The government has confirmed its commitment to introducing mandatory ethnicity and disability pay gap reporting for employers with more than 250 employees. While no timetable has yet been announced, it is widely expected that the framework will closely mirror the existing gender pay gap reporting regime, with many employers potentially choosing to publish all pay gap data within a single report.
However, ethnicity and disability pay gap reporting is likely to be more complex in practice. Unlike gender data, it relies heavily on employee self-reporting, which can present real challenges around participation, data quality and trust.
Some employers have already begun collecting and analysing this information, and there are clear advantages to doing so. Early engagement allows organisations to demonstrate openness and build confidence around how sensitive data is used. This, in turn, can encourage greater employee participation, resulting in more robust and meaningful data over time. By contrast, employers that wait until reporting becomes compulsory risk publishing an initial report that is incomplete or unconvincing due to low disclosure rates. That can reinforce employee concerns about self-reporting and make it even harder to gather reliable data in future years.
Taking action now also gives employers the opportunity to understand their data and begin addressing any gaps before legal reporting obligations take effect. This proactive approach allows organisations to move beyond compliance and focus on meaningful change.
While some employers may feel hesitant about uncovering ethnicity or disability pay gaps, there are good reasons not to delay. Early analysis provides time to identify underlying causes, develop targeted interventions, and demonstrate a genuine commitment to fairness and transparency, before reporting becomes a legal requirement.
It is also important to keep two broader considerations in mind. Pay gap reporting, even when carried out in line with legal requirements, has its limitations, and organisations committed to genuine progress will often seek to go further: for example, by looking at intersectional pay gaps. At the same time, reporting alone is not enough. It should form part of a wider approach to diversity and inclusion, underpinned by training, effective policies, allyship and a culture in which inclusion is actively promoted.
Rena Magdani is head of employment, pensions and immigration at Freeths
