from business and parliamentary groups, as well as the public. 

Not everyone is waiting for government guidance, with [PwC] research indicating more companies are producing voluntary reports for internal use and external publication.  

How can organisations make the most of ethnicity pay gap reporting and avoid potential pitfalls? 

Strategy on ethnicity pay gap

There must be a clear strategy in place to address the trends revealed. 

The case for workforce diversity has been made repeatedly –with increases in innovation, productivity, engagement and wellbeing all frequently cited as benefits. Data gathering plays an essential role in unlocking these rewards: companies need to build a realistic understanding of their baseline position, so that meaningful improvements can be made. 

But data alone is not enough. 

As with any strategic objective, there needs to be a commitment to properly analysing the information provided and using the findings to take specific, measurable actions. Leadership must set the tone and take responsibility for delivery. 

Communication on ethnicity pay gap

The purpose and goals of ethnicity pay gap reporting must be understood by everyone. 

Non-disclosure is often one of the biggest barriers to success. Low rates of engagement mean the overall picture will be skewed. Employees need to trust that this sensitive information will be handled appropriately.  

Employees should also be part of the conversation about how to move forward. When designing the next steps, discussions should utilise focus groups, reverse mentoring, employee networks and other collaborative approaches. This exercise needs to be more than a monologue from management. 

Advice 

Timely legal advice should also shape the process. 

Data protection considerations will need to inform all aspects – from the justifications for collecting the data, to decisions about how it is accessed and retained, and how to meet transparency obligations so employees understand exactly what is happening to the information provided. 

Privacy will be a factor in how data is segmented, anonymised and analysed. A balance will need to be struck between having a nuanced picture capable of identifying specific barriers and solutions, but also avoiding publication of anything too granular that could compromise the data protection rights of the individuals involved. 

Other areas of law will also be very relevant when it comes to addressing the situations highlighted by the findings, such as discrimination and equality legislation and best practice.

Time to get ahead? 

Despite complexities and delays, we are arguably headed towards greater diversity reporting in several areas. A February 2021 report from the House of Commons Women and Equalities Committee recommends that “the Government should publish proposals for introducing both ethnicity and disability pay gap reporting within the next six months”.  

Given the level of thought required, and the potential benefits from getting this right, now is the time to get the ball rolling. 

For further advice, contact our employment team.