Should Employers report Ethnicity Pay Gaps?

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Should my Employer Report Ethnicity Pay Gaps?

In February 2017, the Government published an Independent review by Baroness McGregor-Smith considering the issues affecting black and minority ethnic (BME) groups in the workplace. The review titled: Race in the workplace stated that no employer can be honest enough to say that they are trying to improve the ethnic diversity in a workplace unless they are sure of that starting point and are able to monitor that success over a designated period of time.

The review by McGregor Smith suggests that a full representation of minority ethnic groups across the entire labour market of UK’s economy can lead to an increase in output of about 24 billion pounds. Yet, the consultation has raised a myriad of questions regarding the group of employers concerning how the data should be reported and what methodologies will be employed in collecting of the required data.

The consultation also highlights notable gaps and hurdles to be overcome before any such reporting obligation is genuinely made feasible. As well as considering how to balance the collecting of most valuable data without creating a significant burden on employers.

Does your employer need to comply?

The government has suggested a threshold for mandatory reporting obligation for an organisation with over 250 employers. While the McGregor’s recommendation was of merely 50 employers, the government chose to not follow the same and recommended 250 employers to report.

How will it be measured and analysed?

The prime focus on the consultation is that once collected, how will the ethnicity pay information be reported. The balancing act on providing easy information and at the same time demonstrating that the complexity of ethnicity data is of prime importance.

As of now, there seem to be four feasible options:

1.) A single percentage of pay gap difference between the average pay of white employees as compared to all other minority ethnic groups.
2.) Multiple percentages of figures for every different minority ethnic group against white employees.
3.) Providing ethnicity pay information by £20,000 band
4.) Quartile method of pay information

While there are essentially the most digestible and familiar formats as compared to the ones of gender pay gap reporting, the first option may lead to a significant lack of context while reporting.

The second option is an improvement but could still fail to visibly reflect the complexity of data since the pay of each minority group will only be directly compared to that of white employees.

The final two options are more preferable from data perspective as each ethnic group representing a percentage of pay bands will allow the data to be directly compared to not just that of white employees but to other ethnic minority groups too.

Another benefit of opting for this method will be the ability to decide where the different ethnic minorities will be concentrated within a business and to consider why this is the case?

There is still a long way to go

Despite such a high financial burden of implementation, there is no doubt that an ethnicity pay gap reporting is a positive step in the future. There are still concerns which may be legally raised in respect to clarity, classification and what exactly to report.

This consultation paper passed aims to address these concerns but there is still a lot to be decided. In spite of a successful impact of gender pay reporting, the complexities involved in collection of data for ethnicity pay gaps means that the proposal for mandatory reporting has a long way to go before it is considered to be a feasible option.

If you think you have been discriminated against due to your ethnicity our Employment Law Solicitors can assist with all types of claims. Naturally, we pride ourselves on providing the best possible service to the highest standards, we can provide free employment law advice on all problems.

Call us on 020 3923 4777 or 020 3923 4777