Are you ready for Labour’s ethnicity and disability pay gap transparency requirements

Is your organisation ready for ethnicity and disability pay reporting?

Critics have noted that Gender Pay Gap Reporting is an imperfect and complex system, and statistics show progress in closing the gender pay gap isn’t happening at the pace hoped. Organisations Fawcett Society have underlined the Ethnicity Gender Pay Gap as a further discriminatory hurdle, and it’s not obvious that the proposed extension to ethnicity pay gap reporting will address these nuances.

Yet, with ONS statistics showing a UK disability pay gap of 13.8% in 2021 and data indicating that some ethnic groups are still earning up to 18.5% less per hour than white employees, Labour are hoping that greater transparency – and anticipated name and shaming of poorer performers in national media – will make businesses refocus on action within their own organisations.

Why it matters to your business: the carrot…

Transparent reporting gets media and the public talking, challenging established ‘truths’ about how we should be treated and how we do business.?Extending this scrutiny to ethnicity and disability pay gaps will help identify the organisations that need to do more, those we can learn from, and those who talented individuals from all backgrounds may decide to avoid...

And it’s that last point that will begin to hit the bottom line of organisations that aren’t willing to make positive progress - as they miss out on the raft of benefits of that come from the injection of diverse perspectives into innovative ways of doing business, understanding customer needs and experience, and collaborating to develop fresh commercial strategies.

We have seen senior leader in the most responsible organisations embracing reporting, including the voluntary approach on ethnicity pay gap, as a tool to understand the effectiveness of their DE&I partnerships and programmes in delivering results. ?

Why it matters to your business: …and stick?

Ahead of the election, Labour messaging noted that businesses ‘with unacceptable’ pay gaps would need to implement an improvement plan to eradicate inequalities, ‘encouraging employers to take action, and coupled with additional equal pay protections, allowing those who are being underpaid with greater legal certainty to make a claim’. Time will tell whether Labour decide to tackle laggards and non-reporters with threatened enforcement and fines. ?

How quickly could it extended pay gap reporting introduced?

Likely consultation and legislation timings will become clearer in coming weeks, but a lead-in period will be needed in any case so that businesses can get their data processes in place. It should however be noted that the Gender Pay Gap requirements only had a 15-months between regulation being passed in Jan 2017 and deadline for first reports in April 2018.

How can we get ready for new reporting?

Our advice is to begin data collection early to help establish your results and how you will frame your report, especially if you have not adopted reporting under the previous voluntary approach.

Early preparation will also help you identify the need for any additional supporting initiatives – and identify the many VCSE partnerships who can help supercharge your DE&I strategies well ahead of the reporting becoming compulsory.

If you’d like to talk more about preparing your organisation for extended pay gap reporting, get in touch at [email protected]