Ethnicity Pay Reporting: Government launches consultation

The Government has published a consultation seeking views on mandatory Ethnicity Pay Reporting (EPR) by employers.

The consultation comes in response to the Government’s findings that not enough progress has been made in removing barriers to entry and progression in the labour market for all ethnic groups.

Baroness McGregor-Smith recommended mandatory EPR in her 2017 report Race in the Workplace. At the time, it was agreed that the case had been made but businesses were expected to take it forward voluntarily and the Government reserved its position in case further action were required. It has now become clear that only a small number of businesses have chosen to publish such data voluntarily and the Government therefore believes it is time to move to mandatory reporting.

What do you need to know?

The consultation provides interesting background on the pay context. There are differences in labour market participation, and wide variations in earnings, between ethnic groups (notwithstanding other factors at play which feed into some pay differentials, including occupations, progression, age, education and gender).

Like Gender Pay Gap Reporting (GPGR), it is believed that EPR will enable employers to identify and then tackle barriers to creating a diverse workforce - not just for social justice purposes, but also because there is evidence that diverse workforces perform better and are more profitable.

The aim of the consultation is to agree a methodological approach which will drive “meaningful action”, while seeking to remain proportionate and without placing undue burden on businesses. In particular, the consultation looks at:

  • What ethnicity pay information should be reported. The Government wants to build upon experience from GPGR and explore various options, including:
    • one pay gap figure comparing average hourly earnings
    • several pay gap figures comparing average hourly earnings of different ethnic minority groups
    • ethnicity pay information by pay band (ie the proportion of employees from different ethnic groups by £20,000 pay bands or by pay quartiles).
  • Whether it should be mandatory for employers to publish a narrative or action plan alongside data (this is not currently mandatory for GPGR).

  • How employers can improve ethnicity reporting rates by their employees and data collection.

  • Whether a standardised approach to ethnicity classifications should be used.

  • What size of employer should be within scope to report. Should this be a threshold of over 250 employees, mirroring GPGR?

The full consultation is available here.

What happens now?

The deadline to respond is 11 January 2019. We will be submitting a response to the consultation which will incorporate client input and will provide details in due course.

For further information on the existing Gender Pay Gap Reporting regime, please see our Remuneration - Equality microsite.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.