A recent government consultation explores the possibility of mandatory ethnicity pay reporting. Following general underlying principles similar to the reporting obligations on the gender pay gap, it questions what information should be reported, and by whom. Consultation ends on January 11th 2019.
A phased introduction of reporting is envisioned, prior to anything’s becoming mandatory, and a significant part of the consultation is to decide what type of ethnicity pay information should be reported. The balance to be struck is between having sufficient information to take action when necessary, and avoiding placing too heavy a burden on employers.
The possible options are reporting the average hourly earnings of ethnic minority employees en masse, compared to those of a percentage of white employees, reporting average hourly earnings for different ethnicity groups compared to those of a percentage of white employees, or reporting by pay band to show whether there are concentrations of ethnic groups in particular pay bands. There are pros and cons to each of these options.
There is also a need to discuss whether the reporting should be limited to information on pay, or whether it might be more useful were it to include information on geographical, age or gender variations. Furthermore, if disparity is identified, should there be a need to publish an action plan to address the issue?
If implemented legislation is expected to apply to organisations employing in excess of 250 people, but this is not definite and various thresholds are offered in the consultation including one that covers all employers.
The consultation accepts that there would be many challenges thrown up by mandatory reporting, especially if the information generated is to be usable in a meaningful way. For example, individuals are not legally required to disclose the ethnicity with which they identify, if asked some will not identify with any of the categories offered as options by employers, standardising approaches to classification may incur costs to employers who have established systems that have to change, and there are some looming question marks relating to GDPR.
Nonetheless, the consultation is seeking views on what classification systems employers are using at present and what can be done to improve accuracy of reporting among numerous other discussion points. The potential good news, if you are an employer concerned that this may affect you, is that the government is proposing to offer support similar to that offered for gender pay reporting.
Have a question? Contact Alison via email for more information.
