Last week the government launched a consultation to determine whether obligatory pay gap reporting could help address the pay disparity that minorities face in the workplace. This is the government’s next step in its agenda to tackle racial inequality, following the introduction of the Race Disparity Audit last year and the initiation of the Race At Work Charter.

The principle behind the consultation already looks very similar to that of the gender pay gap reporting obligations, which this year forced employers with over 250 employees to reveal their gender pay gaps for the first time. Gender pay gap reporting has received praise for taking a legislative step towards tackling such an important issue but has also been criticised for not going further or focusing on the figures from an equal pay perspective.

Laws of this nature place many commercial organisations in the spotlight, with the ensuing media attention pushing businesses into action. As a result, most employers have not simply published their figures but also contextualised the figures and published the steps they are taking to reduce their pay gaps.

Whilst gender pay gap reporting currently only applies to larger companies, it is likely to be rolled out to smaller companies in the future. In fact, many smaller employers have chosen to voluntarily report on their gender pay gap to address any issues early and show their commitment to attracting and retaining female talent in an increasingly difficult recruitment market.

What does this mean for my business?

With the deadline for next year’s gender pay gap reporting deadline looming, it is prudent to begin preparations now and also consider what race pay gap may exist in order to be as prepared as possible for this prospective legislation.