The Government says it is “time to move to mandatory ethnicity pay reporting” in its new Race at Work Charter announced in October 2018. The consultation on the proposed new law requests feedback on the sort of information that employers should be required to publish and whether this should follow current gender pay gap reporting rules.
Employment law expert Colin Leckey at law firm Lewis Silkin provides reaction to the proposals and gives a word of warning regarding any comparisons with gender pay gap reporting. Colin Leckey, Employment Partner at law firm Lewis Silkin, commented: “There is a trend in employment law towards transparency being used as a method of driving change, which we have seen across a range of new regulations, including the new CEO pay ratio reporting regime, the publication of age demographic statistics suggested by the Women and Equalities Committee, and in gender pay gap reporting. Now, with the recent announcement of the Government’s Race at Work Charter consultation, it looks like ethnicity pay reporting will be next.
“The government clearly has good intentions, but a simple copy and paste of the gender pay gap regulations for ethnicity won’t work.”
“Pay gaps are calculated from averages and, where you have a small group, the average calculated from that group becomes inherently more changeable. The addition or removal of just a few individuals can dramatically shift a statistic.”
“With gender pay gap reporting, this is an issue that impacts only the most gender-skewed of workforces. But, because ethnic minorities are exactly that – a minority – I would expect that most employers would be impacted by the “small groups” problem with ethnicity pay gap reporting and so produce unreliable and unhelpful statistics.”
“There are alternative methods of ethnicity reporting that would provide more helpful statistics, and we will be providing our recommendations in response to the government consultation.”