New guidance for employers – Ethnicity pay reporting

26 May 2023

The UK workforce is becoming increasingly diverse however there is still more to be done to remove barriers to entering the labour market and to ensure pay and progression is fair for all ethnic groups. Data has been produced to show that there are broad variations in gross earnings amongst ethnic groups. Some minority groups are earning less per hour than white British employees, whilst some appear to earn more.

On 17 April 2023, the Government issued new guidance to employers on how to measure and report on any ethnicity pay differences within their business.

The guidance explain how employers can report on ethnicity pay and how to:

1. collect ethnicity data of employees
2. gather the required payroll data for ethnicity pay calculations
3. make ethnicity pay calculations
4. analyse and understand the results of these calculations
5. develop an action plan to address any identified disparities

Much of the guidance mirrors the approach set out in the guidance for gender pay gap reporting. The document provides high level guidance on how to balance reliability and confidentiality. Pay disparities may be due to a number of different reasons. It is up to employers to do further work or collate other available data to identify and understand the causes. Ethnicity pay reporting is one of the tools employers can use to build transparency and trust among their employees.

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