Who is covered and what will reporting look like?

The government is proposing to make ethnicity and disability pay reporting mandatory for those employers that are required to produce gender pay reports. This includes large employers (i.e. with 250+ employees) in the private and voluntary sectors in England, Wales and Scotland, as well as large public bodies in England.

In order to minimise additional burdens, employers will have to report on the same metrics as they do for gender pay reporting (i.e. mean and median differences in average hourly pay, percentage of employees in each pay quarter, mean and median differences in bonus pay, and percentage of employees receiving bonus pay). The timing and method of publication will also mirror current gender pay reporting requirements.

In addition, the government is proposing to require employers to report on the overall breakdown of their workforce by ethnicity and disability, and the percentage of employees who did not disclose their ethnicity or disability information, to provide additional context for employers' ethnicity and disability pay gap data. Workforce breakdown, for example, may be particularly relevant if an employer has recently recruited more entry level employees with disabilities or from ethnic minority backgrounds.

The current proposals do not include a requirement for employers to produce ethnicity and disability pay gap action plans, but the consultation seeks views on whether to do so.

It is proposed that the Equality and Human Rights Commission would have the power to enforce ethnicity and disability pay reporting requirements in the same way that it enforces gender pay reporting requirements.

Possible additional requirements for public bodies

In addition to the metrics set out above, the government is proposing to require large public bodies to report on ethnicity pay differences by grade or salary band, and data relating to recruitment, retention and progression by ethnicity. The consultation notes that such data could help public bodies identify barriers to progression and their application to different groups, which is important given the recent increase in the ethnic diversity of the public sector workforce. The consultation asks respondents whether they agree with these proposals and whether these additional reporting requirements for public bodies should be extended to disability.

Ethnicity data collection and analysis

With regard to classification of different ethnicities, the government proposes that employers in England and Wales use the harmonised standard from the 2021 Census, and notes that when employers ask employees to report their ethnicity, a "prefer not to say" option should be available.

The government acknowledges that data protection concerns may arise if there are only a small number of employees in particular categories. It is therefore proposing that there should be a minimum of 10 employees in any ethnic group being analysed, to avoid potentially revealing information about individual employees. Where necessary, employers would be able to report on a binary basis only – for example, comparing the pay of White British employees against that of all other ethnic groups combined. However, employers will be encouraged where possible to report using a more detailed breakdown of ethnic groups.

Disability data collection and analysis

The possibility of disability workforce reporting was considered by the previous government in 2021 – 2022, and the consultation paper refers to concerns raised, at the time, that reporting by reference to different types of disability would risk identifying individual employees, and be more complex for employers to administer than binary reporting (i.e. reporting on the difference in pay between disabled and non-disabled employees).

In view of these concerns, the government is proposing to require disability pay reporting on a binary basis only, with a minimum of 10 employees in each group being compared, in order to avoid potentially revealing information about individual employees. This suggests that, if an employer has fewer than 10 employees who self-identify as disabled, they will be unable to produce a report at all. (In order to ensure consistency across equality-related measures, the Equality Act 2010 definition of disability – that is, a physical or a mental impairment that has a substantial and long-term impact on an employee's ability to carry out normal day to day activities – will be used.)

The consultation emphasises that employees will not be required by law to identify or disclose their disability to their employers as a result of the introduction of disability pay gap reporting.

What does this mean for employers?

The introduction of ethnicity and disability pay reporting will inevitably involve an additional administrative burden for in-scope employers, although the proposal to align it as much as possible with gender pay reporting should help to limit that. However, as highlighted in the consultation paper, the collection of ethnicity and disability data is fraught with complexity. In addition, the fact that some employees may prefer not to disclose their ethnicity and/or disability status may mean that employers' reports cannot paint a full picture of pay equality in their organisation. Employers may also be concerned that an employee's disclosure of a disability in the context of disability pay reporting could mean they are classed as having knowledge of that disability for the purposes of the Equality Act 2010.

We are planning to respond to the consultation to make the government aware of these issues. If you have additional feedback that you would like us to incorporate in our response, please email Joanne Bell, Sara Meyer, or your usual DACB contact.

The consultation runs until 10 June 2025, and the government has said that the responses will be used to inform the drafting of the Equality (Race and Disability) Bill. Given that we are also awaiting a call for evidence on the proposal to enable equal pay claims on the basis of ethnicity and disability, we anticipate that the draft Bill is unlikely to be published before the autumn.

Consultation: Equality (Race and Disability) Bill: mandatory ethnicity and disability pay gap reporting