News item

Ethnicity pay gap consultation - why, what, when?

12th October 2018

Why is the government consulting?

In 2017, a government-commissioned report, Race in the Workplace, set out a range of actions for business and the government to take forward to help improve employment and career prospects for those from ethnic minority backgrounds. One of these recommendations was that the government should legislate for mandatory reporting of ethnicity pay data. A recent review of progress against the recommendations suggests that currently only 11% of organisations collect such data. On this basis, the government has decided to consult on the introduction of mandatory ethnicity pay reporting. Consultation commenced yesterday and closes on 11th January 2019.


What is the consultation about?

The consultation seeks views on what type of ethnicity pay information should be reported.

Options suggested in the consultation include a single pay gap figure comparing average hourly earnings of ethnic minority employees as a percentage of white employees (a similar approach to gender pay gap reporting), or several pay gap figures broken down by different groups, or ethnicity pay information by pay band or quartile.

The government is also consulting on what supporting or contextual data (if any) should be disclosed and whether employers that identify disparities in their ethnicity pay should be required to publish an action plan.

The consultation also considers the difficulties around collecting, analysing and reporting ethnicity pay information in a meaningful way given that many employers currently do not collect data on ethnicity. For those that do, declaration rates can be low and organisations often use different ethnicity classifications to one another.


Which employers will be affected?

The government is contemplating restricting the mandatory reporting requirement to employers with more than 250 employees, in line with gender pay gap reporting, although the consultation asks for views on whether a higher or lower threshold should be put in place.

If introduced, it is likely to affect both public and private sectors. Whilst the education sector is not specifically considered in the consultation document and the scope is therefore speculative at this stage, we would envisage the impact – unless the threshold is lowered – would largely fall on multi-academy trusts and the FE/HE sector rather than individual schools. It's possible that maintained schools where the local authority is the employer would have to provide data as part of the local authority's report, although - unusually - that was the not the case with gender pay gap reporting so it could be that such schools are also treated separately from the local authority in the case of ethnicity pay gap reporting.


When will these proposals be taken forward?

There is no indication in the consultation document as to when the government might envisage implementing mandatory reporting. Consultation concludes in January and there is some suggestion that a trial or phased approach could be implemented. Bearing this in mind, it is unlikely to be implemented any earlier than 2020.