Susannah Donaldson

Pinsent Masons asked clients for their say on the introduction of reporting requirements to aid our response to the UK government’s consultation on the Equality (Race and Disability) Bill, which will introduce mandatory ethnicity and disability pay gap reporting.

While many employers across different business sectors voiced strong support for reporting, the findings reveal that meeting the mandatory requirements will take preparation. Our survey showed fewer than half currently calculate disability or ethnicity pay gaps, suggesting that despite positive sentiment, significant groundwork will be required before the new measures can be implemented effectively.

Perhaps to minimise such groundwork, some clients suggested aligning any new frameworks with the existing gender pay gap reporting model and the use of established legal definitions for ethnicity and disability. Experience gained from gender pay gap reporting will be valuable to employers when implementing disability and ethnicity pay gap reporting.

However, ethnicity and disability data also present unique challenges, including sensitivities around self-identification, data protection concerns, and the need for tailored strategies to address disparities.

Just over half of the employers surveyed already produce action plans in relation to gender pay gaps, despite there currently being no legal requirement to do so. However, the Employment Rights Bill will make gender pay gap actions plans mandatory. In contrast, very few employers asked, currently produce action plans for ethnicity or disability gaps.

Action plans should be purposeful and aim to deliver objective benefits by identifying specific actions required to close pay gaps. Linking reporting with follow-up action is essential to avoid stagnation and ensure year-on-year progress.

One of the most significant barriers identified was the challenge of collecting accurate and comprehensive data. Only 28% of clients we asked reported that at least 80% of their workforce had disclosed disability status, while 43% said the same for ethnicity. Additionally, employees who meet the legal definition of disability under the Equality Act may not identify as disabled, particularly among neurodivergent individuals.

Another concern raised by employers was the frequency of data updates. If disability status is only recorded at the point of hiring, it may not reflect changes in an employee’s health status over time. This could result in underreporting or outdated information being used in pay gap calculations.

Collecting data for pay gap reporting involves data management and a cultural exercise. Employers need to build trust and communicate clearly with employees about how their sensitive personal data will be used. Better cultural outcomes, as well as better figures to publicly report, are likely to be achieved if the exercise is based on reliable data.

Organisations that already collect ethnicity and disability data will be better positioned to comply with future requirements. Those that do not, should begin assessing how to introduce data collection processes and engage with their workforce to build trust and encourage disclosure. Although the new legal obligations are unlikely to come into force before 2027, employers should be encouraged to start preparations now.

Susannah Donaldson is a partner at Pinsent Masons