Legal

Could Black Lives Matter speed up the introduction of ethnicity pay reporting?

10 Jul 2020 By Rachel Ward and Tom Heys

Rachel Ward and Tom Heys explore whether the renewed pressure to remove societal injustice faced by BAME people could finally mean clarity on this area of legislation

The UK government’s 2018 consultation on ethnicity pay reporting closed in January 2019, but no further steps have been announced since. Questioned in March 2020, the government responded there had been 300 responses and that it would share the ‘next steps on [the consultation] in due course’.

A few months from that statement and now the world is very different: waves of Black Lives Matter protests come at a time when Covid-19 is disproportionately affecting BAME groups, and ethnic minorities are being harder hit by the Covid-19 recession and economic shutdown. Will the government be prompted to react?

Gender pay gap reporting was introduced in 2017 and some have called for a similar regime to seek to address BAME representation in the workplace. 

The 2018 consultation sought comments on how employers might report data. These included choices between having a single pay-gap figure of ‘white vs non-white’, multiple figures for different BAME groups, or publishing pay information by bands or quartiles.

The consultation also sought views on whether organisations should mirror the gender pay gap reporting system by using the same definitions and sets of statistics (eg, mean gender pay gap in hourly pay, mean bonus gender pay gap, etc). There are difficulties with this approach.

The gender pay gap regulations require comparison of the average woman to the average man, but the size of those two groups might be dissimilar: some workplaces are heavily gender-skewed. The gap may look good but fail to show what that workplace is really like for women. For example, in a workplace with 270 men and 30 women, the hourly rate of pay for women is calculated from a much smaller group of employees. If one or two of the women are dismissed or hired, it could significantly affect the overall pay gap. The issue is magnified when applied to ethnicity gap calculations.

Many employers may have a small proportion of non-white employees, potentially resulting in a lack of meaningful data and large swings from year to year. A headline figure may not reflect overall BAME representation in an organisation or accurately show if an employer is making progress at addressing imbalance.

In addition, some organisations do not hold ethnicity data for all staff. In 2019, a PwC report showed 75 per cent of the 80 companies surveyed had insufficient data to analyse their ethnicity pay gap. HR and data privacy considerations also arise when recording, storing and processing ethnic origin personal data.

Finally, the proposal for pay gaps to be published based on ‘non-white’ compared to ‘white or white British’ may assist with sample size but using a binary distinction could mask differences faced by discrete BAME groups: the Office for National Statistics uses 18 ethnic classifications. The experiences and problems faced by black people in the workplace can be very different to Asian workers.

The government would need to pass an Act of Parliament to create any new ethnicity pay reporting scheme, a time-consuming process with Covid-19 and Brexit already swallowing up much parliamentary time. It will have to decide whether it wants to prioritise this. 

There are significant problems with copying and pasting the gender pay gap approach in the field of ethnicity, and more consideration is needed. There is a growing consensus that something must be done, but as yet no agreement on what.

Rachel Ward is a senior associate and Tom Heys a legal analyst at Lewis Silkin, the UK member firm of Ius Laboris

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