Mandatory ethnicity pay reporting set to be debated in Parliament

A petition calling for the introduction of mandatory ethnicity pay gap reporting for companies with 250 employees or more has reached the 100,000 signature threshold, and will now be considered for debate in parliament.

The proposal is by no means new. In fact, the UK government’s consultation on the topic closed in January 2019, although the findings are yet to be published. The petition in question was launched in March of this year, before the tragic death of George Floyd propelled the issue of structural racism to the forefront of public thinking. The petition has garnered support in recent weeks and, at the time of writing, has attracted 113,817 signatures.

The petition’s creator, Rabya Aftab Lomas, states that the legislation is needed to “shine a light on race/ethnicity based inequality in the workplace so that they can be addressed. Many large companies, both within the UK and elsewhere, have shared similar sentiments of late, announcing their intention to address racism and inequality in their organisations in an expression of solidarity with the Black Lives Matter movement.

Prior to now, many firms have argued that ethnicity reporting would be too complex to introduce and would simply increase the reporting burden already placed upon large companies (for example, with regards to gender pay gap reporting). According to the CBI, however, UK GDP could increase by £24 billion a year by closing the ethnicity pay gap. Studies have shown that companies in the top quartile for ethnic/cultural diversity at the executive level are, in fact, more likely to outperform their competitors on profitability.

So, what can employers do to prepare for this potential change? Starting to think about whether you have the necessary data to hand would certainly be a welcome start. Just last year, a survey of 80 organisations carried out by PwC found that 75% did not have the necessary data to analyse their ethnicity pay gap. As such, employers should think about starting to collect this data where they have not already done so, and to encourage their staff to share this information with them, in order to ensure that they will be in a position to comply with any future legislation.

The government has not yet responded to the petition and a date for debate is yet to be set. It seems likely, however, particularly within the current climate, that we might see this change come in sooner rather than later.

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Claire McKee

About Claire McKee

Claire is an associate in the People, Reward and Mobility practice. Whilst advising employers and employees on a wide range of employment issues, Claire focuses on advising clients on contentious employment, discrimination and equal pay matters. She appears before the Employment Tribunal in Scotland and England on a regular basis.

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