16.04.2025

It is over seven years since gender pay gap reporting became mandatory for large employers. According to the Office for National Statistics, the gender pay gap has been declining slowly over time - over the last decade it has fallen by approximately a quarter among full-time employees, and in April 2024, it stood at 7.0%, down from 7.5% in 2023.

Now, in line with its commitments in Next Steps to Make Work Pay, the Government is working towards extending mandatory reporting obligations for large employers to also cover ethnicity and disability. On 18 March 2025, the Government launched a public consultation, which will close on 10 June 2025. The responses the Government receives will help to shape the ethnicity and disability reporting measures which are included in the draft Equality (Race and Disability) Bill.

The Government is aiming to use a similar reporting framework for ethnicity and disability pay gap reporting to that which is already in place for gender pay gap reporting (i.e. the same pay gap measures, same reporting dates and same enforcement regime will apply). In addition, it is proposed that large employers should be required to publish data on the following:

  • The overall breakdown of their workforce by ethnicity and disability.
  • The percentage of employees who did not disclose their personal data on their ethnicity and disability.

The Government’s consultation document suggests that employers should use the ethnicity classifications that were used for the 2021 Census, and that disability should be assessed using the definition in the Equality Act 2010 (i.e. that a person is disabled if they have a physical or a mental condition that has a substantial and long-term impact on their ability to do normal day to day activities).

It is also proposed that for calculating an employer’s pay gaps there should be a minimum of 10 employees in any ethnic or disability group that is being analysed. For ethnicity reporting, this means some employers might need to add some ethnic groups together.

The Government suggests that, as a minimum, employers should be required to provide a binary comparison (for example, showing the pay gap between White British employees and ethnic minority employees, and the pay gap between disabled employees and non-disabled employees). If employers can provide more detailed comparisons, they will be encouraged to do so.

Although these plans are likely to take longer to implement than some of the measures contained in the Employment Rights Bill – which is currently working its way through Parliament – it is important to put these proposals on the radar of relevant people within your organisation in good time, so that they can start to prepare.  With this in mind, you should talk to your payroll, HR and EDI teams now, so that they understand the key mandatory reporting changes that lie ahead. 

Now is also a good time to take stock now of what your gender, ethnicity and disability data look like (including from recruitment, promotion and pay perspectives), and take active steps where possible to best position your organisation for when the extended reporting obligations take effect.

Notably, the Government plans to publish a separate call for evidence in due course, and a Race Equality Engagement Group has also been established to help the Government to develop further measures to tackle race inequality.

We are keen to hear your views on the Government’s proposals in relation to ethnicity and disability pay gap reporting. Please email our Policy Team with any comments by 23 May 2025.

Make UK will also conduct a formal survey on this topic from 28 May to 16 June as part of our HR Q2 Bulletin. Please continue to monitor your emails and we will be in touch closer to the time to collect your responses.