Call us on 0844 324 5840

NEWS & RESOURCES

What You Need to Know About Ethnicity Pay Gap Reporting

In recent years, ethnicity pay gap reporting has gained significant attention as businesses strive to create fairer, more inclusive workplaces. For many companies, the journey toward understanding pay differences between ethnic groups not only strengthens compliance but also enhances employee trust and creates a positive company culture.

What is Ethnicity Pay Gap Reporting?

Ethnicity pay gap reporting involves analysing workforce pay data to identify and address disparities across ethnic groups. By understanding any pay differences, your organisation can take informed steps towards promoting equality.

While the Government’s guidance on ethnicity pay gap reporting draws from gender pay gap analysis practices, there are key differences. Ethnicity pay gap reporting requires handling data from multiple ethnic groups, adding complexity to the calculations and insights.

Currently, there is no statutory requirement to report on the ethnicity pay gap. However, the government introduced guidance for employers in 2023 on how to do it, and many organisations choose to do it as part of their commitment to equality.

According to data from the Office for National Statistics, pay differences vary widely across ethnic groups, with minority groups often earning less than White British employees. These disparities are more pronounced in areas like London and less so in regions like Wales.

Preparing for Future Legislation

Under the new government, ethnicity pay gap reporting will become a statutory requirement for certain employers. Anytime now, the government will introduce a new Equality (Race and Disability) Bill, which if passed will:

  • place a legal duty on employers with more than 250 employees to carry out ethnicity (and disability) pay gap reporting
  • extend equal pay rights to protect workers who suffer discrimination on the grounds of their race (and disability)
  • ensure that outsourcing services cannot be used to avoid paying equal pay
  • implement a regulatory and enforcement unit for equal pay with involvement from trade unions

By starting now, your organisation can get ahead of future compliance requirements and demonstrate its commitment to pay equality.

The Benefits of Ethnicity Pay Gap Reporting

  1. Creating an Inclusive WorkplaceAn in-depth pay analysis allows companies to identify pay imbalances across different ethnic groups. By spotting and addressing these disparities, organisations can create a workplace that values and supports all employees equally.An inclusive workplace boosts employee morale and can lead to a more collaborative, engaged workforce, benefiting the overall organisational culture.
  2. Ensuring Legal Compliance
    Analysing pay data of your workforce also enables the organisation to remain compliant with equality law. Whilst there is currently no legal requirement to carry out ethnicity pay gap reporting, there is one in regards to the prevention of discrimination, in accordance with the Equality Act 2010.This means that it is unlawful to pay an employee less or give them terms and conditions that puts them at a disadvantage because of a protected characteristic. There are nine protected characteristics, one of which is race and includes colour, nationality, ethnic origins and national origins.

    Carrying out an analysis on how pay is awarded and examining existing working practices will help the organisation to identify any practices or policies that inadvertently disadvantages someone from this group (or any other of the protected characteristics under the Equality Act 2010). If so, this is where there may be claims of indirect discrimination.

    Analysing pay will also help the organisation to see if there are any pay differences between employees by looking at how someone is treated compared to someone else who is in a similar situation. Where there are instances of someone being treated differently to another person, and the difference in treatment is connected to their race, then this opens up claims of direct race discrimination.

  3. Increasing Transparency and Accountability

    Ethnicity pay gap reporting sends a powerful message to employees, stakeholders, and the public about an organisation’s commitment to equality.
    Publicly sharing these outcomes can boost trust and encourage current and prospective employees to feel confident about the organisation’s dedication to fair pay practices.
  4. Improving Employee Engagement
    In today’s socially conscious work environment, employees value employers who actively work to prevent inequality. Demonstrating a commitment through ethnicity pay gap reporting can help all employees, particularly those from underrepresented backgrounds, feel respected and valued.This increased engagement is invaluable, as engaged employees are more productive and less likely to leave, contributing positively to organisational success.

Is a Pay Gap the Same as Unequal Pay?

