COMPANIES with 250 or more employees will be required by law to publish their ethnicity and disability pay gaps, the government announced this week.
Firms will need to report six pay gap metrics as well as new workforce composition data. Ministers say the legislation will build on the existing gender pay gap reporting framework, which has been in place since 2017, to make the process as straightforward as possible for employers, a statement said.
The commitment follows a public consultation in which 87 per cent of respondents agreed that large employers should be required to report their ethnicity and disability pay gaps. The government published its response to the consultation on Wednesday (25), alongside indicative draft clauses for the new law.
Officials said the clauses had been drawn up in collaboration with businesses already reporting voluntarily on pay differences.
Equalities minister, Seema Malhotra, said the change was about basic fairness. "No-one deserves to be held back at work because of their ethnicity or disability. Everyone should be able to expect fair pay and progression opportunities for their hard work. By introducing ethnicity and disability pay gap reporting, this government is committed to ensuring transparency and tackling unfairness where it exists," she said.
Stephen Timms, minister of state for social security and disability, acknowledged that gaps in pay between disabled and non-disabled workers were a reality.
He said, "Disabled people deserve the same chance as everyone else to be rewarded fairly at work, but the fact is that pay gaps exist. Pay gap reporting will give organisations the data they need to reduce these gaps and improve fairness and inclusivity in the workplace."
Deloitte, one of the firms that has been publishing its ethnicity pay gap on a voluntary basis since 2017, said the experience had driven concrete changes within the business. Jackie Henry, the firm's managing partner for People and Purpose, said transparency had helped it take more focused action, including a programme providing tailored support and sponsorship for women and ethnic minority colleagues.
"There is no quick solution to improving diversity and inclusion in business. Meaningful and sustained change will take time and requires ongoing transparency," Henry said.
Sandra Kerr, race equality director at Business in the Community, said her organisation had been campaigning for the measure for many years and called it a major step forward. She pointed to research suggesting that making ethnicity pay transparency standard business practice could unlock an estimated £17 billion annually for the UK economy, and said evidence showed it helped employers attract and retain staff.
Kohinoor Choudhury, responsible investment manager at ShareAction, welcomed the commitment, saying it would ensure companies had "the tools and the mandate to identify and tackle inequality in the workplace."
The announcement forms part of a wider government drive to remove barriers to work. The government has set aside £3.5bn in employment support for sick or disabled people by the end of the decade, including a scheme to help up to 250,000 people return to or stay in work, and a separate programme providing tailored help for 300,000 sick or disabled people.
A timetable for introducing the legislation has not been confirmed.
