In April 2023, the Government published guidance to help employers voluntarily measure, report on and address the ethnicity pay gap. This move followed data from the Office of National Statistics, which revealed significant variations in earnings between ethnic groups, with some ethnic minority groups earning less than white British employees and some earning more.
Unlike the mandatory gender pay gap reporting obligations for larger employers with at least 250 employees, ethnicity pay gap reporting is currently entirely voluntary. However, many employers already report their ethnicity pay gap information, and this guidance will help ensure that reporting is reliable and consistent.
What is the purpose of ethnicity pay gap reporting?
This guidance helps employers identify and investigate disparities, understand their causes, and develop action plans to address any issues. The methodology for calculating the ethnicity pay gap mirrors that of the gender pay gap, but there is greater complexity involved due to the larger number of potential ethnic groupings analysis may need to cover.
The guidance explains how employers can collect their ethnicity pay data for employees, including the thorny considerations of data protection, confidentiality and aggregating ethnic groups, as well as guidance on how to report on the findings and carry out appropriate analysis to identify and understand the underlying causes of any disparities.
To maximise the impact of ethnicity pay reporting, employers should outline the actions they intend to take to reduce any disparities, including how success will be measured.
