Shrena Fraser Johnson


The UK Government recently issued guidance for employers on voluntarily measuring and reporting on ethnic pay gaps. The guidance is in response to the government’s Inclusive Britain action plan and is the first government guidance to set out a consistent approach to measuring ethnic pay differences. The aim of the guidance is said to be to develop a consistent, methodological approach to ethnicity pay reporting, which can then lead to meaningful action, while remaining proportionate and without adding undue burdens on business. 

Ethnic pay gap reporting presents more complex issues than gender pay gap reporting. In an ethnically diverse workforce, ethnic pay gap reporting can involve a comparison between multiple ethnic groups. In a less ethnically diverse workforce, if publishing the results, ethnic groups might need to be aggregated to protect confidentiality and to ensure statistically robust data. 

Collecting and analysing data  

The guidance covers collecting ethnicity data, preparing payroll data, and different calculation measures to analyse the data.  

The guidance recommends using the Government’s Statistical Service harmonised standards when collecting ethnicity data to help ensure consistency and comparability across different data collections.  

The steps for preparing payroll data mirror the same approach as set out in the gender pay gap reporting guidance.  

The guidance contains several different calculation measures to analyse the data and it is not recommended to look at any one in isolation. The measures mirror the gender pay gap reporting, with the exception of an additional two measures: 

  1. The percentages of employees in different ethnic groups across the organisation. 

  1. The percentage of employees who did not disclose their ethnicity.  

Understanding the results 

Where pay disparities do exist, it should not necessarily be assumed that it is as a result of discrimination. The guidance provides some questions that employers might want to consider where there are findings of ethnic group pay disparities to determine the underlying cause(s) and whether action is needed.  

Taking action  

Where action is needed, the guidance outlines how any action should be realistic and measurable and sets out further resources that employers might want to publish to address any disparities, such as a supporting statement or an action plan.  

General Data Protection Rules (GDPR

To comply with GDPR, employees should be informed of how their ethnicity data will be used and kept safe and secure. It must not be possible to identify an individual from information put into any report.  

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