Ethnicity and disability pay gap reporting: consultation underway

During the King’s Speech last summer, the Government announced its intention to introduce an Equality (Race and Disability) Bill (the ‘Bill’) this year.

The Bill (which is yet to be published) is set to cover numerous issues, one of which being the requirement for mandatory ethnicity and disability pay reporting for employers with 250 or more employees. Unlike gender pay gap reporting, to date, ethnicity and disability pay gap reporting has been voluntary.

Consultation

On 18 March 2025, in anticipation of the Bill’s publication, the Government launched a consultation to seek views on how these ethnicity and disability pay reporting measures could be implemented. The framework largely mirrors gender pay reporting (applying to employers with 250+ employees, using the same pay elements and breakdown, and assessed on the same timeframe), whilst understanding that gathering and analysing ethnicity and disability pay data tends to be more complex. The diversity within ethnic groups and the nuanced nature of disability identification complicate data collection.

The consultation, which will run for 12 weeks until 10 June 2025, seeks to address the challenges and mechanics of how these new requirements will work in practice. A copy of the consultation document can be found here.

This consultation signifies the beginning of the Government’s efforts towards fulfilling its commitment to “create a more equal society and support a growing economy”.

How will it compare to gender pay gap reporting?

The Government wants to avoid placing any unnecessary additional burden on employers by introducing new systems and processes. As a result, employers would be required to report on the following measures, as they do currently in relation to gender:

• Mean differences in average hourly pay
• Median differences in average hourly pay
• Pay quarters – the percentage of employees in 4 equally-sized groups, ranked from highest to lowest hourly pay
• Mean differences in bonus pay
• Median differences in bonus pay
• The percentage of employees receiving bonus pay for the relevant protected characteristic.

It’s proposed that the data will be reported online in a similar way as with gender pay gap reporting, and the Equality and Human Rights Commission (EHRC) would enforce the new pay gap reporting frameworks as it currently does for gender pay gap reporting.

Additional requirements

While similar to the requirements for gender pay gap reporting, the proposed reporting framework will account for some distinct considerations relating to ethnicity and disability, particularly in the processes of data collection and analysis. The Government propose that it should be mandatory for employers to report on:

• The overall breakdown of their workforce by ethnicity and disability
• The percentage of employees who did not disclose their personal data on their ethnicity and disability.

This will highlight any disparity caused because of low self-declaration rates from their employees on these characteristics or, for example, a recent increase in the number of ethnic or disabled employees who have joined the business in entry level roles.

There will also be additional reporting requirements for public bodies, which will include most maintained schools, academies and multi-academy trusts. They will be required to report on:

• Ethnicity / disability pay differences by grade or salary bands
• Data relating to recruitment, retention and progression by ethnicity / disability.

As there has been an increase in ethnic diversity in public body workforces in recent years, this information should help those bodies recognise where racial / disability inequalities, such as barriers to promotion, still exist.

Data collection

As mentioned, the collection of ethnicity data can be complicated due to there being many ethnic groups. Employers will be encouraged to show pay gap measures for as many ethnic groups as they can. However, to protect the privacy of individuals and ensure they are collecting meaningful data, the Government propose that there should be a minimum of 10 employees in any ethnic group being analysed. This means that some ethnic groups may have to be combined, and employers are directed to the Office for National Statistics for guidance on how to do so. If the number of ethnic employees is very small, binary classification can be used (e.g. comparing white British employees with employees of an ethnic minority).

It becomes more complex again for disability data. Using specific impairment types may mean the individuals become identifiable and there may also be difficulties where individuals have multiple impairment types. Although analysing separate impairment groups could offer a more detailed understanding of the effects of pay gap issues, the Government proposes to take the binary approach in comparing disabled and non-disabled employees.

Action plans

The consultation also seeks views on whether employers should be mandated to create action plans following their ethnicity and disability pay gap reporting. These plans would mean employers were required to set out how they intend to close, or to justify the reasons behind, any pay gaps revealed by the reports.

Impact on schools

The Equality (Race and Disability) Act is anticipated to come into force in 2026 and there is likely to be a transition period to allow employers to get ready for the change. However, schools should not wait to take steps until the law forces them to do so.

Schools with 250 or more employees should act now to ensure that they have the infrastructure in place to be able to report on their gender, ethnicity and disability pay gap figures for relevant employees.

Maintained schools and academies should be conscious of the added reporting obligations that will be expected of all public bodies.

Before publishing any pay gap reports or subsequent action plans, schools should seek legal advice to establish whether they have covered all elements of the proposed requirements, and that their data has been analysed and interpreted fairly.

Regardless of workforce numbers, all schools should continue to promote diversity and inclusion within their workforces at all stages, whether that be in recruitment, in respect of pay practices, inclusive policymaking or opportunities for promotion.

If you have any queries on ethnicity and disability pay gap reporting in your school, please get in touch with our Education team.