With businesses struggling to retain staff and fill job vacancies, it is no wonder that more and more employers are keen to promote their inclusivity credentials to both their existing and future workforce. Part of this is demonstrating that the pay and progression within their workplace is fair for all ethnic groups. Whilst not yet compulsory, ethnicity pay gap reporting, like the existing gender pay gap reporting, can help demonstrate a business’ commitment to creating transparency, fairness and diversity within its workforce. 

The Government has issued ethnicity pay reporting guidance for employers to encourage voluntary reporting by businesses and develop a consistent, methodological approach for reporting which can lead to meaningful actions.

  The guidance provides advice on:

• collecting ethnicity pay data for employees;
• how to consider data issues such as confidentiality, aggregating ethnic groups and the location of employees;
• the recommended calculations and step by step instructions on how to do them;
• reporting the findings;
• further analysis that may be needed to understand the underlying causes of any disparities; and
• the importance of taking an evidence-based approach towards actions

The guidance also recommends that an action plan is published alongside pay gap results to send strong signals to the workforce about the business’ commitment to understanding and addressing any unfair ethnic disparities in its workplace.

This article reflects the position at the date of publication 9 May 2023. If you are reading this at a later date you are advised to check that that position has not changed in the time since.   We regularly publish articles on a range of tax and wider topical issues which affect employers. If you wish to subscribe to our monthly Employer Focus e-newsletter, please contact us.