Background
Many of you will be very familiar with the gender pay gap reporting regulations, introduced back in 2017 as a way of tackling head on continued differences in pay between men and women in the workforce, despite the Equal Pay Act being with us since the 1970s.
In 2020 the Prime Minister set up a Commission to identify racial disparities and inequalities and set out ways to address them. In March 2021, that Commission produced a report, which identified a number of recommendations. Those of most relevance to employers included investigating pay disparities and helping with action plans to address them, opening up access to apprenticeships to marginalised young people and encouraging innovation with an enterprise programme.
In March 2022, following a period of consultation, the Government published its response to the Commission’s report. It has agreed to provide further funding to the Equality and Human Rights Commission (“EHRC”) to enable it to use its compliance and enforcement powers where it sees practices which lead to racial disadvantage. That included the formation of an “Inclusion at Work Panel”, (made up of a panel of academics and business leaders).
By Spring 2023, the Panel will develop and disseminate resources to employers to help drive fairness. It will go beyond race and identify actions to promote fairness in the workplace. On 17 April 2023, the Government published “Inclusive Britain”, an update on progress. Some of the major issues identified are:-
- The need to communicate more effectively on racial issues and to avoid lumping together different ethnic minority groups – the Government stopped using the term BAME (black, Asian and minority ethnic) in its own communications because of the need to be specific when reporting about ethnicity. The use of umbrella terms, such as Asian or black, should be avoided and instead, and only where necessary, references should be made as specifically as possible to the exact ethnic group to avoid confusion or misrepresentation.
- To be able to encourage responsible reporting of issues of race and ethnicity, the Government commissioned Basis Social to undertake research into the use of language and terminology with which people from different ethnic backgrounds identify. Part of the research found that ethnicity should not be used as an identifier when reporting unless there is a clear and valid reason to do so.
- Care needs to be taken over the potential for ethnic terminology to be used in a way which is stigmatising or reinforces stereotypes.
Guidance on voluntary ethnicity pay gap reporting
In its Guidance the Government recognised that analysing ethnicity pay information can help employers understand whether unfair disparities exist in the average pay between different ethnic groups in their workforces. However, it decided against introducing mandatory ethnicity pay gap reporting. Instead, employers who report on a voluntary basis would be required to publish a “diagnosis and action plan”, setting out reasons why disparities exist and what will be done to address them.
Last month the Government published guidance to provide employers with advice on ethnicity pay gap reporting and covers the following areas:
- Collecting employees’ ethnicity pay data.
- How to consider data issues such as confidentiality, aggregating ethnic groups and the location of employees.
- The recommended calculations and step-by-step instructions on how to do them.
- Reporting the findings.
- Further analysis that may be needed to understand the underlying causes of any disparities.
- The importance of taking an evidence-based approach towards actions.
The Government suggests that the Guidance will allow businesses to measure ethnicity pay gaps in the workforce “meticulously without placing an unfair burden on them”.
Having acknowledged the need to support employers (and smaller organisations in particular) to understand how to take positive action while avoiding unlawful discrimination, the government published ‘Positive action in the workplace: guidance for employers.’ Some of the Guidance draws from the existing EHRC Code of Practice which has a section on positive action which is relevant.
The voluntary reporting regime is not perfect, but it will mean that employers who do report will need to demonstrate their commitment to improving diversity by setting out tangible measures in an action plan, to show how the pay gap will be narrowed.
The latest Guidance also comments on steps made to encourage the take up of apprenticeships, development of opportunities for entrepreneurs from under-represented backgrounds, and complex measures to address the impact of artificial intelligence (AI), where for example employers utilise AI tools in recruitment software for candidate screening. This type of software may be used to filter out candidates at the earliest stages of recruitment, without any human involvement.
Some commentators feel pulling back from making ethnicity pay gap reporting compulsory is a missed opportunity. Others feel employment is over-regulated as it is, and to impose another reporting regime would simply add to the burden on employers. Given the acknowledged issues with categorising employees by race and ethnicity, and obtaining ethnicity data in the first place, it is likely that take-up of voluntary reporting will be low. However, employers should consider the benefits for their business (including the importance of operating transparently and prioritising ED&I) and their ability to be able to respond to future legal developments at pace before determining they need not take any action at this stage.
Please do not hesitate to get in touch with your usual Hill Dickinson Health Employment contact if you need any advice or support in this area.
For further information, please contact:
Andrew Gibson, Hill Dickinson
andrew.gibson@hilldickinson.com
