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Government reforms (2): Ethnicity pay gap reporting

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What do we already know?

We updated you in our October 2018 Newsletter Government reforms (1): Mind the ethnicity pay gap and in our blog here that the Government was consulting on implementing mandatory ethnicity pay reporting. The consultation closed on 11 January 2019.

What’s new?

The Government has confirmed that it will not introduce mandatory ethnicity pay gap reporting at this stage and will instead support employers with voluntary reporting.

Although it says it supports the principle of ethnicity pay gap reporting (and sees this as playing an important part in creating a fairer society for everyone), it believes that there are ‘significant obstacles for employers looking to create ethnicity pay gap mechanisms‘ and that it does not want to impose additional burdens on them ‘as they recover from the pandemic‘.


The Government instead aims to publish guidance on voluntary ethnicity pay gap reporting in summer 2022 with the intention that this provides employers with the tools to understand and tackle pay gaps, particularly some of the more challenging issues (including how to preserve employee confidentiality where the sample group is small). If employers do identify pay disparities, they should produce a ‘diagnosis and action plan’ which sets out the reasons for this and steps to address them.

The guidance is also likely to recommend that employers use specific ethnic groups rather than broader categories (such as ‘BAME’) when publishing their data. There are around 18 specific ethnic classifications but these are often grouped into five different categories to make the process more manageable. However, grouping it in this way makes it more difficult to obtain meaningful data as it will not pick up on issues (and their effect) between specific ethnic classifications.

Return to Menzies Law Newsletter 2022 Issue 2

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