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Mind the gap – reporting on ethnicity and disability pay gaps

Since 2017, all employers with 250 employees or more have been required to carry out gender pay gap reporting. The gender pay gap is the difference between the average earnings of men and women across a workforce. Private sector employers have to report annually on 4 April, while public sector employers report annually on 30 March.

Gender pay gap reporting has the aim of promoting more transparent and gender-balanced pay practices. As gender pay gap reports are public, it’s possible to browse them and compare data between employers.

Greater transparency can lead to greater accountability. Publishing pay gap data does not automatically eradicate pay disparity, but it can stimulate internal discussion about the makeup of an organisation’s workforce. This can help employers devise an action plan to reduce the gap. Gender pay gap reporting appears to have raised the level of women being recruited and promoted into senior roles.

Given the benefits realised from gender pay reporting, it’s been recommended that pay gap reporting should be extended to other under-represented groups in the workplace. In particular, reporting on ethnicity and disability pay gaps have long been suggested.

In January 2019 the Government completed its consultation on ethnicity pay gap reporting. However, to date the Government has not yet moved forward with plans to make ethnicity pay gap reporting mandatory. Despite this, some organisations voluntarily produce their own ethnicity pay gap reports.

One issue that has long dogged ethnicity pay gap reporting is how ethnicity is to be defined. The commonly used term “BAME” (Black, Asian and Minority Ethnic) is the term most often used in ethnicity pay gap reports. However, census reporting uses a wider selection of ethnic categories. There are also issues of confidentiality and data protection.  For some employers too much detail could lead to identification of the employees involved.

Despite the challenges, ethnicity pay gap reporting can bring real benefits to an organisation. As Sandra Kerr of Business in the Community notes: “Ethnicity pay gap reporting is an important tool that employers can use to ensure they are being fair in pay, reward and recognition. It can also help an organisation identify where there may be structural issues on how talent from diverse ethnic backgrounds is distributed within the organisation. De-aggregating the data gives an additional layer of transparency on where there may be pay disparities within ethnic groups and by location. Most importantly, it ensures the issues of race, ethnicity and inclusion remain pertinent issues for discussion at the top table within organisations.”*

Similar benefits can be realised where organisations carry out disability pay gap reporting. More than 11 million people in the UK have a disability, and 16% to 19% of those are of working age. According to research by the TUC, disabled women face the most significant pay gaps of all. This highlights the importance of employers taking an intersectional approach when tacking pay gap reports and action plans.

Instead of waiting for mandatory ethnicity and disability pay gap reporting to be introduced, employers can take steps to identify and address any gaps they have now. Recommended steps for employers to follow are:

  1. Collect and publish ethnicity and disability pay gap data in a similar manner to gender pay gap reporting.
  2. Use this information to create action plans that address the underlying causes of pay gaps.
  3. Set targets for reducing pay gaps.
  4. Measure and report progress against those targets annually.

LexLeyton can assist employers with advice and training on diversity and inclusion in the workplace. Please contact us at legal@lexleyton.co.uk if you would like to discuss this topic in more detail.

*A Guide for General Counsels – Ethnicity Pay Gap Reporting; Business in the Community (BITC); published 14 April 2021. Available at: <https://www.bitc.org.uk/report/a-guide-for-general-counsels-ethnicity-pay-gap-reporting/>.

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