Government confirms plans to introduce mandatory pay reporting for large employers

Background

The government has published its response to the March 2025 consultation on ethnicity and disability pay gap reporting, confirming that it will proceed with its plans for mandatory reporting for employers with 250 or more employees.

This forms part of the proposed Equality (Race and Disability) Bill, building on the existing gender pay gap reporting framework. The consultation received strong support, with the majority of respondents backing mandatory reporting.

Draft legislative provisions have also been published to illustrate how the regime is expected to operate in practice.

Key features of the proposed regime

The new regime will closely mirror the existing gender pay gap reporting framework. Employers will be required to report mean and median pay gaps, bonus gaps and pay quartile data.

For ethnicity, employers will be required to report a minimum binary comparison between white employees and the pay of employees in all other ethnic groups combined. Where sufficient data is available, further reporting across five broad ethnic groups will also be required.

For disability, reporting will initially be limited to a binary comparison between disabled and non-disabled employees, using the statutory definition of disability. The government has indicated that more detailed reporting may be introduced in future if data quality improves.

Employers will also need to publish information on workforce composition, including the proportion of employees who have not disclosed their ethnicity or disability. This is intended to provide context and highlight the reliability of the data.

Action plans and wider reporting

The government intends to link disability and race pay gap reporting to equality action plans, which require employers to publish the measures they are taking to address the gender pay gap and the measures they are taking to support employees going through the menopause. While these action plans will be voluntary from April 2026, they are expected to become mandatory from Spring 2027.
Following the strong support from the consultation respondents, the government plans to extend the scope of the equality action plans to require employers to explain the steps they are taking to address identified pay gaps and broader workplace inequality relating to race and disability.

Scope, timing and enforcement

The scope of the regime will align with gender pay gap reporting, covering large private and voluntary sector employers in Great Britain, as well as certain public sector bodies. The same snapshot dates and reporting deadlines will apply, and reporting will be completed via an online portal.

Enforcement will sit with the Equality and Human Rights Commission, consistent with the current gender pay gap framework. No implementation date has yet been confirmed, although the government has stated that it will continue developing the legislation and supporting guidance.

Learning points for employers

This development signals a clear direction of travel towards greater transparency in relation to race and disability in the workplace. Employers should begin preparing now by reviewing their data collection practices, particularly around employee disclosure rates, which will be critical to producing meaningful reports.

There is also a clear expectation that reporting will not be a standalone exercise. Employers will be expected to explain and, in due course, take action to address any gaps identified. Taking early steps to analyse workforce data and consider potential action plans will place employers in a stronger position ahead of implementation.