Ethnicity pay gap reporting

21 May 2019


The jury is still out on what mandatory reporting may come into force as the Government is still considering the responses to its consultation.



Back in 2017 the ‘Race in the Workplace’ report from Baroness McGregor-Smith, recommended that government should legislate to introduce mandatory reporting of ethnicity data. At the time, the government said that the case had been made for ethnicity reporting and it expected businesses to do this voluntarily. It did however ask Business in the Community (BITC) to assess what steps employers have taken to haul down workplace barriers and harness the talent of a diverse workforce.


A review of the ‘Race at Work’ report one year on (2018) found that barriers persist in the workplace. The review included a number of calls to action for business and contributes to the Industrial Strategy goals of boosting productivity by backing businesses to create good jobs and increase the earning power of people throughout the UK with investment in skills, industries and infrastructure.


Monitoring ethnicity and pay

The 2018 review found that just 11% of employees reported that their organisation collects data on the ethnicity pay gap ratio - in particular those in small organisations are much less likely to report that their organisation collects data on the ethnicity pay gap ratio, just 8%.


Of those people who work in an organisation that collects data on the ethnicity pay gap, 50% reported that their organisation publishes the data that they collect.


‘Race in the Workplace’ recommendations on monitoring ethnicity and pay include:


  • Listed companies and all businesses and public bodies with more than 50 employees should publish five- year aspirational targets and report against these annually. They should also publish a breakdown of employees by race and pay band.
  • All employers should take positive action to improve reporting rates amongst their workforce, explaining why supplying data will improve diversity and the business as a whole.
  • Government should legislate to ensure that all listed companies and businesses employing more than 50 people publish workforce data broken down by race and pay band.

Government consultation

As only a small number of employers had chosen to publish ethnicity pay data voluntarily, in October 2018 the government published a consultation on ethnicity pay reporting  (alongside a Race in the Workplace Charter) asking how a new mandatory reporting requirement should operate.


The government invited views on mirroring some or all elements of the gender pay gap regulations such as proposing the same threshold of 250 employees or above, not 50 or above as recommended in the ‘Race in the Workplace’ review.


CIPP response

The CIPP surveyed its members to help inform our response. From an administrative burden perspective comparability with the methodology applied for gender pay gap would be preferred by our members. However, our members are pragmatic and recognise that this will not achieve the same results because of the different challenges presented by ethnicity classifications. Our key conclusions and recommendations in our response were:


  • There must be value achieved through the efforts of the software developers, payroll and HR professionals and so we recognise different methodology will be required.
  • If government consider that the time is right to deliver another reporting obligation on employers, in the name of transparency, then significant time and structured planning will be needed. Rushed delivery will not achieve accurate outcomes.
  • Lessons need to be learned from the roll out of gender pay gap reporting with government engaging in greater detail with all affected stakeholders as they continue to consult.
  • Employers pay processes vary in size and complexity enormously and with the added challenges for gathering accurate ethnicity data, as identified within the consultation paper, will add further layers of complexity.


Is your business planning to report its ethnicity pay gap voluntarily?

In advance of any mandatory obligation we asked payroll professionals, businesses and employers through a recent poll, if their business is planning to report its ethnicity pay gap voluntarily. We received 347 responses to our poll. In our question, we gave the options for large and small employers as the consultation suggests government may follow the 250+ rule.


13% of respondents with 250 or more employees said they would be reporting voluntarily within the next 12 months and 2% of employers in the same category said they would report in the next 2 years.  21% of large employers said they would not be reporting voluntarily in the next 12 months or 2 years.


Unsurprisingly, no one from the ‘less than 250 employees’ bracket went for the option to say they would be reporting voluntarily and when directly asked if they would not be reporting, 37% said they would not.


The remining 37% of respondents were unsure or didn’t know what their company is planning.


Next steps

The jury is still out on what mandatory reporting may come into force as the Government is still considering the responses to its consultation. We said at the time of submitting our response that we see this consultation as the start of a conversation and not the end of it - and that we look forward to being involved in further discussions.