Although the government does not require employers to gather ethnicity pay gap data, it has recently issued guidance which it claims is to develop a more consistent approach among employers who already report on and analyse ethnicity pay.

As such, while the introduction of the guidance is, in theory, positive, it stops short of introducing mandatory pay reporting in this area. This will allow employers to keep a poor record of pay gaps in relation to ethnicity under wraps whilst often continuing to profess they have committed to equality and diversity.

In particular, the government says it wants to help and encourage employers to:

  • Collect employees’ ethnicity data.
  • Gather the required payroll data for ethnicity pay calculations.
  • Make ethnicity pay calculations.
  • Analyse and understand the results of these calculations.
  • Develop an action plan to address any identified disparities.

Much of the guidance mirrors the approach for gender pay gap reporting. However, the government emphasises that ethnicity pay reporting is much more complex as it can potentially involve various ethnic groups.

Although the guidance advises employers to scrutinise and explore the underlying causes for any pay disparities and develop action plans to address this, the government also seems at pains to point out that it should not be assumed that any variations are necessarily the result of discrimination by employers themselves as “lower pay among a particular ethnic group may be because that group disproportionately applies for lower paid, more junior positions in an organisation”, an assumption that seems to rather defeat the purpose of this already voluntary  exercise.

It does acknowledge, however, that the disparities could be because the company does not provide adequate recruitment or progression opportunities for people from that ethnic group. It is then up to the employer to do further work or collate other available data (for example, staff surveys, data on recruitment and progression) to identify and understand the underlying causes. Again, however, these steps are voluntary and for guidance only.

To maximise the impact of ethnicity pay reporting, the government advises employers to outline the actions they intend to take to reduce any disparities, including how success will be measured.

The government’s Race Disparity Unit has also recently published a set of standards for government departments and other public bodies on how to record, understand and communicate ethnicity data more generally if they are involved in:

  • Collecting data about people’s ethnicity – for example, in surveys.
  • Analysing differences between ethnic groups.
  • Publishing ethnicity data – for example, in statistical releases.

To read the guidance in full, click here.

To read more about the standards required of public bodies when collecting ethnicity data, click here.