Will ethnicity pay reporting become mandatory for employers?
The government has published an Ethnicity Pay Reporting consultation paper which sets out its proposals to make it mandatory for employers to publish their ethnicity pay gap statistics. This follows a Race Disparity Audit carried out last year.
The following approaches are suggested:
- One pay gap figure comparing average hourly earnings of ethnic minority employees as a percentage of white employees;
- Several pay gap figures comparing average hourly earnings of different groups of ethnic minority employees as a percentage of white employees;
- Ethnicity pay information by pay band or quartile, showing the proportion of employees from different ethnic groups by £20,000 pay bands or by pay quartiles.
It is proposed that employers would be required to publish ethnicity pay gap data annually. The consultation asks whether there should also be a requirement to publish narrative information and formulate action plans to address any disparities identified by the data.
In a recent report only 11% of the 24,000 employees surveyed reported that their organisation collects data on the ethnicity pay gap. This low uptake of voluntary collecting and reporting on ethnicity pay gap data, together with the detrimental impact which unequal participation and progression across ethnicities could be having on the UK economy, are likely to have been the key catalysts for the government’s proposal to make ethnicity pay gap reporting mandatory.
Who would the reporting obligations apply to?
The government is proposing that the reporting obligation will only apply to employers with 250 or more employees, which mirrors the current threshold for gender pay gap reporting (see our previous blog posts on gender pay reporting).
What potential issues might there be with compulsory ethnicity data reporting?
The consultation acknowledges that collecting ethnicity data may be particularly complex.
There are varying classifications of ethnic groups; and identification with a particular ethnic group is ‘self-defined’ by the individual themselves. Also, there is currently no legal obligation on employees to disclose which ethnic group they identify themselves with. Given such complexities the consultation suggests a number of contextual factors, such as gender, geographical location and age variations, could form part of the information that is provided.
Any information relating to an individual’s racial or ethnic origin is classified as sensitive personal data, meaning that there will be anonymity and data protection implications of an obligation to report ethnicity pay gap information.
Race at Work charter
On 1 October the Government also launched the Race at Work Charter in partnership with Business in the Community, which is a new initiative setting out some key principles which organisations can commit to in order to tackle ethnic disparities in recruitment and progression. Currently 84 public, private and charitable organisations have signed up to the Charter.
The consultation closes on 11 January 2019 and a trial or phased approach has been suggested to test the process before any mandatory obligation is imposed.
If mandatory reporting of ethnicity pay data is to be implemented, either a new Act of Parliament will have to be enacted, or additional provisions inserted into the Equality Act. Such reform may face delay with Brexit dominating the legislative programme and parliamentary timetable over the coming year. We’ll update this blog as matters progress.
If you would like to discuss anything raised in this blog, please get in touch with your usual Brodies contact.
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