‘Ethnicity pay gap reporting will help achieve equality’


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The groundswell of support for the Black Lives Matter movement has pushed the call for mandatory ethnicity pay gap reporting further up the agenda and employers are being encouraged to begin collecting the data they need now.

Speaking at a Westminster Employment Forum conference on BAME equality in the workplace, Equality and Human Rights Commission chair David Isaac said significant progress could be made in improving equality if businesses published, and acted upon, the difference in pay between ethnic groups.

“One of the abiding calls from the race discussions we’ve had over the past two weeks is, ‘what are we going to do now?’. This is a once-in-a-generation opportunity to seek to resolve these issues,” said Isaac.

“We do need action, we need to build upon the recommendations made, many by the McGregor Smith report, and the good work that Business in the Community and others have done.

“We would like to make pay gap reporting mandatory and we’d like to build upon the data that currently exists … I do not feel that its overly bureaucratic to introduce and respond to mandatory ethnicity pay gap reporting.”

Like the gender pay gap reporting requirement, Isaac said the EHRC would support the introduction of mandatory ethnicity pay gap reporting for employers with 250 or more staff.

Such a requirement has been considered by the government for some time, with a consultation into the proposal closing in January 2019.

Isaac said he did not want to see further bureaucracy thrust upon employers and felt reporting on the pay differences experienced by different workplace groups was “not difficult, not too onerous”.

“The 250 [employees] figure is meant to be an indicator of a large organisation that will be able to cope with the additional cost and administration associated with this. It’s very much a bar that we would hope to review.

“In gender pay gap reporting we are now suggesting that that figure be reduced to 50. In terms of mandatory ethnicity pay gap reporting, there would not initially be a huge amount of support to start at 50, but I would hope that it would move to 50 before too long.”

He said pay gap reporting was a “very crude” tool, but was considered “very effective to shine a light on many of the issues that we all know need to be addressed”.

“What we are particularly concerned about isn’t just average pay, it’s about the measurement of recruitment, retention and progression in addition to remuneration. What we’ve seen in gender pay gap reporting is a very detailed analysis of what lies behind some of the figures,” he added.

I do not feel that its overly bureaucratic to introduce and respond to mandatory ethnicity pay gap reporting,” – David Isaac, Equality and Human Rights Commission

Fudia Smartt, employment lawyer at Spencer West, said the concept of ethnicity pay gap reporting had been considered by Theresa May’s government but not acted upon, and felt its introduction had been put on hold while the UK dealt with Brexit and Covid-19.

“However, I think with the Black Lives Matter movement coming to the fore, there is a real groundswell of interest in looking at the issue of inequality in this country and tackling the ethnicity pay gap will just be one of the issues that can address that,” she said.

Employers lack data

However, one of the major barriers to reporting on the average pay of different ethnic groups was the lack of available data, particularly due to employees’ reluctance to provide their ethnicity data because of concerns around confidentiality and how it would be used.

Katy Bennett, diversity and inclusion consulting director at PwC, said: “It requires some thinking, particularly if you’re global and you want to collect outside of the UK. How are you going to explain that you wish to collect this data and what you’re going to do with it?”

One such organisation that has been voluntarily publishing its ethnicity pay gap is NatWest, which has published two ethnicity pay gap reports alongside its gender pay gap reports. Colleague experience lead for ethnicity Karen Flynn-Macfarlane said the bank used its HR system to collect ethnicity data, and that this had been used to develop targets for how it wanted its leadership teams to look.

To encourage employees to provide their data, a privacy notice was circulated to inform them about what would be collected, why it was being collected and how it would be kept secure. This was followed up with communication from leaders, social media campaigns and through the “ethnicity week” it held as part of NatWest’s inclusion month.

Flynn-Macfarlane said once the organisation had explained what the data would be used for the response rate rose from around 77% to 81%.

She said: “That change in culture doesn’t come automatically. People are always a bit wary about sharing personal data and we had to do a lot of work to gain that trust and make people disclose… One of the key parts was that people thought that the data went to everybody within HR, but that couldn’t be further from the truth really.

“We also explained that one of the goals for collecting that data was to do ethnicity pay gap reporting. We knew it was going to come and we thought that it was a good way to show the difference that this activity would make.”

Building trust

Organisations also needed to think about how data would be categorised to avoid identifying individuals in organisations where there could be a small proportion of BAME employees, said Adrian Hyyrylainen-Trett, global inclusion and diversity membership development manager at the Employers Network for Equality & Inclusion.

He said: “There needs to be an atmosphere of trust within organisations so that data can be collected without employees questioning what it’s going to be used for. The only way of doing that is making it part of an exercise that everyone understands the value of, and having workplace data from across all different characteristics.”

PwC’s Bennett said that collecting ethnicity and pay data was “really an exercise in trust”.

She said: “If you were really struggling to build that trust, that can be an indicator there are some wider cultural issues within the organisation. That’s probably time to pause and ask whether there are some broader issues around inclusion and whether you need to talk to staff and create some safe spaces for them to talk about how they feel or why they do not trust you.”

Smartt said creating a whistleblowing hotline as a safe space for people to raise concerns could help encourage individuals to raise concerns about discrimination “without fear about being accused of playing a race card or trying to be difficult”.

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