A common question is whether a pay gap equates to unequal pay. In fact, they are distinct issues:

  • Pay Gap: Refers to the difference in median or mean hourly pay between two groups, which may reflect broad societal factors and organisational practices.
  • Unequal Pay: Occurs when employees in the same role, under the same conditions, are paid differently solely due to their gender, race, or another protected characteristic.

Getting Started with Ethnicity Pay Gap Reporting

If considering implementing ethnicity pay gap reporting, here are a few first steps to take:

  1. Data Collection: Begin by gathering pay data across the organisation, categorised by ethnic group.
  2. Analysis: Examine the data for any significant pay disparities.
  3. Policy Review: Assess current compensation policies and identify areas for improvement.
  4. Set Goals: Based on findings, establish clear, actionable goals to close any gaps identified.

Organisations that take these steps can contribute to a more equal, fair, and transparent workplace. Ethnicity pay gap reporting is not only a compliance measure but a commitment to a values-driven, inclusive organisational culture.

We’re here to help

If we can help your business start preparing for these changes or if you have any questions about the Ethnicity Pay Gap Reporting, please get in contact.

SHARE THIS:

Instagram

GET IN TOUCH

Got questions? Looking for advice?

GET IN TOUCH

Got questions? Looking for advice?

RELATED RESOURCES

Explore our comprehensive library of related resources to gain valuable insights, expert tips, and helpful tools for optimising your HR practices.

01
Low maternity pay found to not support families and to force new parents back to work early
Insights
20 November 2024
02
Proposed changes to Statutory Sick Pay (SSP) and payroll processing
Insights
20 November 2024
03
How the Autumn Budget 2024 Impacts Employers
Insights
30 October 2024

Request a Call from an HR Advisor

Our expert HR Advisors are here to assist you. To schedule a complimentary 30-minute call, please complete the form below. One of our advisors will reach out within 24 hours to either conduct the consultation or arrange a suitable time.

SIGN-UP FOR UPDATES

Receive all the latest industry insights, expert tips and exciting updates from HR Solutions, straight to your inbox.

Strategic HR thinking whitepaper

Our latest HR whitepaper offers an in-depth analysis and strategic framework aimed at transforming Human Resources into a pivotal element of business success in the rapidly evolving corporate environment of 2024.

PARTNER REGISTRATION

Register your details below and we will contact you regarding how HR Solutions can support your organisation.

MAKE A GENERAL ENQUIRY

We’re here to assist you with any questions or enquiries you might have. Simply fill out the form below, and our dedicated team will get back to you.

var iframe = document.getElementById('pageurl-general-popup-6'); iframe.src = iframe.src + "?Form_Completion_Page=" + window.location.pathname + "&" + window.location.search.substr(1);

BOOK YOUR PLACE

Please complete the form and one of our team will call you back to discuss your query/booking.

Request your free trial

Register your details below and we will contact you about your 30 day free trial of the HR Knowledge Base.

REGISTRATION FORM

Register your details below and we will contact you about access to the HR Knowledge Base.  As part of your approved industry membership organisation you can get access to the HR Knowledge Base, created by Business HR Solutions, which is the go-to resource for thousands of business owners and managers across the UK.

REQUEST A PROPOSAL FROM US

We’re here to assist you with any questions or enquiries you might have. Simply fill out the form below, and our dedicated team will get back to you.

2023/2024 SME BUSINESS SURVEY

Our latest 2023/24 SME Business Survey sheds light on the intricate dynamics shaping the SME sector and unveils critical insights that can guide businesses toward sustainable success.

IF YOU WISH TO PURCHASE HR ADVICE LINE TIME, PLEASE COMPLETE THE FORM BELOW.

HR Solutions are here to help. We offer a standard hourly rate package for ad hoc HR advice which means you can pay for what you need, whenever you need it, and then quickly get advice. Our highly experienced advisors are on hand to provide you with practical employment advice to help you manage your workforce.  You can purchase HR Advice Line time now, and the time purchased will be valid for 12 months.