Following the launch of the UK government’s consultation on 4 April 2025 regarding the inclusion of mandatory Ethnicity and Disability Pay Gap Reporting for large employers into the Equality (Race and Disability) Bill, ARE has spent the past month gathering input from community stakeholders, professionals and staff networks.
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In our response, we urge the Government to strengthen proposals, introduce measures that ensure meaningful action from employers and robust legislation that goes beyond data collection and demands real accountability.
Our response draws on the valuable lived experiences and perspectives of our community and partners, pushing for measures that don’t just reveal disparities but drive organisations to act on them. In particular, it includes views shared through roundtable discussions, feedback from staff networks, and insights gathered from our Ethnicity Pay Gap consultation briefing session hosted in April 2025.
These voluntary sessions allowed individuals from across sectors, including HR leads, ethnic minority staff network chairs, and community advocates, to share challenges, ideas, and recommendations directly with us. Their input has helped shape our formal response to the Government’s proposals, ensuring it reflects the voices of those affected by pay disparities.
The submission outlines eight key recommendations. If fully implemented, these recommendations will move pay gap reporting from a compliance exercise to a tool for real workplace change.
Our eight key recommendations:
1. Extending:
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 2 additional statistics before using the standard 6 from the GPG;
- The proportion of an employer’s total UK workforce from ethnic backgrounds
- 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 are one of the world’s largest employers. Additionally, it is one of the 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 datasets. 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 fewer than 10 employees in each ethnic category, data should still be collected and used internally to understand disparities.
The consultation deadline is fast approaching. We encourage individuals, civil society organisations and staff networks to submit their response before 10 June 2025 and help ensure that data leads to change.
Our partners at ShareAction have drafted an email for you to send as your response to the consultation ahead of the deadline, urging the Government to deliver an ethnicity pay gap reporting framework that truly advances racial equity in the workplace.
For more information or enquiries, please contact: ARE Chief Executive, Jeremy Crook via Jeremy@actionforraceequality.org
