All corners of the business world call for mandatory ethnicity pay gap reporting

Business leaders have come together to call on the Government to introduce mandatory ethnicity pay gap reporting. The Confederation of British Industry (CBI), Trades Union Congress (TUC) and Equality and Human Rights Commission (ECHR) have collectively written to Michael Gove in a bid to tackle pay disparities across ethnic and racial groups in the workplace.

As has so often been the case in recent years, business is leading government, especially when it comes to Environmental, Social, and Governance (ESG) matters. The Government's failure to include any plans for employment law reform in it's parliamentary agenda for the current term and 2020's Employment Bill apparently missing in action, has left reform in the hands of companies and employers.Since the mandating of gender pay gap reporting by employers with more than 250 employees in 2017 (although the obligation was paused in 2020 due to the COVID-19 pandemic), a growing number of businesses have voluntarily recorded, reviewed and reported the race and ethnicity pay gap within their organisations.

Although the commitment from government at present is only to review mandating race and ethnicity pay gap reporting 'in due course', it is likely that it will become compulsory for large employers at some point in the future. Before that, public pressure, customer and client pressure and demand from employees may encourage, if not compel, employers to at least start recording inequality in pay across race groups if not report it to a wider audience. A wise employer will want to start preparing now in any event.

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Some businesses – including banks such as Barclays, NatWest and Lloyds – have already begun voluntarily reporting their ethnicity pay gaps. However, the TUC said making it mandatory was “an obvious first step in helping to improve transparency” and bringing about widespread change across the labour market.

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