COMPLIANCE
The future of pay gap reporting
Cybill Watkins MCIPP, Group Product Legislation Manager, Zellis, explores what businesses need to consider in relation to disability and ethnicity pay gap reporting
T he future of business pay gap reporting will expand to disability and ethnicity pay gap reporting. Currently, it’s only mandatory to report on gender pay once a year for employers of 250 or more. It’s voluntary to report on ethnicity, and guidance is available on GOV.UK here: https://ow.ly/3K1Z50VXzEs. It’s also voluntary to report on disability pay. However, there’s no GOV.UK guidance available on this at present. At the time of writing, we expect reporting on disability and ethnicity pay to become mandatory within the next four years. However, we don’t currently have an exact timescale or concrete details of how much detail will need to be reported. The Labour Government has indicated that this will become compulsory for employers and will be enshrined in law in the Equality (Race and Disability) Bill.
This Bill was part of the 40 Bills being proposed in 2024 but hasn’t been drafted yet. However, this doesn’t stop businesses from bringing in their own processes or from voluntarily reporting. The Government was recently asked if it was going to have discussions with the European Union (EU) around its reporting requirements as a part of this draft Bill. The answer was: “This Government is committed to building on the historic achievements of the Equal Pay Act 1970 and Equality Act 2010 and tackle pay discrimination. The Equality (Race and Disability) Bill will introduce mandatory ethnicity and disability pay gap reporting for large employers and extend the right to make equal pay claims to ethnic minority and disabled people. Additionally, as set out in the Plan to Make Work Pay, we will put in place measures
to ensure that outsourcing of services can no longer be used by employers to avoid paying equal pay and improve enforcement by establishing an Equal Pay Regulatory and Enforcement Unit. These changes will strengthen and expand the existing legislative framework. “We are also committed to protecting the ability to draw on equal pay comparators where workers’ terms and conditions can be attributed to a single source, ensuring those provisions that were previously derived from EU law remain enshrined in UK law.” So, what next? So, a business has decided they wish to start reporting on disability and ethnicity pay gaps and have seen the benefits of being open and transparent. What do they need to consider?
PROFESSI NAL in Payroll, Pensions and Reward
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June 2025 | Issue 111
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