Ethnicity pay gap reporting will not be mandatory, says government.

This is the long-awaited government response to a consultation which concluded way back in 2019. At the time, the government was saying it planned to introduce a regime similar to the mandatory regime brought in for gender pay gap reporting a few years ago, but they subsequently dropped the idea in 2022. Things went quite for a while, then in April this year they published guidance for employers that want to publish their data on a voluntary basis, before finally making their position clear in this official response paper saying, once and for all, that mandatory reporting will not be happening.

People Management reports on this and asks the question: ‘what now”? They quote Lutfur Ali, senior EDI adviser at the CIPD, who warns that the decision indirectly perpetuates “systemic biases”. He says: “This decision not only disregards the insights and recommendations from professional bodies, organisations and experts for greater transparency and accountability in workplace inequalities, but crucially undermines the progress made by employers seeking to deliver wider equality, diversity and inclusion.”

Teresa Boughey, chief executive of Jungle HR and founder of Inclusion 247, says the government’s decision “underscores a reluctance to adopt a uniform model for all employers”. She says: “The government has recognised that combining all ethnic minority groups together for reporting purposes poses a significant concern.” She goes on: “It overlooks the rich individual uniqueness and the wide array of backgrounds that comprise ethnic minority communities, which would in turn fail to spotlight specific pay disparities.”

So what do we make of the government’s response and where does it leave employers? Earlier I spoke to D&I specialist Shuabe Shabudin who joined me by video-link from Birmingham to discuss it:

Shuabe Shabudin: “So, I think the first point, and the elephant in the room, is to acknowledge the disappointment that I had when I first read through the response which confirmed, in black and white, unfortunately, that the government does not feel that now is the right time, and perhaps that there won't be a right time, for ethnicity pay gap reporting to be made mandatory. So, that's the headline. Underneath that there is also the affirmation, if you like, from government which says that there are difficulties, that this is a potentially complex area that needs to be considered with quite some thought, that it cannot be one size fits all and that, for example, something like binary reporting should be avoided, where at all possible. But the other side of that coin is that if you're going to be looking at more categories, the ONS, the census data categories, perhaps, then again you need to be thinking about that quite carefully and it's one of the areas where some real thought is needed. So, none of it really is new to me, if you like, and actually for those of you that have heard some of the other programmes that I've done you will have heard me make all of those points. So, I think in some ways it's helpful that government has confirmed where we have said there needs to be some real keen thought and an effort to put in. But yes, overall, it is disappointing that we now know that ethnicity pay gap reporting isn't going to be mandatory. I think I should just say as well that part of that disappointment is maybe also linked with surprise because when we had the government guidance that was published a few months ago, a lot of us felt that that was the precursor to ethnicity pay gap reporting being made mandatory and, actually, what the response seems to say is, no, it's the alternative, so in lieu of guidance, in lieu of guidelines, in lieu of actually a set of rules by which ethnicity pay gap reporting would be undertaken, the guidance is the best that we're going to get. But I do still think that we can do a lot with that and the response that's been given.”

Joe Glavina: “So, in light of this government’s response, Shuabe, what do think employers should change, if anything, in your view?”

Shuabe Shabudin: “I think the first point is don't panic. This isn't the government saying that this is not a worthwhile area. It's not the government saying that you should down tools and not do anything in relation to assessing your ethnicity pay gap and I've used that word particularly and on purpose. I think what this does do is actually push people towards, guide people towards, and support what we've been saying, and actually looking at it rather than the purpose of the undertaking, the outcome of the undertaking, being to produce a report, so an ethnicity pay gap report, but rather to undertake an ethnicity pay gap assessment. Now, the reason I say that is because if you read the response based on just what it says at face level, an employer could be forgiven for thinking, well, we're not going to be able to report without breaching data protection, without individuals being identified, we're not going to be able to report because we've only got 50 employees, 75 employees, 200 employees, whatever it might be, but that's not what this is about. Actually, what I think we can do is, if we reframe the way we're looking at it to being an assessment, then, if you are able to report because you do have the dataset, you do have the size of employees, you do have the different areas of location where you're based, brilliant, but even if you're not, you will still be able to undertake some kind of assessment based on the information that you are able to obtain and, as I've said many times before, that information could be as rudimentary as what you've got on your HR system, on your workday, on your account system, perhaps. Or it could be, in some ways more usefully, information that you get from a focus group, from interviewing particular stakeholders. So, employers shouldn't think, okay, this is the government saying it's not worth it, it’s not worthwhile, it's not worth our time, we should be spending our time and putting our efforts elsewhere. To the contrary, it's government saying, look, this is something that is worthwhile and, actually, the importance of it is in the complexity of it. So, yes, something not to be scared about, something not to stop doing, something to actually just seek some specialist advice, which is where we come in, which is where we can guide clients through and are continuing to do so. Another point to make is that my approach with clients isn't changing. Clients that we've been working with on all things to do with their ethnicity pay assessment, it’s not as if since having the response we've had to email them and say, okay, right, we need to change direction. Not at all. If anything, it's an affirmation of all of the complexities that we are already aware of, and for new clients that are coming on board it's about saying, yes, maybe the only thing we need to be doing is changing the title at the top from being an ethnicity pay report to being an ethnicity pay gap assessment, brackets, with report if possible.”

The government’s response was published on 13 July and is available from the government’s website. We’ve put a link to the paper in the transcript of this programme for you.

LINKS

- Link to government response to consultation on ethnicity pay gap reporting