Mandatory ethnicity and disability pay gap reporting: government opens consultation

Kevin McKenna, Partner

On 18 March 2025, the government published an open consultation seeking views on how to implement mandatory ethnicity and disability pay gap reporting for large employers (250 or more employees). The consultation will close at 11:59pm on 10 June 2025. The responses will help to shape proposals which will be included in the upcoming Equality (Race and Disability) Bill, announced in the King’s Speech on 17 July 2024.

In tandem with the consultation, the government has also published long-awaited findings from the 2021–22 disability workforce reporting consultation. These findings reflected strong support for mandatory reporting and collection of disability workforce data, citing benefits such as greater inclusion and accountability. Concerns were raised around data privacy and the risk of reporting becoming a tick-boxing exercise. This has prompted calls for a more standardised and anonymised approach to reporting.

What is being proposed?

The government proposes using a similar framework to the existing gender pay gap reporting. The same employers would be within scope (so all employers with 250 or more employees), and the same six key metrics would apply, covering mean and median differences in average hourly pay and bonus pay, pay quarters, and % of employees receiving bonus pay for the relevant protected characteristic. In addition, employers would need to publish a breakdown of their workforce by ethnicity and disability, including the percentage of employees who chose not to disclose their data.

Public bodies could face enhanced obligations. These may include reporting on pay differences by grade or salary band, as well as data on recruitment, retention, and progression by ethnicity. The consultation has asked for views as to whether these requirements should be extended to disability, including whether employers should be required to produce action plans.

Ethnicity and disability status would be self-reported (unlike gender pay gap reporting), with employees given the option to opt out. To ensure consistency, the government proposes the use of standardised ethnicity groupings, which should be based on the Government Statistical Service (GSS).

To protect anonymity and compliance with data protection considerations, data would only be published where at least ten employees are in any ethnic group. Smaller groups may need to be aggregated. At a minimum, it is proposed that all employers report a binary comparison, preferably between White British employees and all other ethnic minority groups combined. Similarly, with disability reporting, a minimum of ten employees must fall in each group being compared, and a binary approach is proposed, comparing disabled and non-disable employees only, avoiding the complexities of reporting by type of impairment and the risk of individual identification.

Enforcement of the new reporting requirements would fall under the remit of the Equality and Human Rights Commission (EHRC), as is already the case with gender pay gap reporting.

The government has described the consultation as “the beginning of the process”. A broader evidence-gathering exercise is planned to inform the wider measures of the Race and Disability Bill, including a proposed legal right to equal pay for ethnic minority and disabled people and “other areas of equality law”.

While the consultation offers a useful insight into the government’s likely direction to ethnicity and disability pay gap reporting, many questions still remain. Employers are encouraged to engage with minority groups of staff to consider additional supportive action and to begin laying the groundwork for future compliance and more inclusive workplaces, particular in relation to any future training and information programmes which will need to be implemented.

We will be responding to the Consultation so please get in touch if you have any views which you would like us to include in our response – info@kuits.com.