19 July 2023

The government has published the ‘Ethnicity pay reporting: government response’. In 2019 the government consulted on mandatory ethnicity pay reporting, which some individuals and organisations had proposed as a way of bringing more transparency to this area. This response sets out the context of this consultation, a summary of responses received, and the further work in this area undertaken by the government since the consultation closed.

Initially, this consultation sought views on a mandatory approach to ethnicity pay reporting. Respondents reported that they wanted to see alignment, where possible and appropriate, between mandatory ethnicity pay reporting and existing arrangements for gender pay reporting. There were mixed responses on the preferred metric to report ethnicity pay gaps.

Furthermore, this work has led government to conclude that, while ethnicity pay gap reporting can be a valuable tool to assist employers, it may not always be the most appropriate mechanism for every type of employer. Therefore, as set out in the “Inclusive Britain” report, which was published in March 2022, the government will not be legislating to make ethnicity pay reporting mandatory at this stage. It has been reported that this consultation highlighted genuine difficulties in designing a methodology for ethnicity pay reporting, with mixed views on the best metric to use. The government states that it is therefore clear that it is not appropriate or the government to mandate a particular methodology. Instead, the government have produced guidance to support employers who wish to report voluntarily. This was published in April 2023.

However, the government states that it is determined to take steps to help employers address unjust ethnic disparities in the workplace, recognising that disparities emerge for a complex range of reasons and that not all disparities are a result of discrimination. Introducing an effective pay reporting system is one way to achieve that because it helps employers build an evidence base for relative pay across ethnic groups and identify unexplained gaps, but recognises that employers need flexibility to do this well.

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