Following a number of reports, studies and audits throughout 2017 and 2018 that highlighted that Black, Asian and minority ethnic (BAME) employees are being paid substantially less on average than their white counterparts, calls for larger employers to reveal their ethnicity pay-gap, in the same way they are required to report their gender pay-gap, are being heard with the government launching a new consultation to consider this subject further. Below we consider the context of this new government consultation whilst also recapping on the gender pay-gap reporting requirements.
Gender pay-gap reporting - Recap
The 'gender pay-gap' is the difference in average hourly pay between men and women in a particular workforce. In the Spring of 2018 it became a legal requirement for all organisations (public bodies and companies) in Great Britain with more than 250 employees to publish their gender pay-gap data on both their own and the Government's Gender Pay Gap websites. This is an obligation organisations are now required to repeat every year.
Under the Equal Pay Act 1970, and the Equality Act 2010, it is illegal to pay people performing the same role or “work of equivalent value” differently because of their gender. Despite this established legislation, it was apparent that organisations were paying their staff differently in terms of pay awarded to men and women. This led to a call for action, similar to that now being seen in the context of the ethnicity pay-gap, and resulted in the gender pay gap reporting obligations that are now in place.
Ethnicity pay-gap reporting - Background
In 2017, Baroness McGregor-Smith carried out a report of the barriers faced by ethnic minorities in the workplace ('Race in the Workplace'). It set out a number of proposals, but one of the biggest recommendations was that the government should legislate for mandatory reporting of ethnicity pay data. This report, coupled with research carried out throughout 2018, namely the Ethnicity Earnings Audit and the independent Resolution Foundation think-tank, highlights the underlying issue of disparity in pay between the 1.6 million BAME workers in Britain, and their white counterparts. As an illustration of the gap which exists, the independent Resolution Foundation think-tank found that Black, Asian and ethnic minority employees are losing out on £3.2 billion a year in wages compared to white employees carrying out the same work.
Ethnicity pay-gap reporting - Next steps
In response to such findings, the government launched the Race Disparity Audit’s Ethnicity Facts and Figures website in August 2017, and most recently in October 2018 issued a consultation on the mandatory approach to Ethnicity Pay Reporting. The purpose of the consultation is to enable the government to understand "how we can take forward our manifesto commitment to ask large employers to publish ethnicity pay data so we can establish the best and most meaningful approach to drive change, while ensuring proposals are proportionate and do not cause undue additional burdens on business". The consultation ends on 11 January 2019 and the outcome will no doubt be of significant interest to both employers and employees alike. Until the outcome of the consultation is known, employers should be mindful of any ethnic pay discrepancies that may exist in their workforce and consider whether any remedial action should be taken in light of potential future reporting obligations on this topic, which may put the spotlight on allegations of race discrimination in the context of pay, and give rise to future claims.