Ethnicity Pay Reporting – what to think about now
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The Government's consultation into Ethnicity Pay Reporting closes tonight with responses expected to frame future legislation for mandatory reporting. It is not yet confirmed whether businesses with less than 250 employees will be obligated to report so if you fell under the threshold for Gender Pay Gap reporting it is likely that you will have more time before this needs to become an immediate concern. But who should be reporting is just one of a number of questions to be answered.
What information will you need?
There is no answer to this yet. Ideas so far include:
1. Classification of ethnicities – Taking a standardised approach based on, for example, Office of National Statistic Census groups or independent classifications determined by and from business to business.
2. One pay gap figure – Comparing average hourly earnings of employees from underrepresented ethnicities (as one group) as a percentage of the earnings of white employees.
3. Several pay gap figures – Comparing the average hourly earnings of employees from a range of underrepresented ethnicities as a percentage of the earnings of white employees.
4. Reporting by pay band or quartile – Identifying the proportion of employees of different ethnicities by £20,000 pay bands or pay quartiles.
5. Context – Making contextual information (such as age, gender, and geographical location) mandatory to aid understanding of the drivers of disparities and/or provide important context to employees about the information reported.
6. Action Plan – Making the publication of an action plan mandatory.
Things to think about now
1. This isn't going to be the same as Gender Pay Reporting – Whatever form Ethnicity Pay Reporting takes, it is likely that your business will need to collect a broader range of datasets, carry out more complicated analysis and, therefore, need more time and resource than what may have been required to date for Gender Pay Reporting. Will extra budget be needed to prepare for this? If so, how much?
2. You cannot force employees to provide information about their ethnicity – Unless the law changes there is no obligation to take part in equal opportunities monitoring so if your organisation has a low response rate to staff surveys / induction questionnaires how will you comply with Ethnicity Pay Reporting? If you have a low response rate, do you know why? Can steps be taken now to increase the likelihood of your organisation having meaningful data when legislation comes into force?
3. The perception of your future talent pool – Baroness McGregor-Smith's 2017 report 'Race in the Workplace' identified an untapped talent pool, of people from underrepresented ethnicities, worth an estimated £24 billion a year. People within this untapped talent pool will pay attention to how your business reacts to Ethnicity Pay Reporting so being seen to be proactive will be crucial if your organisation wants to attract candidates. Is there support to initiate a proactive communication campaign in recognition of this? Is data available now to identify the significance of any disparity? And do you understand what that data is telling you?