UK Government Launches Public Consultation in Advance of Mandatory Ethnicity and Disability Pay Gap Reporting Bill

The UK government has launched a consultation seeking input on measures it proposes to include in an upcoming Equality (Race and Disability) Bill. The Bill would require mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees. The responses to the consultation are intended to help shape draft legislation. The King’s Speech in July 2024 announced the government’s intention to introduce this type of legislation.

Large UK employers – including the UK subsidiaries of a large number of U.S.-based multinationals – already are required to report gender pay gap data. This has been a requirement since 2017. 

The consultation seeks feedback on 27 questions relevant to private sector employers:

• Extending mandatory pay gap reporting to ethnicity and disability (two questions)
  • As a threshold matter, whether large employers should have to report these gaps.
• Geographical scope (two questions)
  • The Government is proposing to follow the same approach as for gender pay gap reporting, which among other things would include mandatory reporting by large private sector employers in England, Wales and Scotland.
• Pay gap calculations (six questions)
  • The Government proposes requiring employers to report the same set of pay gap measures for ethnicity and disability as they report for gender. This would consist of reporting on:
    • Mean and median differences in average hourly pay;
    • The percentage of employees in four equally-sized groups, ranked from highest to lowest hourly pay (pay quarters);
    • Mean and median differences in bonus pay; and
    • The percentage of employees receiving bonus pay for the relevant protected characteristic.
  • It also would be mandatory for employers to report on the overall breakdown of their workforce by ethnicity and disability and the percentage of employees who did not disclose their personal data on their ethnicity and disability, to give context to the employer’s ethnicity and disability pay gap figures.
• Action plans (two questions)
  • The consultation is seeking views on whether employers should have to produce action plans as part of ethnicity and disability pay gap reporting. 
• Dates and deadlines (four questions)
  • Under the current gender pay gap regulations, large employers have a “snapshot date” of April 5 each year to collect pay data from their employees. They have to report their pay gap data within 12 months, i.e., by April 4 of the following year. The Government is proposing using the same sets of dates for ethnicity and disability pay gap reporting. 
  • In addition, employers would report their ethnicity and disability pay gap data online, similar to the current gender pay gap reporting process.
• Enforcement (two questions)
  • The Equality and Human Rights Commission enforces gender pay gap reporting. The Government is proposing that the same enforcement approach be used for ethnicity and disability pay gap reporting.
• Ethnicity data collection and calculations (five questions)
  • To protect employee privacy and help produce statistically robust data, the Government proposes that there be a minimum of ten employees in any ethnic group being analyzed. To meet this threshold, employers might be required to aggregate some ethnic groups. 
  • If an employer has smaller numbers of employees in different ethnic groups, it could report figures for two groups (e.g., comparing white British employees with ethnic minority employees). Three options for binary classification are proposed in the consultation.
• Disability data collection and calculations (four questions)
  • The Government is proposing a binary approach, measuring the disability pay gap by comparing the pay of disabled employees with non-disabled employees.
  • To protect the privacy of employees and ensure data is statistically robust, the Government proposes that each group being compared include at least ten employees.

The consultation was launched on March 18. It is open until June 10. Among other options, there is an online response form.

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