Lovewell’s logic: Should ethnicity pay gap reporting be mandatory?

Debbie Lovewell Tuck Editor Employee BenefitsAs we approach this year’s deadline for gender pay gap reporting, we have seen an increasing number of organisations choosing to voluntarily publish their ethnicity pay gap data alongside this.

In the past few weeks alone, these have included Greggs, which reported a 5.78% mean ethnicity pay gap for 2023, Nationwide Building Society, which reported a 6.4% mean ethnicity pay gap and Virgin Media, which reported a 9.7% mean ethnicity hourly pay gap. These follow numerous other employers, including Severn Trent Water, Centrica and BAE Systems, which had already reported ethnicity pay gaps alongside their published gender pay gap reporting for 2023.

Although there have been ongoing calls for ethnicity pay gap reporting to become mandatory, at this stage, it is still a voluntary process for employers. In April 2023, the government published guidance on ethnicity pay reporting, which aimed to set out a consistent approach for organisations that wish to measure pay differences among ethnic groups. This was also intended to advise employers on matters such as collecting ethnicity pay data, overcoming data issues such as confidentiality and aggregating ethnic groups, how to carry out the recommended calculations, and reporting the findings, among others.

By publicly setting out their current position on pay differentials among different ethnic groups, employers are establishing a further level of transparency around themselves as an employer. They are also sending a clear message to existing and prospective employees that this is an issue which is important to them.

For those where pay gaps exist, it also gives a clear base against which to measure the effectiveness of steps taken to improve upon and close these gaps. The fact employers choose to report upon these annually demonstrates the accountability they are taking in this area. In time, this will, ultimately, help an employer with its recruitment and retention efforts, as well as building trust with its workforce.

So, is it time for ethnicity pay gap reporting to become mandatory for all employers?

Debbie Lovewell-Tuck
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