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In the King’s Speech in July 2024, plans to introduce the Equality (Race and Disability) Bill (the Bill) were announced, which would introduce mandatory disability and ethnicity pay gap reporting for employers with 250 or more employees, as well as extending equal pay rights to protect workers suffering discrimination on the basis of race or disability. On 18 March 2025, the government launched a consultation on how to introduce mandatory ethnicity and disability pay reporting for large employers to shape proposals to be included in the Bill. The consultation closes on 10 June 2025.
The consultation
To reduce the administrative burden on employers, the government proposes using a similar reporting framework to that used for gender pay gap reporting. This would include reporting on the same six measures currently in place for gender pay gap reporting, as well as reporting on the overall breakdown of staff by disability and ethnicity, and identifying the percentage of employees choosing not to disclose this information. It’s proposed that the same snapshot dates for data collection and reporting dates would be adopted, as well as requiring the information to be reported online in a similar way to the gender pay gap requirements.
Ethnicity
Due to the nature of ethnicity data, collection may be more challenging. The government proposes that employers should ask employees to self-report their own ethnicity, with an option to opt out. Employers will be encouraged to show pay gap measures for as many ethnic groups as they can. However, due to data protection considerations and to ensure the data is robust, the government proposes that there should be at least 10 employees in any ethnic group being analysed. This may require some ethnic groups to be aggregated (which should be done in accordance with the relevant ONS guidance). For some employers, binary classification may be the only option, but where this occurs, employers should keep this under regular review.
Disability
The government proposes employers take a binary approach to capturing disability data by measuring the difference in pay between disabled employees and non-disabled employees. The definition of disability in the Equality Act 2010 will be used and employees will continue to self-report voluntarily. Again, it is proposed that a minimum of 10 employees in each group be compared.
The government is also seeking views on whether employers should be required to produce action plans. This would help identify the causes of any pay gap and would require an employer to set out the actions it will take to close it.
The government aims to require additional information from public bodies on ethnicity to improve transparency and accountability and seeks views on whether the additional reporting requirements should be extended to disability.
Impact on employers
Although largely based on the gender pay gap reporting framework, collecting and reporting on ethnicity and disability comes with distinct additional complexities. This will inevitably increase the administrative burden on employers, who will need to be particularly mindful of protecting the privacy of their employees.
We will wait to see whether the government decides to introduce a requirement for employers to produce an action plan. While this will further increase the administrative burden on employers, such plans can be effective tools for tracking progress and maintaining accountability.
Many employers already voluntarily analyse ethnicity pay data. For those that don’t, and in relation to disability data, organisations may want to start looking at auditing their current data collection practices and consider whether any improvements need to be made. Once the government’s plans are firmed up, information regarding the new requirements should be disseminated to the workforce, and training should take place for those responsible for compliance. Like when gender pay gap reporting was first introduced, the first year will inevitably involve employers spending additional time (and potentially money) familiarising themselves with the data capture and reporting requirements.
Please contact Lynsey Blyth if you’d like to discuss any of the issues raised in this article.
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