[UK] Employers must report ethnicity and disability pay gaps

The UK’s large employers will be required to act to close ethnicity and disability pay gaps under legislation mirroring rules already in place for gender pay reporting, Financial Times reports.

Draft rules were published on March 25 which state that organisations with more than 250 staff must publish annual figures on the gaps in average hourly pay and bonuses, and show where staff of different ethnicities and disability status rank in their pay distribution. 

In addition, it will reportedly be mandatory to publish “action plans” explaining any disparities and setting out ways to address them. This mirrors a new requirement to act on gender pay gaps set to take effect in 2027. 

The government has yet to confirm whether the legislation would be included in May’s King’s Speech. 

Business groups and unions have long been in favour of the mandatory disclosure of pay gaps as a means of tackling racial inequality at work. The latest official data (published in 2023) revealed that UK-born White employees earned more on average than employees from most ethnic minorities, after adjusting for characteristics such as occupation, qualifications, age and sex.  

UK-born Black, African, Caribbean or Black British employees earned 5.6 per cent less on average, after adjustment, than their White peers. 

Official data published in 2024 showed that disabled employees earned 12.7 per cent less than those without a disability on an hourly basis. This gap reportedly narrowed but did not disappear after adjusting for factors such as occupation and qualifications. 

Seema Malhotra - UK Minister for Equalities - told the Financial Times that greater transparency would help ensure “fair pay and progression opportunities”. 

Since 2017, gender pay reporting has been mandatory for large UK employers. However, views are mixed on the extent to which it has helped narrow pay gaps, since employers are not yet required to act on the disparities it exposes. 

Official data shows that, over the past decade, the overall hourly pay gap between men and women has narrowed from 19.3 per cent to 12.8 per cent. With a smaller pay gap between those working full-time hours, narrowing from 9.6 per cent to 6.9 per cent over the same period. Ethnicity and disability pay gap reporting will have more complexity than gender pay gap reporting as employees are not required to disclose their status. 

Some organisations are not large enough to publish a detailed breakdown of all groups without inadvertently revealing personal information. 

According to the government, the minimum requirement would be publishing a binary comparison of disabled and non-disabled staff, and of White employees with all other ethnic groups combined; comparing five ethnicities only if there were sufficient employees in each group.  

Source: Financial Times

(Quotes via original reporting)

The UK’s large employers will be required to act to close ethnicity and disability pay gaps under legislation mirroring rules already in place for gender pay reporting, Financial Times reports.

Draft rules were published on March 25 which state that organisations with more than 250 staff must publish annual figures on the gaps in average hourly pay and bonuses, and show where staff of different ethnicities and disability status rank in their pay distribution. 

In addition, it will reportedly be mandatory to publish “action plans” explaining any disparities and setting out ways to address them. This mirrors a new requirement to act on gender pay gaps set to take effect in 2027. 

The government has yet to confirm whether the legislation would be included in May’s King’s Speech. 

Business groups and unions have long been in favour of the mandatory disclosure of pay gaps as a means of tackling racial inequality at work. The latest official data (published in 2023) revealed that UK-born White employees earned more on average than employees from most ethnic minorities, after adjusting for characteristics such as occupation, qualifications, age and sex.  

UK-born Black, African, Caribbean or Black British employees earned 5.6 per cent less on average, after adjustment, than their White peers. 

Official data published in 2024 showed that disabled employees earned 12.7 per cent less than those without a disability on an hourly basis. This gap reportedly narrowed but did not disappear after adjusting for factors such as occupation and qualifications. 

Seema Malhotra - UK Minister for Equalities - told the Financial Times that greater transparency would help ensure “fair pay and progression opportunities”. 

Since 2017, gender pay reporting has been mandatory for large UK employers. However, views are mixed on the extent to which it has helped narrow pay gaps, since employers are not yet required to act on the disparities it exposes. 

Official data shows that, over the past decade, the overall hourly pay gap between men and women has narrowed from 19.3 per cent to 12.8 per cent. With a smaller pay gap between those working full-time hours, narrowing from 9.6 per cent to 6.9 per cent over the same period. Ethnicity and disability pay gap reporting will have more complexity than gender pay gap reporting as employees are not required to disclose their status. 

Some organisations are not large enough to publish a detailed breakdown of all groups without inadvertently revealing personal information. 

According to the government, the minimum requirement would be publishing a binary comparison of disabled and non-disabled staff, and of White employees with all other ethnic groups combined; comparing five ethnicities only if there were sufficient employees in each group.  

Source: Financial Times

(Quotes via original reporting)