Ethnicity pay reporting

Insights - 15/11/2018

Joanne Kavanagh, Partner in our Employment team explores ethnicity pay reporting in the below article, looking into employment rates across different ethnic groups.

Although employment rates across all ethnic groups are increasing, the undisputed facts are that (1) businesses recruit proportionately more white British people than those from other ethnic groups and (2) generally (there are differences between ethnic minority groups) pay them more. Experts in the field have shown that equality of opportunity is in the interests of social justice and makes business sense.

The Government is consulting on the implementation of mandatory ethnicity pay reporting and the deadline for responses is 11 January 2018.  The Equality & Human Rights Commission has recently reported that although most employers recognise diversity to be a priority, very few actually collate and analyse data on their employees’ ethnicity.

Ethnic pay gap reporting is a more complex issue for employers than gender pay gap reporting.  Many employees decline to provide information about their ethnicity because of concerns about the use to which this data will be put. Those that do provide it are presented with a range of classifications of ethnicity.  The 2011 census has five broad ethnic groups; White, Mixed, Asian, Black and other and 18 specific groups under these categories.

The Government consultation paper sets out three suggestions for gathering the pay data. The first is for employers to give the average hourly pay of all ethnic minority staff as a percentage of all white staff.   The second is to show the average hourly pay of different ethnic groups as a percentage of white staff. The third, most similar to gender pay gap recording, is to set out the comparative data of different ethnic groups in pay bands or quartiles. This approach is preferred by the Government.

However, the pay bands or quartiles approaches ‘may cause issues’. Too much detail will risk individual employees being identified in breach of GDPR and confidentiality; too little will make the data meaningless because an employer will simply have insufficient data to enable them to identify pay gaps and show improvements over time. An example is given in the consultation document of Civil Service statistics which suppress values based on five or fewer responses and views are invited on an ‘equivalent approach’ for the private sector.

Currently there is no legal obligation to provide a contextual statement or action plan for gender pay gap data (only around 50% of employers did).  The Government asks whether a narrative plan should be mandatory for ethnicity pay gap data which could be useful to show declaration rates amongst employees.

It seems likely ethnic pay reporting will mirror gender pay gap reporting and be introduced for employers with 250 or more employees. However, smaller employers may decide to produce an ethnic pay report at least for internal use so as to monitor successes in reducing pay gaps.

We are tracking developments in this area (and also with regard to pay reporting for other groups). Should you have any questions on the issues set out here contact your usual adviser in the team or Joanne Kavanagh at [email protected].

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.