Government introduces ethnicity pay gap reporting guidance

Is your organisation planning to voluntarily publish ethnicity pay gap data?The government has published guidance for employers on how to voluntarily report on their ethnicity pay gaps.

Developed by the Department for Business and Trade, the Equality Hub and the Race Disparity Unit, the advice is in response to one of the actions in the Inclusive Britain: government response to the commission on race and ethnic disparities policy paper published in March 2022. It detailed the need to address ethnicity pay gap reporting challenges, and support employers looking to promote greater fairness in the workplace.

The guidance included advice on collecting ethnicity pay data, and how to consider data issues such as confidentiality, aggregating ethnic groups and the location of employees, and reporting the findings. It also included support with recommended calculations and step-by-step instructions on how to do them, further analysis that may be needed to understand the underlying causes of any disparities, and the importance of taking an evidence-based approach towards actions.

According to the government, it published the guidance in order to help employers looking to report their ethnicity pay data, by providing a consistent approach to follow.

Kemi Badenoch, Minister for Women and Equalities, said: “The concrete actions we have delivered over the last year are improving people’s day-to-day lives, but I know that we need to do more to tackle disparities and build people’s trust in our great institutions. We must all work together to ensure no-one is held back by their race, social or ethnic background.”

Sandra Kerr, race director at Business in the Community, added: “It is good news that the government has published voluntary guidance for employers on ethnicity pay gap reporting. This shows that the government clearly understands that there is a discrepancy in pay for people from Black, Asian, mixed race and other ethnically diverse backgrounds. While the voluntary guidance is a welcomed step, we have been clear that the only way to close the ethnicity pay gap is to make reporting mandatory for businesses with more than 250 employees.

“Publishing ethnicity pay gap data is the easiest part of the action needed to close the pay gap; the real work will begin when we know the scale of the problem and the collective response needed to address it. I hope that the commitment the government has shown to providing voluntary guidance for employers will be followed swiftly by making ethnicity pay gap reporting mandatory.”