A consultation has been launched asking employers to contribute their views on implementing mandatory ethnicity pay reporting. It sets out options and asks questions on what ethnicity pay information should be reported by employers to allow for meaningful action, who should be expected to report, and the next steps to be taken.

In previous discussions, the Government stated that it preferred voluntary, business led ethnicity reporting, but given the small number of employers reporting and the different methodologies that have been adopted, it now believes that it is necessary to implement mandatory reporting.

What ethnicity information should be reported?

The consultation asks for views on what type of ethnicity pay information should be reported that would not place undue burdens on business but allow for meaningful action to be taken; and the extent to which employers would find it helpful to mirror parts of the gender pay gap methodology. The proposed options are:

  • One pay gap figure comparing average hourly earnings of ethnic minority employees as a percentage of white employees;
  • Several pay gap figures for different ethnic groups, using standardised ethnicity classifications;
  • Ethnicity pay information by £20,000 pay band; or
  • Ethnicity pay information by pay quartile.

The consultation also seeks views on whether reports should be limited to pay gap information, or whether to include the following wider reporting obligations:

  • Reporting of contextual data such as geographical variations, age variations, gender variations to help ensure a true and fair picture;
  • Where disparities in ethnicity pay are identified, a requirement to publish a narrative or an action plan for addressing the disparities.

Who will be expected to report?

The government has stated that it believes employers with fewer than 250 employees should not be expected to publish their ethnicity pay data, however the consultation provides further options on what the employee threshold should be. The suggested options are as follows:

  • All employers;
  • Employers with 50+ employees;
  • Employers with 250+ employees (mirroring the gender pay gap reporting threshold);
  • Employers with 500+ employees; or
  • Other threshold.

Ethnicity data and classifications

The consultation accepts that there are a number of challenges around collecting, analysing and reporting ethnicity pay information in a meaningful way, given that there is no legal obligation for individuals to disclose which ethnic group they identify themselves with, as well as there being no current obligation on employers to collect ethnicity information. The consultation therefore goes on to seeks views on:

  • Which (if any) standard ethnicity classifications employers current use for reporting;
  • What effective action can be taken for employers to improve employee self-reporting or declaration rates; and
  • How should self-reporting or non-disclosure rates be reflected in the information reported by employers.

Next steps and government support for employers

The Government has recognised that some businesses will have to do a lot of ground work to be in a position to publish their ethnicity data. The government is proposing to offer support similar to that offered for gender pay reporting.

The Government are also considering implementing a trial or phased approach in which they could work with “early adopters” across the public and private sector to test approaches before mandatory reporting is required.

The consultation closes on 11 January 2019.