The consultation closes on 11 January 2019. The government suggests that a trial or phased approach could be used with early adopters to test the process before mandatory reporting is required.
Key Elements of the Consultation
What ethnicity pay information should be reported?
The following approaches have been proposed:
- “One pay gap figure comparing average hourly earnings of ethnic minority employees as a percentage of white employees.” This approach would mirror the gender pay gap reporting methodology. The employer would provide one headline figure. One drawback of this approach is that a headline pay gap figure alone may not give a fully representative picture as different ethnic groups would be rolled into one.
- “Several pay gap figures by ethnicity group.” This approach would compare average hourly earnings of different groups of ethnic minority employees as a percentage of white employees. However, this approach would not identify variations in pay distributions across different groups.
- “By pay band or quartile.” This approach would show the proportion of employees from different ethnic groups by £20,000 pay bands or by pay quartiles. Employers would be able to see where ethnic minorities are concentrated in terms of pay and identify any apparent barriers to progression. One problem with this approach may be that breaking down data in this way may cause issues in terms of protecting employee anonymity.
Where would the data need to be published?
There is no indication in the consultation document of where the government proposes employers should publish ethnicity pay data. However, it seems likely that the government would implement publication requirements similar to those for gender pay gap information, which employers are required to publish on their websites and on a central government online portal.
What are some challenges that may arise for employers collecting ethnicity data?
The consultation document summarises the following challenges:
- There is no legal obligation for individuals to disclose the ethnic group with which they identify, and there is no legal obligation on employers to collect ethnicity data.
- Analysing ethnicity data can be complex because individuals do not necessarily associate themselves with any of the categories.
- Employers have their own classifications. Taking a standardised approach may result in additional costs to employers where changes to classification systems are required.
- Any information relating to an individual’s racial or ethnic origin is classified as a special category of personal data under the Data Protection Act 2018, read with the General Data Protection Regulation. Employers that collect ethnicity data need to ensure the anonymity of their employees.
Will the reporting requirement apply to all UK employers?
“The government believes that employers of fewer than 250 employees should not be expected to publish ethnicity pay data . . . A threshold of 250 or more employees would mirror the gender pay gap reporting methodology.”