The future of workplace equality – proposed legislation on ethnicity and disability pay reporting

What employers need to know about the Equality (Race and Disability) Bill.

On 18 March 2025, the government launched a consultation on the introduction of mandatory ethnicity and disability pay reporting under the Equality (Race and Disability) Bill (the ‘Bill’). The consultation will close on 10 June 2025. The stated aimed of the Bill is to create a more equal society in which people can thrive whatever their background and to support a growing economy. 

The former Conservative government previously explored and consulted on the possibility of ethnicity and disability pay gap reporting, but did not introduce mandatory reporting. It did however publish in 2023 guidance for employers who wished to report their ethnicity pay gap on a voluntary basis. 

Which employers will fall within the scope of mandatory reporting duty for ethnicity and disability? 

The government proposes to follow a similar approach to the current requirement for gender pay reporting. Employers with 250 or more employees will fall within the scope of mandatory reporting including: 

• Private and voluntary sector employers in Great Britain (England, Wales and Scotland);

• Public sector bodies in England; and

• Certain public authorities operating across Great Britain in relation to non-devolved functions. 

What measures will be required to be reported? 

The same reports which are currently required for gender pay gap reporting are also proposed for ethnicity and disability pay gap reporting, these being:

• Mean difference in average hourly pay;

• Median difference in average hourly pay;

• Pay quartiles (the percentage of employees in four equally sized groups, ranked from highest to lowest hourly pay);

• Mean difference in bonus pay;

• Median difference in bonus pay; and

• Percentage of employees receiving bonus pay for the relevant protected characteristic.

Employers would also be required to report on the overall breakdown of their workforce by ethnicity and disability, as well as the percentage of employees not disclosing their personal data for these characteristics. 

The government is seeking views on whether employers should be required to produce ‘action plans’ to help identify the cause of any pay gap and the actions to be taken to close it. 

How will ethnicity data be collected by employers? 

The government proposes that employers should ask employees to self-report their ethnicity with an option to opt out. To ensure consistency, it is proposed that employers will collect ethnicity data using the classifications in the Government Statistical Service (GSS) ethnicity harmonised standard which was used for the 2021 Census. 

How will disability data be collected by employers? 

The definition of ‘disabled’ under the Equality Act 2010 is intended to be adopted for the purposes of the Equality (Race and Disability) Bill. Under the Equality Act, a person is ‘disabled’ if they have a physical or mental impairment that has a substantial and long term adverse effect on their ability to do normal activities. 

Employees will self-report in relation to their disability and will not be required to disclose their disability if they prefer not to do so. 

Additional ethnicity reporting requirements for public bodies including schools and academy trusts 

It is proposed that public bodies with 250 or more employees will be required to provide more granular information on the ethnicity pay gap in addition to the data outlined above in order to improve transparency and accountability. 

The proposals suggest that these public bodies, including local authorities, schools and academy trusts, will need to report ethnicity pay differences by grade or salary bands and data relating to recruitment, retention and progression by ethnicity. 

Potential challenges for employers 

• Data collection and reporting – the new reporting requirements could raise concerns regarding privacy, data protection and the ethical handling of employee information. In light of concerns about employees being identifiable from the data, the consultation proposes that employers will only be required to report in relation to groups of more than ten employees.

• Action plans – steps to close ethnicity and disability pay gaps are likely to add logistical and financial strains on organisations. However, if this requirement is brought in, it will present employers with further opportunities to take meaningful steps to diversify their workforces at all levels.

• Intersectionality – addressing discrimination where multiple protected characteristics intersect, such as both race and disability can be complex and may be overlooked under the proposed reporting framework.

• Reputational risk – where ethnicity and disability pay gap reporting reveals significant pay differentials, organisations will need to prepare for communications strategies and action plans to mitigate reputational risk. 

Next steps for employers: 

Although the Bill is not yet in force, implementation is expected in 2026 and it would be good practice for employers to take steps to prepare for mandatory reporting. Steps for employers include: 

• Considering a trial run of ethnicity and disability pay gap reports using self-reported ethnicity and disability data to calculate pay gaps and analyse results.
• Reviewing salaries, management structure and grading where appropriate, to ensure that pay levels can be compared accurately.
• Considering creating practical action plans to increase diversity at senior levels in the organisation.

If you would like to discuss any aspect of this article further, please contact our Employment team on 0113 244 6100. 

You can also keep up to date by following Wrigleys Solicitors on LinkedIn.

The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.