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UK Government Launches Consultation on Mandatory Ethnicity Pay Reporting

The Government of the United Kingdom (UK) has launched a series of measures to tackle barriers facing ethnic minorities in the workplace. Part of its strategy is the introduction of mandatory ethnicity pay reporting. The proposed ethnicity reporting requirement is similar to the gender pay gap reporting requirement, which went into effect in April 2017.

The consultation closes on January 11, 2019. The government suggests that a trial or phased approach could be used with early adopters to test the process before mandatory reporting is required.

Key Elements of the Consultation

What ethnicity pay information should be reported?

The following approaches have been proposed:

  • “One pay gap figure comparing average hourly earnings of ethnic minority employees as a percentage of white employees.” This approach would mirror the gender pay gap reporting methodology. The employer would provide one headline figure. One drawback of this approach is that a headline pay gap figure alone may not give a fully representative picture as different ethnic groups would be rolled into one.
  • “Several pay gap figures by ethnicity group.” This approach would compare average hourly earnings of different groups of ethnic minority employees as a percentage of white employees. However, this approach would not identify variations in pay distributions across different groups.
  • “By pay band or quartile.” This approach would show the proportion of employees from different ethnic groups by £20,000 pay bands or by pay quartiles. Employers would be able to see where ethnic minorities are concentrated in terms of pay and identify any apparent barriers to progression. One problem with this approach may be that breaking down data in this way may cause issues in terms of protecting employee anonymity.

Where would the data need to be published?

There is no indication in the consultation document of where the government proposes employers should publish ethnicity pay data. However, it seems likely that the government would implement publication requirements similar to those for gender pay gap information, which employers are required to publish on their websites and on a central government online portal.

What are the some challenges that may arise for employers collecting ethnicity data?

The consultation document summarizes the following challenges:

  • There is no legal obligation for individuals to disclose the ethnic group with which they identify, and there is no legal obligation on employers to collect ethnicity data.
  • Analyzing ethnicity data can be complex because individuals do not necessarily associate themselves with any of the categories.
  • Employers have their own classifications. Taking a standardized approach may result in additional costs to employers where changes to classification systems are required.
  • Any information relating to an individual’s racial or ethnic origin is classified as a special category of personal data under the Data Protection Act 2018, read with the General Data Protection Regulation. Employers that collect ethnicity data need to ensure the anonymity of their employees.

Will the reporting requirement apply to all UK employers?

“The government believes that employers of fewer than 250 employees should not be expected to publish ethnicity pay data . . . A threshold of 250 or more employees would mirror the gender pay gap reporting methodology.”

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About this Author

Daniella McGuigan, Ogletree Deakins Law Firm, Employment Law Attorney
Partner

Daniella advises on all aspects of employment law representing employers in both the private and public sector.

Daniella has a particular interest in equal pay and has handled complex equal pay test cases, including at the EAT and Court of Appeal stages, which have had far reaching consequences for both the public and private sectors.  Most recently she has been providing support and advice to employers in relation to the new gender pay gap reporting requirements and was a member of the steering group that worked with the Government Equalities...

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