Ethnicity Pay Gap Advice for Employers

Posted on April 21, 2023

Business owners need to be aware of the Government guidance on how to measure, report and tackle ethnicity pay gaps within their workforce in order to make sure they are compliant and not find themselves subject to an Employment Tribunal.

Under the Equality Act 2010 it is unlawful to discriminate, both directly and indirectly, against employees because of their ethnicity, and it is the same for both those in employment and those seeking employment. Currently, ethnicity pay gap reporting is voluntary and of course the ethnicity pay gap and equal pay are two very different concepts.

Gender and Ethnicity Pay Gap

Equal pay refers to the principle that men and women who perform the same job, or work of equal value, should receive the same pay. In other words, it is about ensuring that there is no gender based pay discrimination in the workplace and forms part of employment law policies.

On the other hand, the ethnicity pay gap refers to the difference in average pay between people from different ethnic groups. This gap can exist even when individuals are doing the same job or work of equal value. The ethnicity pay gap can be caused by a variety of factors, including discrimination, unconscious bias, and differences in educational attainment and experience.

Is Ethnicity Pay Gap reporting mandatory?

It is a statutory requirement for employers with at least 250 staff to measure and report gender pay gaps, so if your business is larger than this then you need to make sure you are compliant.

However, whilst reporting ethnicity pay gaps is voluntary, many SMEs and business owners do indeed record their ethnicity pay data saying that it; promotes an understanding of the issues facing ethnic employees, can help to influence equality, diversity and inclusion at work, and hopefully prevents any future inequalities and discrimination.

This latest guidance from the Government sets out a consistent approach for all to follow and includes how to:

collect ethnicity pay data
how to consider data issues such as confidentiality, combining ethnic groups, as well as the location of staff
all recommended calculations
reporting
analysis and cause of any disparities
take an evidence-based approach towards actions

What is the Ethnicity Pay Gap?

Ethnicity Pay Gap basically shows the difference in the average pay between all Black, Asian and minority ethnic workers in a workforce and all white staff.

The House of Common's Women and Equalities committee recently recommended to the Government that mandatory Ethnicity Pay Gap reporting be introduced by April 2023 for all organisations that currently perform GPR. As always employment law is a minefield of constantly changing policies and legal updates and so it is a good idea to check in from time to time with your employment solicitor for advice.

Commenting on the recent news, Alan Lewis, Partner and Employment Law Solicitor at Pearson Solicitors said:

“There has been specific legal protection for equal pay based on sex for over 50 years, in the form of the Equal Pay Act 1970 and subsequent legislation. However, there has never been equivalent legal protection for employees who suffer a disparity in pay based upon their race or ethnicity.”

“Such employees are left with having to rely on other provisions in the Equality Act 2010, which are not necessarily as straightforward to rely upon as the provisions of the equal pay legislation protecting women. Similarly, whilst there are many previously decided cases relating to equal pay between men and women (because many claims have been brought under the equal pay legislation), there are comparatively very few equal pay decisions on the grounds of ethnicity or race,” he added.

Ethnic Pay Gap reporting

This is the first such Government guidance to deal with ethnic pay reporting and is welcomed by employment lawyers as a step towards further clarity. Pay gap reporting can encourage business owners to have some introspection and hopefully make changes for the better and employers can begin to address any inequalities and help avoid costly court cases.

“Whilst there have been recent moves to introduce ethnicity pay reporting, it is important to note that this is still only voluntary. There is undoubtedly a significant disparity of earnings based on matters such as ethnicity, disability or age. Perhaps it is time to consider the introduction of like equal pay protection for all types of protected characteristic,” said Alan.

How can we help

If you are a business owner and help and legal advice on how to manage your workplace policies contact our employment law solicitors on 0161 785 3500 or enquiries@pearsonlegal.co.uk

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.