Improving the race and disability pay gaps

Back in July 2024, it was announced in the King’s Speech that the government would bring forward the Equality (Race and Disability) Bill as part of their wider ‘Plan to Make Work Pay’.

What will this mean for businesses?

It is expected that this Bill will include proposals on extending equal pay rights and the requirement to produce a pay gap report to cover race and disability. In practice this means that employers will have to ensure workers carrying out duties and work that is the same or broadly similar must not be paid different on the basis of sex, race or disability.

Whilst the Bill has yet to be tabled by the government, they have this month launched a consultation seeking views on how to implement ethnicity and disability pay gap reporting for large employers (those with 250 or more employees).

Under current laws, these employers are already required to report on their gender pay gaps, therefore the consultations seek to understand how adding in additional elements will work in practice which will help shape the proposals that will be included in the Equality (Race and Disability) Bill.

Check our BrAInbox for instant answers to questions like:

What is gender pay gap reporting?

In the consultation the government propose to use the same measures as those used for gender pay gap reporting, for race and disability reporting. Like gender pay gap reporting, the data will taken from a snapshot of time, however there will be some additional considerations such as ensuring there are at least 10 employees representing each group being compared.

Alongside this, the government have also confirmed there will be a separate call to evidence seeking views on extending the right to equal pay to include ethnic minority and disabled people.

Check our BrAInbox for instant answers to questions like:

What is equal pay?

What are the current requirements?

Under current legislation set out in the Equality Act 2010, businesses must provide equal pay to both men and women if their duties and work they do is the same or broadly similar. Since 2017, enforced by the Equality and Human Rights Commission, businesses with 250 or more employees have been required to publish an annual gender pay gap report. This report is based on a ‘snapshot’ taken on the 5 April each year covering the difference between male and female pay of employees in their organisation. On top of this, it is recommended that these businesses then produce an ‘equality action plan’ to tackle any shortfalls.

The Employment Rights Bill includes proposals to enhance the above, making the production of an ‘equality action plan’ a requirement, rather than just a recommendation. It is expected that these action plans will need to differ from any policies with clear focus on tackling any inequalities when it comes to the gender pay gap. The Bill also proposes that the gender pay report must also identify the name of any providers or employers of contract workers they work with.

Additionally, to ensure that employers comply with these proposed rules, the government intends to restrict the ability for businesses to outsource their services in the aim of avoiding paying equal pay, putting the onus solely on the employer.