Ethnicity and disability pay gap reporting – what’s in store? 

The Government has issued a new consultation on its proposals to introduce mandatory ethnicity and disability pay gap reporting for larger employers (250+ employees). 

Responses to the consultation will be used to shape the Government’s proposed Equality (Race and Disability) Bill, which was a Labour party manifesto commitment and featured in the King’s Speech on 17 July 2024 following the General Election. 

The Government plans to introduce a similar reporting framework to the existing gender pay gap reporting framework, but with distinct considerations for ethnicity and disability. It is intended to provide the same transparency and impetus for positive change for people from different ethnic groups and disabled people.  

Who will be covered by the new duty? 

Following the same approach as existing requirements for gender pay gap reporting, the new duty will apply to: 

• large (250+ employees) private and voluntary sector employers in Great Britain (England, Wales and Scotland) 

• large public sector bodies in England 

• certain public authorities operating across Great Britain in relation to non-devolved functions. 

The Government proposes to apply the same ‘snapshot’ dates of 5 April (for private and voluntary sector employers) and 31 March (public bodies) as currently apply under the gender pay gap regulations, with reports to be submitted online within 12 months of the snapshot date.  

Pay gap calculations 

The Government is proposing that employers will be required to report the same six pay gap measures as currently apply for gender pay gap reporting: 

• mean differences in average hourly pay  

• median differences in average hourly pay 

• pay quarters – the percentage of employees in four equally-sized groups, ranked from highest to lowest hourly pay 

• mean differences in bonus pay  

• median differences in bonus pay 

• the percentage of employees receiving bonus pay for the relevant protected characteristic.  

The Government is also proposing to make it mandatory for employers to report on:  

• the overall breakdown of their workforce by ethnicity and disability; and 

• the percentage of employees who did not disclose their personal data on their ethnicity and disability. 

The intention is that this additional data would give context to an employer’s ethnicity and disability pay gap figures. For example, allowing for low self-declaration rates from employees. 

In addition, public bodies may be required to report further information on ethnicity:  

• ethnicity pay differences by grade or salary bands 

• data relating to recruitment, retention and progression by ethnicity. 

The Government may decide to extend these additional reporting requirements to disability.  

The Government is seeking views on whether employers should have to produce mandatory action plans for ethnicity and disability pay gap reporting. These can be used to set out the reasons for any pay gaps and any proposed actions by the employer to close the gap. 

Ethnicity data 

The Government considers that the best method for collecting ethnicity data is for employers to ask employees to report their own ethnicity, based on the ethnicity classifications used in the national census. 

It is proposed that a minimum threshold of 10 employees will apply for an ethnic group to be analysed, but employers may add certain ethnic groups together to meet this threshold. 

If an employer has smaller groups in different ethnic groups, they can choose to report their figures for two groups as a ‘binary classification’ (for example, comparing White British employees with ethnic minority employees as a single group). 

Disability data 

The Government is proposing to take a binary approach to disability pay gap reporting, by comparing the pay of disabled employees with non-disabled employees, using the Equality Act definition of a ‘disability’.  

It appears that the proposal is to adopt ‘self-reporting’ of disability, but with employees not being required to identify or disclose a disability to their employers as a result of the introduction of disability pay gap reporting.   

Next steps 

The consultation will close on 10 June 2025, following which the Government will analyse responses before publishing its Equality (Race and Disability) Bill. It would therefore seem unlikely that the Bill will appear before the autumn.  

There is currently no confirmed timescale for these new reporting requirements to take effect, but employers should start to consider the appropriate mechanisms for collecting the data and producing the reports. Whilst gender pay gap reporting is generally well-embedded amongst employers, these new reporting requirements will involve some additional complexities and advanced planning.