The Ethnicity Pay Gap Consultation Make Your Voice Count.
NEWS RELEASE – 29 MAY 2025
The UK Government is consulting on plans to introduce mandatory Ethnicity and Disability Pay Gap Reporting for large employers into the Equality (Race and Disability) Bill. The consultation seeks views on how to implement mandatory ethnicity and disability pay gap reporting for large employers in Great Britain.
The government are inviting views from anyone interested, particularly: employers, race and disability stakeholders, people from ethnic minority groups, amongst others.
It’s vital for stakeholders like you to respond to the government consultation before the 10th June 2025 deadline.
What we’re doing
The UK Government is consulting on plans to introduce mandatory Ethnicity and Disability Pay Gap Reporting for large employers into the Equality (Race and Disability) Bill. Below are our recommendations on how to respond to key aspects of the consultation. For a more comprehensive overview, please read the Share Action briefing document.
PURPOSE
The purpose of EPG Reporting is to advance fairness and to ask companies to build evidence and show where and why racial disparity exists, underpinned with data. It’s vital for stakeholders like you to respond to the government consultation before the 10 June 2025 deadline.
This addresses whether employers should report the same six measures as Gender Pay Gap reporting.
We have now released our consultation response, below are our eight key recommendations.
1. Extending < 250
Currently the threshold for reporting is set at large employers of 250 or more. We want smaller employers to eventually report on ethnicity pay gaps as Black, Asian and Mixed Heritage people are more likely to work in workforces smaller than 250 employees. This will ensure the legislation covers more workers and provides a sharper picture of the ethnicity pay gap in the UK.
2. Geographical scope
We believe that the same geographical scope that applies to Gender Pay Gap reporting should be adopted by the upcoming ethnicity and disability pay gap reporting legislation. This will provide a consistent understanding of pay disparities within employers already reporting on gender pay gaps.
3. Additional Measures (Pay gap calculations)
The ethnicity pay gap reporting is inherently more complex. The gender pay gap only compares two categories (male and female genders), whereas there are far more categories for ethnicity to account for.
Therefore, we recommend using two additional statistics before to using the standard six from the GPG;
- The proportion of an employer’s total UK workforce from ethnic background.
- The proportion of employees who have disclosed their ethnicity.
4. Narratives & Action Plans
We recommend that narratives and action plans become a mandatory requirement from the outset.
Narratives explain findings by outlining the nature and causation of pay gaps.
Action Plans outline what companies are doing to fix pay gaps.
How EPG reporting is undertaken is crucial; without mandatory narratives and action plans, companies will not be compelled to tackle the ethnicity pay gap, despite reporting evidence of its existence.
5. Public Bodies
We recommend that public bodies should report on pay disparities and indicators on recruitment, retention and progression as public bodies such as the NHS is one of the world’s largest employers. Additionally, it is one of biggest employers of ethnic minorities, this demographic making up 25% of the NHS’ total workforce.
Public bodies use salary band frameworks – reporting on pay disparities within salary bands is integral to ending disparities as it will enable employees to advocate for pay reviews if gaps are identified. We consider salary band structures to be best practice and encourage the establishment of these frameworks to non-public body employers.
6. Dates and Deadlines
We recommend using the same reporting periods and mechanisms (such as reporting online) as Gender Pay Gap reporting will support employers to take a consistent approach that will allow for comparisons between the data.
7. Enforcement
Whilst consistency is important, the enforcement policy that currently applies to the Gender Pay Gap could be improved. We believe that an introduction of a financial penalty to employers that fail to report within the deadline will reduce the burden on the EHRC by providing additional funding for effective enforcement.
Ring-fencing funding for and increasing the powers of the EHRC to pursue non-compliant employers and follow up with those that have published action plans will strengthen enforcement measures.
8. Data Collection
We believe that when reporting on the Ethnicity Pay Gap, employers should use the GSS Harmonised data standards for ethnicity. Harmonised standards set out how to collect and report statistics to ensure comparability across different data. Therefore, when reporting the ethnicity pay gap, employers must use disaggregated groups as much as possible and not aggregate all data into the categories of White, Mixed, Asian, Black and Other so specific details of ethnic groups are not lost.
Aggregation should be treated as an only option to protect the detailed information of individual staff members. If there are less than 10 employees in each ethnic category, data should still be collected and used internally to understand disparities.
For more information or any enquiries, please contact our team via Hello@actionforraceequality.org.uk
Until the deadline for feedback.
MORAL CASE
We can’t close the ethnicity pay gap if we can’t see it. Transparent reporting helps shine a light on where change is needed most.
FINANCIAL CASE
Culturally and ethnically diverse executive teams are 36% more likely to financially outperform their peers.
ECONOMIC CASE
Closing the ethnicity pay gap could boost the UK economy by £24 billion annually.
EPG Reporting is the first step for tackling inequality because it measures the scale of racial disparities and institutional racism.
Read our full consultation response
May 2025
Consultation deadline 10 June 2025.
BACKGROUND
The McGregor-Smith Review (2017) recommended ethnicity pay reporting to address workplace racial inequality. The consultation on ethnicity pay reporting was launched in 2018 but the initial government response was to encourage voluntary reporting.
In 2021, the Commission on Race and Ethnic Disparities, Sewell report recommended voluntary ethnicity pay gap reporting. For disability pay gap reporting, the National Disability Strategy (2021) included commitments to improve workplace equality.
For decades, successive governments and employers have professed their commitment to racial equality yet vast inequality continues to exist. This has to change now. With 14% of the working age population coming from a Black or Minority Ethnic (BME) background, employers have got to take control and start making the most of talent, whatever their background.
Baroness Ruby McGregor-Smith CBE, Author, Race in the workplace: The McGregor-Smith Review, 2017