UK: No Mandatory Ethnicity Pay Gap Reporting at This Stage

​Recent data suggests that the number of U.K. companies voluntarily disclosing ethnicity pay gap data has declined sharply, bolstering calls for a mandatory approach as for gender pay data. The U.K. government consulted on this back in 2018 and recently the House of Commons Women and Equalities Committee urged it to make ethnicity pay gap reporting mandatory for large employers from April 2023. However, although no formal response to the consultation has yet been published, it seems that call has gone unheeded.

On March 17, the government published its response to the much broader report of the Commission on Race and Ethnic Disparities chaired by Dr Tony Sewell. Among a raft of other actions is a pledge to support employers with voluntary reporting by publishing new guidance in the summer of 2022. The response states that the government will not be legislating for mandatory reporting "at this stage" as it wants "to avoid imposing new reporting burdens on businesses as they recover from the pandemic." The long-awaited Employment Bill is similarly being delayed for pandemic reasons, in that case to allow the government to "more firmly establish" the "post-pandemic needs of businesses and workers."

The ethnicity pay gap reporting guidance will address the challenges around employee confidentiality, ethnic categories and reporting across demographically different areas. Employers are to be encouraged, where appropriate, to use specific ethnic groups rather than broader categories. The guidance will also include case studies from leading organizations, which is intended to provide a benchmark for good action plans. There is no commitment to mandatory requirements if the voluntary approach does not work, only a note that the government expects employers to "take meaningful action to identify and then tackle the causes of disparate pay" once the guidance has provided them with "a trustworthy, consistent standard for reporting."

Other initiatives announced specific to the workplace include:

• The government will work with experts to promote and publicize an evidence-based approach to advance inclusion in the workplace, building on work already underway in the civil service. By the spring of 2023, the Equality Hub will create an "Inclusion at Work Panel" of academics and practitioners in business to develop and disseminate effective resources going beyond race and ethnicity to identify actions to promote fairness for all in the workplace. It will include a program of research and workplace trials to provide a robust evidence base and root out poor quality training.
• The Government Equalities Office will create new updated guidance on lawful positive action by December.
• The government will develop a new "Inclusion Confident" scheme for employers, working with stakeholders in business, civil society and academia, to provide an evidenced framework for improving race equality and progression in the workplace. Organizations will be able to sign up to the scheme voluntarily, to be live by the autumn of 2023.

The policy paper is available here.

Anna Henderson is a professional support consultant with Herbert Smith Freehills LLP in London. © 2022 Herbert Smith Freehills LLP. All rights reserved. Reposted with permission of Lexology.