UK firms to publish ethnicity and disability pay gaps under new Labour plans

Large British employers will soon face new legal obligations to disclose pay disparities affecting ethnic minority and disabled workers under draft legislation.

The proposed rules would require organisations employing more than 250 people to publish annual reports detailing wage gaps, extending transparency requirements that currently apply only to gender-based pay differences.

The legislation also introduces requirements beyond disclosure.

Companies will be required to produce action plans outlining how they intend to address any identified inequalities.

The approach mirrors forthcoming changes to gender pay gap reporting set to take effect next year.

Both trade unions and business organisations have previously expressed support for mandatory pay gap reporting as a tool for addressing racial inequality in employment.

Under the proposed framework, businesses meeting the 250-employee threshold must annually publish differences in average hourly wages and bonus payments between demographic groups.

Employers will also be required to show how staff from different ethnic backgrounds and those with disabilities are distributed across their pay structures.

The Government has acknowledged practical challenges associated with the reporting requirements.

At a minimum, companies must provide a comparison between disabled and non-disabled workers, alongside a comparison between white employees and all other ethnicities combined.

More detailed breakdowns covering five ethnic categories would only be required where workforce numbers are sufficient to prevent identification of individuals.

The provision is intended to address concerns about protecting personal data in organisations where some groups are small.

LATEST DEVELOPMENTS

• Economy alert: Fuel prices to rise as Russia loses 40% of oil export capacity in Ukraine strikes
• DWP unveils major overhaul to tackle youth unemployment in 'major boost' to Britain
• World 'heading for stark and steep recession' as UK warned of high prices amid sky high oil costs

Government data from 2023 showed that UK-born Black, African, Caribbean or Black British workers earned on average 5.6 per cent less than their white counterparts, after adjusting for occupation, qualifications, age and sex.

Figures published in 2024 showed they earned 12.7 per cent less per hour than non-disabled colleagues, even after accounting for occupational and educational differences.

Seema Malhotra, minister for equalities, said: "Enhanced transparency will help ensure fair pay and progression opportunities for all workers."

Unlike sex, employees are not required to disclose their ethnicity or disability status to employers, which may affect the completeness of the data.