Government confirms that ethnicity and disability pay gap reporting will become mandatory for large employers

27 March 2026 5 min read

By Katie Davies

At a glance

The government has confirmed that it will introduce mandatory ethnicity and disability pay gap reporting for large employers, building on the existing gender pay gap reporting regime.
Employers with 250 or more employees will be required to report, while smaller employers will be encouraged to participate voluntarily where possible.
The reporting framework will closely mirror gender pay gap reporting, including six standard pay and bonus metrics, workforce breakdowns and the same annual reporting timetable.
Employers will need to collect ethnicity data using the Government Statistical Service harmonised standard and report disability data using the Equality Act 2010 (EqA) definition, subject to minimum thresholds to protect anonymity.
Large employers will also be required to produce an action plan addressing ethnicity and disability pay gaps, aligned with forthcoming mandatory gender pay gap and menopause action plans.

One year on from the publication of a consultation on a requirement for large employers to report ethnicity and disability pay gaps, the government has now confirmed that it will take this proposal forward. These new obligations come on top of the existing annual requirement for large employers to report gender pay gap data.

In our earlier article we set out the details of the consultation. The government’s response now provides:

Employers in scope

The reporting threshold for mandatory ethnicity and disability pay gap reporting will be large employers with 250 or more employees.
The government intends to provide advice for organisations just over the reporting threshold (250 to 500 employees) who are concerned about implementing reporting effectively, including the potential costs of compliance.
Employers with fewer than 250 employees will be encouraged to report voluntarily, where possible.

Reporting framework

The reporting metrics and reporting processes for ethnicity and disability pay gap reporting will be aligned with the existing gender pay gap reporting regime.
Employers will, therefore, report the same six measures for ethnicity and disability pay gap reporting as are currently used for gender pay gap reporting:
- 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.
Mandatory ethnicity and disability pay gap reporting will also include workforce reporting requirements. This means that employers will have to report the breakdown of their workforce by ethnicity and disability status. They will also have to declare the proportion of employees who did not share their ethnicity or disability status.
Mandatory ethnicity and disability pay gap reporting will have the same reporting dates as gender pay gap reporting and use the same online service for the publication of data. This means that employers (in the private sector) will have a pay data ‘snapshot date’ of 5 April each year. They will then have to report their pay gap data within 12 months ie by 4 April the following year.

Ethnicity data

Employers will be required to collect ethnicity data using the same set of questions used in the Government Statistical Service’s ethnicity harmonised standard.
Aggregation of individual ethnic groups will need to be in line with ONS guidance as follows:
- White.
- Asian or Asian British.
- Black, Black British, Caribbean or African.
- Mixed or multiple ethnic groups.
- Other ethnic groups.
Where numbers permit, employers will have to report comparisons between the five ethnic groups. However, as a minimum, employers will be required to report a binary comparison. A binary comparison means comparing the White ethnic group with all other ethnic groups combined. However, this will not apply if an employer does not meet the set threshold for either the White group or all other ethnic groups combined.
The government will set a threshold for employees for each ethnic group to protect anonymity. This threshold has not yet been decided and is still under consideration by the government. For example, if the threshold is set at ten, an employer would need to have at least ten employees in each of the five broad ethnic groups in order to report the data.

Disability data

Disability pay gap reporting will require employers to report a binary comparison (disabled or non-disabled), using the EqA definition of disability. The EqA defines a disabled person as someone who has a ‘physical or mental impairment’ which has ‘a substantial and long-term adverse effect on the person’s ability to carry out normal day-to-day activities‘. However, the government is going to consider how it can also encourage organisations with sufficient data to disaggregate their data further on a voluntary basis.
Again, there will be a threshold for employees for each group to protect anonymity, but consideration is still ongoing as to the most appropriate threshold. For example, if the minimum threshold is set at ten employees, reporting will only be required if there are least ten employees in each of the salary quarters, rather than ten overall in the workforce.
The government is also aiming to ‘future-proof’ the legislation to allow for more granular disability reporting in due course, if this becomes appropriate.

Action plans

The government will require large employers to take actions to tackle ethnicity and disability pay gaps. This will be aligned with the new requirements (mandatory from 2027) for large employers to produce an action plan covering steps to reduce the gender pay gap and support employees going through the menopause. This means that employers will be able to produce one single action plan.

Guidance and tools

The government says that it will develop guidance and practical tools to support employers with the proposed new reporting requirements. This will include:
- Guidance on how employers can improve employee declaration rates on ethnicity and disability.
- Detailed step-by-step guidance on how to make the calculations.
- Advice on actions to address ethnicity and disability pay gaps.

Enforcement

Enforcement for ethnicity and disability pay gap reporting will mirror enforcement for gender pay gap reporting. As it stands, the Equality and Human Rights Commission (EHRC) is responsible for enforcing reporting annually. It has also previously investigated statistically improbable data to ensure employers are reporting accurately. The government intends to discuss enforcement further with the EHRC as it continues to develop the legislation and detailed reporting requirements.

Implementing legislation

The government will draft new primary legislation to give effect to the new obligations, together with supporting regulations that will set out the detail of the reporting requirements.
It appears from the government’s 2024 Next Steps to Make Work Pay document that the new primary legislation will be an Equality (Race and Disability) Bill. As yet, the government has published very little information about this bill. However, in the response to consultation, the government has set out some proposed draft wording for the relevant clauses.

Key takeaways

This latest development comes at a time when employers are already grappling with significant employment law reforms being introduced under the Employment Rights Act 2025. However, the impact of these new reporting requirements cannot be sidelined as they will require employers to undertake a significant audit of their existing data and data collection practices.

Further, while the government is aiming to align disability and ethnicity pay gap reporting as much as possible with the existing gender pay gap reporting regime, there is no doubt that the concepts of ‘disability’ and ‘ethnicity’ are more complex than the more binary concept of ‘sex’, adding to the burden of achieving accurate and meaningful compliance.

For now, pending further news on the planned implementation date of these reforms, employers would be prudent to start identifying their data pinch-points and start to plan out their strategy for meeting the new requirements.