The government has been urged to act on recommendations to introduce mandatory ethnicity pay gap reporting to help those from ethnic minority groups ‘reach their full potential’ at work. The TUC, CBI and Equality and Human Rights Commission have issued a joint letter to Michael Gove, the Chancellor of the Duchy of Lancaster, asking the government to set out a clear timeframe for introducing ethnicity pay gap reporting. It would follow in the footsteps of gender pay gap reporting which has been a legal requirement for businesses with more than 250 employees since 2017.
As the Guardian reports, the letter puts the case that ministers should set out a clear timeframe for introducing new regulations and work with business groups to develop tools and resources to help employers collect the necessary data. In response a government spokesperson said: “The Commission on Race and Ethnic Disparities published its independent report earlier this year which included recommendations on ethnicity pay gap reporting. We are considering the commission’s findings on this matter alongside feedback to our consultation on this issue, and we will respond to the commission’s report in due course.”
It is unclear how the government plans to tackle this. The Queen’s speech back in May was vague, merely saying that ‘measures will be brought forward to address racial and ethnic disparities’. In a supplementary document, which refers to the report, there is no mention of plans in relation to ethnic pay disparities. It does, however, explain that the government intends to respond in detail to the recommendations of the report by the CRE which was published in March this year. That report had a wide brief – investigating race and ethnic disparities in the UK – but it did consider ethnicity pay gap reporting although it fell short of recommending mandatory reporting. Instead, it focused on voluntary reporting – which a number of large employers carry out – saying any such report should be accompanied by a diagnosis and action plan which clearly sets out the reasons that any disparities exist and what will be done to address them.
You may recall the government ran a consultation on ethnicity pay reporting some time ago. That closed on 11 January 2019, and at some point, presumably, the government will respond to that. Meanwhile we continue to advise clients on this, many of whom are reporting on a voluntary basis. One of the lawyers helping clients with this as Helen Corden who joined me by video-link from her home in Birmingham. I asked Helen about the likely timing of any new legislation and, assuming we do see it at some point, whether it will mirror the gender pay regulations:
Helen Corden: “In terms of timing, the consultation in relation to the regulations closed in January 2019 so we're now two years on since the consultation closed and we still don't have any response to that consultation and we still don't have any draft regulations. We've obviously had the COVID pandemic that has impacted on the introduction of the regulations but pressure is increasing on the government to respond to the consultation and to produce draft regulations. If you ask me for my best guess as to when these regulations will be produced in any draft form or when employers may have to start reporting, it's probably likely that the earliest snapshot date that companies will have to look at would be April 2023 which is obviously another two years from now but there's a lot of work that organisations will need to do to get ready for the introduction of these regulations, not least putting in place the data collection exercise. In relation to the regulations themselves, is there's going to simply be a copy and paste exercise from the gender pay gap regulations? In some respects yes, in some respects no. One of the biggest issues is in relation to how the pay gaps are calculated, what categories of data should be looked at? Obviously, with the gender pay gap regulations, it was quite straightforward, you were looking at the average pay of men versus the average pay of women. Here, should you be looking at the average pay of white people versus the average pay of those from a BAME background or should you be breaking down the categorization even further? This is one of the big issues which the government is grappling with because if you just do it white versus BAME then that can disguise many issues which are relevant in relation to particular categories of individuals. So for example, black people or Asian people, they have potentially different barriers in recruitment, in progression, and if you just use the capsule category of beam, those potential barriers would not be evident."
We mentioned earlier the report by the CRE which was published back in March. As the BBC reported at the time, it concluded that the UK was not deliberately rigged against ethnic minorities but while the media attention focused on that issue there are several aspects of the report that are relevant to employers, particularly in relation to ethnicity pay gap reporting. We have put a link to the report in the transcript of this programme.
- Link to CRE’s report