international employment law firm alliance L&E Global
United Kingdom

UK: Equality, diversity and inclusion: New UK voluntary ethnicity pay reporting guidance

In March 2022, the UK government announced that instead of introducing mandatory ethnicity pay gap reporting there would be a process for voluntary pay reporting. Organisations which choose to publish ethnicity pay figures will be required to publish a diagnosis and action plan setting out the reasons why any disparities exist and what will be done to address them. The UK government promised support for employers who want to publish their ethnicity pay gaps, with new guidance.

The government has now published its ethnicity pay reporting guidance which contains detailed advice on analysing and reporting on ethnicity pay. The guidance covers:

  • collecting employees’ ethnicity pay data
  • data issues
  • ethnicity pay calculations
  • reporting findings
  • analysing and understanding the underlying causes of pay disparities
  • taking an evidence-based approach to addressing pay disparities

The guidance “strongly discourages” binary reporting (eg dividing employees into white British and ethnic minority groups) and advises employers to try and record as many ethnicity categories as possible in their analyses to help with understanding ethnicity pay gaps and identifying relevant actions. That said, it notes that for smaller employers or where businesses have small numbers of employees in certain ethnic groups binary reporting may be necessary to protect employees’ confidentiality.

Key Action Points for Human Resources and In-house Counsel

The UK government is launching an Inclusion at Work panel which will develop and disseminate advice on evidence-based actions employers can take. The panel’s work will inform a new voluntary Inclusion Confident Scheme which employers will be able to sign up to – updates will be available on: Inclusive Britain: publications and updates.

The UK government has also published guidance on positive action in the workplace to support employers understand how to take positive action while avoiding unlawful discrimination. This should be considered alongside the Statutory Code on Employment (chapter 12).