UK Seeks Comments on Ethnicity Pay Reporting Rulemaking

October 26, 2018

The UK Department for Business, Energy, and Industrial Strategy has launched a consultation seeking public views on ethnicity pay reporting by employers, setting out options and asking questions on what types of disclosure should be required.

The consultation period closes on January 11, 2019, and responses may be submitted here.  The proposals are similar to the gender pay reporting requirement that went into effect in April of last year and follow Prime Minister Theresa May's announcement in 2017 calling for UK businesses to begin reporting their ethnicity pay gaps.

The consultation suggests three possible disclosure approaches:

  • One pay gap figure:  Average hourly earnings for all ethnic minority employees as a percentage of white employees;

  • Several pay gap figures:  Average earnings for several different minority groups as a percentage of white employees; or

  • By pay band or quartile:  The proportion of employees from different ethnic groups by pay bands or quartiles to discover where minority employees are concentrated and identify "barriers to progression."

Who will have to comply:  The proposals mirror the current gender pay gap reporting methodology in requiring employers with 250 or more employees to make the suggested disclosures.

What it means:  There are significant differences between gender and ethnicity pay gap reporting, such as the difficulties inherent in defining and tracking ethnicity and the fact that different companies and localities may define ethnicity differently.  In addition, the consultation notes that in the UK there is no legal obligation for individuals to identify their ethnic group or for employers to collect this information, which is a significant challenge to a mandatory disclosure of ethnicity pay differentials. 

The government may consider a trial approach with "early adopters" before mandatory reporting is required, the proposal states.  The government also proposes to provide support to employers similar to what was provided for gender pay gap reporting, including guidance on identifying and mitigating pay gaps, support for communication with employees, and best practices on measures to improve ethnic minority representation.