Consultation launched on ethnicity and disability pay gap reporting for large employers

20 March 2025 4 min read

By Katie Davies

At a glance

The government has launched a consultation on introducing mandatory ethnicity and disabilty pay gap reporting for large employers.
The measures will form part of a new Equality (Race and Disability) Bill.
The proposed framework closely mirrors the existing regime for reporting gender pay gap data.
The consultation closes on 10 June 2025.

Eight months after the King's Speech announced the government's intention to introduce compulsory ethnicity and disability pay gap reporting for large employers (ie those with 250+ employees), the government has published a consultation paper seeking views on its proposal.

The measures will ultimately form part of the upcoming Equality (Race and Disability) Bill.

The consultation closes on 10 June 2025.

Reporting framework

While recognising that there are distinct considerations for ethnicity and disability pay gap reporting, the government is planning to implement a similar reporting framework to that already in place for gender pay gap reporting.

This means reporting on:

Mean differences in average hourly pay.
Median differences in average hourly pay.
Pay quartiles: The percentage of employees in four equally-sized groups, ranked from highest to lowest hourly pay.
Mean differences in bonus pay.
Median differences in bonus pay.
The percentage of employees of the relevant protected characteristic receiving bonus pay.

The government is also proposing to make it 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.

In line with the current gender pay gap reporting regime, the government also proposes:

The snapshot date will be 5 April for private sector employers, with those employers then required to report by 4 April the following year.
The pay gap data will be reported online.
The Equality and Human Rights Commission will enforce compliance.

The government is also seeking views on imposing additional reporting criteria for public sector bodies.

Data collection

Ethnicity

The consultation paper suggests that the best way for employers to collect ethnicity data is to ask employees to report their own ethnicity. It proposes that employers should use the detailed ethnicity classifications in the Government Statistical Service ethnicity harmonised standard and that, in order to protect employee privacy and produce robust statistics, there should be a minimum of ten employees in each ethnic group analysed.

The consultation suggests that employers may group together more than one ethnic group if necessary to achieve the minimum employee threshold and that, if doing this, employers should follow the guidance on ethnicity data from the Office for National Statistics. Where an employer has very small numbers of employees in each ethnic group, the consultation indicates that binary comparisons should be conducted instead eg comparing White British employees with ethnic minority employees. The consultation sets out further details on how to engage in this approach, but also says that employers should keep this approach under review.

Disability

For disability, the government proposes to introduce a binary approach ie measuring the disability pay gap by comparing the pay of disabled employees with non-disabled employees (rather than measuring the difference in pay between non-disabled employees and those with different types of impairment, which could lead to data privacy concerns). Again, there needs to be at least ten employees in each comparison group.

The consultation proposes that the Equality Act 2010 definition of 'disability' will be used and that employers will need to collect the data on the basis of that definition. Employees will continue to report disability themselves, and will not, as now, be required by law to identify or disclose disability to their employers.

Action plans

The consultation also seeks views on whether employers should produce action plans for ethnicity and disability pay gap reporting. It suggests that employers could use those action plans to explain the reasons behind any pay gaps and set out the actions they are taking to improve equality in their workforce.