Ethnicity and disability pay gap reporting to go ahead

The government has confirmed that it will introduce mandatory ethnicity and disability pay gap reporting for larger organisations.

Responding to a consultation on the introduction of reporting requirements for employers with 250 or more employees, it said organisations will be required to publish six key metrics alongside new workforce composition data.

The government committed to extending pay gap reporting to ethnicity and disability in the King's Speech in 2024, and ran a consultation between March and June 2025.

The consultation attracted 857 responses, and 87% agreed that large employers should report ethnicity and disability pay gaps.

A significant majority of respondents agreed on what the parameters for reporting would be, including:

• Large employers are required to report on the overall composition of their workforce by ethnicity and disability;
• They should be required to report on what proportion of employees did not disclose their ethnicity or disability status;
• They should be required to produce ethnicity and disability action plans (gender pay gap action plans become mandatory from Spring 2027);
• Ethnicity data should be collected using the ethnicity classifications set out by the Government Statistical Service's (GSS) harmonised ethnicity standard and aggregated in line with guidance from Office for National Statistics;
• Ethnicity pay gaps must be reported on with the minimum of a binary comparison and require at least 10 employees in each group;
• Disability pay gap reporting should take a binary approach (disabled and non-disabled) and use the Equality Act 2010 definition of disability. It must also require at least 10 employees in each group.
• Most respondents agreed that ethnicity and disability pay gap reporting should mirror the existing framework for gender pay gap reporting, for example on geographic scope, snapshot dates and calculations required.

Some suggested that public bodies should be subject to additional reporting requirements, such as breaking down pay differences by salary or pay grade or publishing data on recruitment, but the government said it would not proceed with these.

The six key metrics would therefore be the same as those required for gender pay gap reporting: the mean hourly gender pay gap; the median hourly gender pay gap; mean and median bonus gaps; the proportion of employees who received a bonus; and quartile pay bands.

There is currently no official timeline for when the reporting requirements will be introduced, and the government said it would continue to develop legislation to support their introduction.

The government has also pledged to develop guidance and practical tools to support employers with the proposed requirements.

Data collection concerns

During the consultation, the government ran a number of roundtable events to get detailed feedback on how ethnicity and disability pay gap reporting could work out in practice.

Attendees shared that greater transparency around workforce diversity and pay gaps would accelerate action on inclusion and help to build trust in organisations.

Some were concerned about the challenges of data collection and the robustness of data, however, citing limitations in their company systems and the need to provide context to their pay gap figures.

A further issue was low employee declaration rates on these two strands, and the government said it would provide guidance on how to improve employee disclosure.

Seema Malhotra, minister for equalities, said: "No one deserves to be held back at work because of their ethnicity or disability. Everyone should be able to expect fair pay and progression opportunities for their hard work.

"By introducing ethnicity and disability pay gap reporting, this government is committed to ensuring transparency and tackling unfairness where it exists, promoting inclusion in our workplaces and our economy.

"The government wants to ensure that whoever you are, wherever you come from, Britain is a country that will respect your contribution and give you a fair chance to get on in life."

Sir Stephen Timms, minister for social security and disability, said pay gap reporting would "give organisations the data they need to reduce these gaps and improve fairness and inclusivity in the workforce".

A number of employers already run ethnicity and disability pay gap reports as part of their annual diversity reporting cycles.

Jackie Henry, managing partner for people and purpose at Deloitte, which published its first ethnicity pay gap in 2017, said: "Being open about our data has helped us take more focused action, such as our Future Leaders Programme, which provides tailored support and sponsorship of women and ethnic minority colleagues.

"We built on this in 2024 by publishing our pay and bonus gaps for disability and socio-economic background for the first time, and in 2025 by publishing our pay and bonus gaps for sexual orientation.

"This has given us a starting point to measure progress, keep us accountable, and help us improve our inclusion plans."

According to ONS figures, disabled people earn on average 12.7% less than their non-disabled counterparts, and most ethnic minority groups earn on average less than their white British peers.

The Chartered Management Institute welcomed the announcement, saying it was "an important step towards greater transparency and fairness in the workplace".

Petra Wilson, director of policy said: "It is only through visibility that we gain an understanding of where disparities exist and, crucially, how we can act on them. But reporting alone is not the end goal, that is why it is particularly encouraging that the proposals introduce a requirement for large employers to take action to address ethnicity and disability pay gaps.

"The key to success here will lie with skilled managers and leaders, equipped with the tools, training, data and confidence that they need to act on what we learn from mandatory reporting. These skills need to be embedded in managers at every level so that action plans can translate into meaningful steps to address pay gaps.

"The employers who get this right will not only close gaps, but unlock the full potential of their people."

Melissa Blissett, pay gap analytics lead at Barnett Waddingham, said: "This will transform gender pay gap reporting to a requirement for organisations to publish a full equality action plan. Data requirements are no longer two-dimensional, it's not just male versus female. Organisations will have the challenge of analysing data across multiple ethnicities and consider how to report intersectionally - for example, comparing the gender pay gap segmented by ethnicity.

"Challenges will arise for organisations around data collection, especially for disability, where individuals may be less willing to disclose. Deeper data analysis will be essential, to enable organisations to provide a data-led explanation and be able to tell their own diversity story with clarity and confidence."