Gender Pay is Done, So What Pay Gap Will Be Next?

By Andrew Willis
30 Apr 2018

The Gender Pay reporting deadline for organisations with 250 employees or more has been and gone, so what next? Some experts think the next stage will be to ask businesses to calculate and report their Ethnicity Pay Gap, which would explore where there is an identifiable pay gap between different ethnic groups.

What Would an Ethnicity Pay Gap Entail?

The independent McGregor-Smith 2017 review on race in the workplace recommended the introduction of ethnic pay gap reporting to help boost the economy by an estimated £24 billion each year. The reporting regime was proposed as a requirement for employers with 50 employees, with reports showing the breakdown of staff by reference to pay and race. The Department for Business, Energy and Industrial Strategy has tasked the charity Business in the Community with carrying out a review of how many companies are reporting ethnicity pay gaps one-year since the recommendation was released. In response to the review Baroness McGregor-Smith stated: “I believe in order to address the challenges in the workplace on ethnic diversity organisations should report each year on the number of individuals they employ from different ethnic backgrounds and their pay bands. Unless this is done on a voluntary basis now I believe that should be in legislation which will enable every company to understand the extent of the challenge they face on recruiting and promoting BME individuals. Publishing data begins the debate and then having aspirational targets for BME individuals and looking and acting at the underlying challenges in the workplace they face will begin to change the opportunities available to them.”

How Would the Government Bring it in?

It is anticipated that any legal requirement to carry out ethnicity pay gap reporting will take effect along the same lines as gender pay gap reporting, i.e. the obligation will be set on employers who meet a certain threshold and similar calculations will be required. The difficulties with this style of reporting are likely to crop up when employers are required to place each employee within a certain ethnicity. Also, if the requirement is going to be introduced in legislation, the government will have to consider whether the ethnicity pay gap report exists alongside pay gap reports or operates a different schedule, for example, whether the ‘snapshot dates’ for pay data are the same or different.

What Ethnicity Pay Gap Stats are Currently Available?

Some organisations have taken it upon themselves recently to carry out pay audits relating to ethnicity. The Greater London Authority (GLA) group carried out a pay audit in 2018 which found high ethnicity pay gaps across public sector organisations, including a finding that median hourly pay for white employees was 16.7% more than the median hourly pay for black and minority ethnic employees in the Metropolitan Police Service. The highest pay gap was 37.5% at the Old Oak and Park Royal Development organisation, whilst the lowest was 0% at the London Fire Brigade. London Mayor, Sadiq Khan, pledged immediate action to close the pay gap.

What You Can Do Now

Even though there is no obligation currently, employers can take proactive steps to review their pay practices across the whole of their organisations, not just in relation to gender. Ethnicity pay audits can be carried out to identify whether a pay gap exists, whilst being transparent and upfront with members of staff about the audit will demonstrate the employer’s commitment towards fair pay practices. If pay gaps do exist, a plan can be put in place of how these will be addressed, for example, by making changes to the recruitment process, introducing training schemes and assessing whether unconscious discrimination is present in decision making processes.

Gender Pay Support

For more information regarding gender pay reporting download our FREE White Paper, click here. If you require expert support please contact Croner Reward. After you send us your pay data, we will analyse and provide a statistical outcome – determining if you have a gender pay gap or not. We can then advise on how to close the gap, or advise on ways to keep it closed if there isn’t one. Call 0808 145 3385 to speak with one of our pay & benefits experts today.

About the Author

Andrew Willis

Andrew Willis is the senior manager of the Litigation and Employment Department and assumes additional responsibility for managing Croner’s office based telephone HR advisory teams, who specialise in employment law, HR and commercial legal advice for small & large organisations across the United Kingdom.