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Government urged to back mandatory ethnicity pay reporting

The government has been urged to introduce mandatory reporting on the ethnicity pay gap for all companies employing more than 250 workers by charities ShareAction and the Runnymede Trust in a new report.

In 2018, the government held a consultation on whether ethnicity pay gap reporting should be mandatory.

However, the recommendations to make reporting mandatory for companies with more than 250 employees was not acted upon.

Instead, in April 2023 the government published voluntary guidance to help employers measure ethnicity pay gaps in the workforce.

The Runnymede Trust’s report said: “It is time for the government to honour its original commitment and require mandatory ethnicity pay gap reporting for companies with over 250 employees."

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The report also said employers should be required to publish a supporting explanation about any gaps they identify and the government should conduct a two-year review to assess employers’ progress.

Voluntary pay gap reporting will leave some employers behind, according to Melissa Blissett, pay gap analytics lead at professional services company Barnett Waddingham.

Speaking to HR magazine, she said: “As we saw with gender pay gap reporting, often a regulatory approach is required to initiate action.

"A mandatory reporting requirement also provides the platform for equality discussions to be raised in the workplace. 

“That said, there are increasing numbers of employers voluntarily publishing their ethnicity pay gap and I’m confident that this will snowball, with or without legislative backing.”

Blissett said many employers are not currently collecting enough workforce data to identify accurate pay analytics.

She said: “Many organisations are likely to need to build further trust with employees and set out how this information will be used for improvement before the calculations can even be made. 

“The calculations themselves should not be a significant challenge as the government guidance issued earlier in the year suggested organisations reflect existing gender pay gap reporting.”

Big four professional services firm EY is one employer which identifies ethnic, gender, disability, sexual orientation and social mobility pay gaps as part of its DEI commitments.

Speaking to HR magazine Justine Campbell, talent managing partner at the firm, said: “Diversity, equity and inclusion are business imperatives for EY and we are taking targeted action across every level of the business to help accelerate the pace of change and improve the representation of diverse talent.

“Pay gap is just one of the metrics we use to monitor our progress and hold the business to account. We have gone beyond statutory requirements to provide voluntary pay gap reporting on a variety of metrics."