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Will Employers Need to Report on Ethnicity Pay Gaps?

on Friday, 09 July 2021.

The Confederation of British Industry (CBI), Trades Union Congress (TUC) and Equality and Human Rights Commission (EHRC) have all called for a clear timetable for the introduction of mandatory ethnicity pay gap reporting.

The three signatories argue that mandatory reporting would highlight pay disparities, and the lack of minority representation in senior positions with the hope that this would push employers towards action. They have addressed a letter to the Cabinet Office Minister, Michael Gove, to request clarity for the introduction of such reporting.

This follows the findings of the Commission on Race and Ethnic Disparities, published on 31 March 2021, which was set up by the Prime Minister in 2020 to identify racial disparities and inequalities in Britain and ways to address them. However, the Commission findings did not recommend mandatory pay gap reporting. Instead the report recommended investigating "what causes existing ethnic pay disparities by requiring the publication of a diagnosis and action plan for organisations who voluntarily publish ethnicity pay figures."

Consultation on Introducing Mandatory Ethnicity Gap Reporting

In addition to this, we continue to await the Government's response to its consultation on introducing mandatory ethnicity pay gap reporting, which was originally launched in October 2018. The Government opened this consultation to seek views on whether or not large employers should be required to publish ethnicity pay information.

The consultation asked a number of questions, including:

  • what ethnicity pay information should be reported
  • which employers should report ethnicity pay information
  • how employers can overcome the challenges of collecting data
  • whether employers who find a disparity should be required to include an action plan

The Government considers that mandatory ethnicity pay reporting alongside gender pay gap reporting could provide a way of examining any potential overlapping effects of pay differences. For example, employers could consider whether women from an ethnic minority background are likely to experience greater pay differentials to men and women from a white background.

What Do Employers Need to Do?

At the moment, there is no obligation on employers to report ethnicity pay gaps. However, in light of this recent letter, this could change and employers should be careful to remain up to date with their requirements.

If you have any questions on ethnicity gap reporting, or employment issues relating to it, please contact Nick Murrell in our Employment Law team on 07500 009162 or complete the form below.

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