Employers told to voluntarily report ethnicity pay
Ever since the Gender Pay Gap Reporting Regulations were introduced in 2017 the industry has been discussing whether the UK Government would introduce mandatory ethnicity pay reporting requirements for UK employers. Over the years, there have been several calls to action and lobbies for the Government to do so but pleas have fallen on deaf ears as last week, the Government confirmed that “at this stage” it will not be introducing a mandatory requirement for UK employers to report on their ethnicity pay – much to the dismay of many industry bodies, regulators and employers.
Considering the sharp focus on DE&I post COVID-19, this decision is somewhat disappointing as Laurie Ollivent, Senior Associate, Employment & Incentives and the Diversity Faculty at Linklaters commented: “Whilst the Government hasn’t ruled out introducing mandatory ethnicity pay reporting in the future, it is clear that we should not expect it as a legal requirement in the UK anytime soon. But what the Government has said is that for those employers who choose to voluntarily report on their ethnicity pay gap, they are supportive of the recommendation that employers should publish accompanying action plans and a diagnosis which explains any pay gap and addresses any disparities, and once employers are equipped with a trustworthy, consistent standard for reporting, they should take meaningful action to identify and tackle any causes of disparate pay. In other words – employers need to focus on their narratives. Whilst we accept there are challenges to ethnicity pay reporting beyond those employers face with gender pay reporting which means that the data alone will only ever be a blunt tool to identify potential disparities, the expectation of a narrative without further guidance on what this should look like and the requirement for employers to tackle any causes of disparate pay and report on progress may be off-putting for some businesses considering whether to voluntarily report on their data at this stage and risks halting progress on voluntary reporting rather than encouraging it.
Simon Kerr-Davis, Counsel, Employment & Incentives and the Diversity Faculty at Linklaters also made comment: “The Women and Equalities Committee report from early 2022 highlighted the increase in employers choosing to voluntarily report on their ethnicity pay gaps. The report states that in 2021, 19% of UK employers voluntarily reported on ethnicity pay – up from 11% in 2018. Whilst this sounds promising and is a large increase, many believe that mandatory reporting obligations are needed – much in the same way as gender pay reporting obligations – for other businesses to follow suit and really drive and achieve change across UK business.