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Ethnicity pay gap reporting

Overview

Following the introduction of the mandatory requirement for private and public sector organisations to calculate and publish a gender pay gap report, there have been calls for pay transparency to be extended to others areas affected by inequality and a lack of diversity.

The Conservative Party’s election manifesto contained a commitment to introduce mandatory ethnicity pay gap reporting, however on 17 March 2022 it was made clear that this will not be happening. 

The government has carried out a consultation on ethnicity pay reporting. The consultation ended on 11 January 2019. No government proposals have been put forward on this yet, and

This is despite calls by the Commons Women and Equalities Committee, and the CIPD, for mandatory ethnicity pay gap reporting by large employers by April 2023.

To support employers, the CIPD have produced a reporting guide for ethnicity pay reporting, recommending what data should be gathered and in what way. Information is also provided on creating a narrative and long-term action plans.  

More information on gender pay gap reporting can be found on our employment law page.

 

Government rules out mandatory ethnicity pay gap reporting

On 17 March 2022, the government confirmed they would not, at this time, bring in compulsory ethnicity pay gap reporting. 

In its new “Inclusive Britain” policy, the government highlighted the challenges ethnicity pay gap reporting would bring. Specifically, it outlined that different ethnic groups which share the same race can have very different outcomes; as such, specific ethnic groups, rather than broad categories, must be used when compiling and analysing data. Meaningful pay gap reporting on ethnicity will not be able to follow the structure of gender reporting, whereby only 2 categories (male and female) are considered. This complexity makes ethnicity pay gap reporting a more resource-intensive activity for businesses. The government recognised that many employers are trying to recover from the impacts of the Covid pandemic so didn’t want to impose new reporting burdens on them whilst they attempt to do so. It did, however, outline that businesses will be supported to voluntarily report through new guidance set to be published by the Department for Business, Energy and Industrial Strategy (BEIS) in summer 2022.