The UK government has launched a consultation to introduce mandatory reporting of ethnicity and disability gaps in pay for certain employers. The consultation ended on 10th June 2025. This consultation is for ‘large employers and large public bodies’, defined as those with at least 250 employees.
The government will use the responses from this consultation to draft the proposed Equality (Race and Disability) Bill and to ensure that employers are given a clear outline of what they must do.
Key Proposals
Since 2017, large employers are required to disclose their gender pay gaps. The Government claims that this has increased transparency for both employers and employees. The Government intends to use the same reporting framework for ethnicity pay gap reporting. This means that employers with 250 employees or more will be required to report any ethnicity pay gap.
Employers must use data taken on a snapshot date of 5 April every year to report any gaps in pay within 12 months, i.e. by the 4th April following that year. Employers will be required to report their data in an online format, similar to the way gender pay gaps are reported. The Equality and Human Rights Commission (which currently enforces gender gap reporting) will be empowered to enforce ethnicity and disabilities pay gap reporting as well.
Employers must report the ethnicity and disability pay gap using the same metrics as for gender pay gaps.
- Differences in the average hourly wage;
- Average hourly wage differences;
- Pay quarters is the number of employees that are divided into four equal-sized groups and ranked by hourly wage from highest to lowest;
- mean differences in bonus pay;
- median differences in bonus pay; and
- The percentage of employees who receive bonus pay.
The Government will also require employers report the total breakdown of their workforce based on ethnicity, disability and the percentage of employees that did not disclose personal information about their ethnicity or disability.
The government is also seeking views on whether employers are required to create “action plans”, for example, for pay gaps based on ethnicity or disability (a proposal similar for pay gap “actions” based upon gender is included in the Employment Rights Bill). The Employment Rights Bill includes a similar proposal for gender pay gap “action plans”.
Reporting on the Ethnicity Pay Gap
The Government proposes that employees self-report (with the option to opt out; employees are not legally required to provide this information). Those who wish to reveal their ethnicity can choose from 18 different classifications in the Government Statistical Service’s ethnicity harmonised standards, which was used for 2021 Census.
The government proposes that employers combine ethnic groups if there are fewer than 10 employees within any of the classifications. Employers should combine ethnic groups if there are less than 10 employees for any classification. They can do this by following the guidelines on ethnicity from the Office for National Statistics. This will ensure that groupings are comparable. The Government advises employers to report a binary classification when there are fewer employees in each ethnic group. For example, the Government recommends reporting a comparison between the biggest ethnic group and the other groups combined.
The Government also wants to know your opinion on whether or not large public institutions such as universities, should publish data on the ethnicity of their employees, including pay differences by salary band and grade, and on recruitment, retention and advancement by ethnicity.
Disability Pay Gap Reporting
The government is proposing to use the Equality Act 2010 definition for ‘disability” as the basis for identifying disabled workers. The government also proposes that employers are responsible for collecting disability data in accordance to this definition. However, just like with ethnicity pay gaps reporting, employees can self-report their disability status (or opt out).
The government has also proposed that the calculation of disability pay gaps be done using a binary method. Employers will have to compare disabled employees and non-disabled workers. Employers are not required to collect or publish data on different impairment types.
Minimum of 10 employees should be included in each group. It is assumed that if there are fewer than 10 employees with disabilities that the employer must still file a report stating that it cannot publish the disability pay gap in order to avoid identifying individuals.
Practical Implications
Employers in the UK will experience a significant change with the introduction of mandatory reporting on ethnicity and disability pay gaps. Many will not have collected and analysed such data up to now.
The consultation did specify the date when these reporting obligations will be introduced. However, the Government stated that it would publish the draft Equality (Race and Disability) Bill during this Parliamentary session. The reporting requirements are expected to be implemented as early as 2026, with the first report due in 2027.
Employers will face a challenge in collecting ethnicity and disability information. They will have to be careful not to compromise the employee’s privacy laws. If you calculate the average salary of 10 employees, it is possible to identify an individual. Its usefulness can be questioned because there could be large fluctuations in pay if new employees are hired or depart.
Employers might also be worried about potential liabilities and responsibilities that could be triggered if an employee discloses to their employer that they believe themselves disabled, even if they did not do so previously.
You can find the full document here.
