Getting ready for ethnicity pay reporting

25 January 2019

Ethnicity Pay Reporting is being considered by Government following recommendations made by Baroness McGregor-Smith’s ‘Race in the workplace’ review. Government consultation has closed this month and so we now await the detailed requirements of what will likely be an add on to the existing Gender Pay Gap Reporting requirements. An overview of Ethnicity Pay Reporting can be in our article ‘Ethnicity pay gap reporting – why the data matters?’ 

We don’t yet know the timescales for this proposed legislation and await the outcome of the consultation. Regardless of the specifics, what we know for certain is that ethnicity reporting will happen and so it is a good idea to conduct a future planning exercise, now. 

Consider your processes

If you already collect ethnicity data, that’s great, and you are likely well prepared. 

However, if you don’t currently collect this data as a matter of course, you will need to think about the processes that you need to put in place. You will need to collect data from the following. 

  • Your current workers: you will need to let your workers know that you will be collecting this data, and the reasons why. The way in which you collect, store and how long you retain this information will need to be considered.   
  • Future workers: you will need to update your onboarding process to include collection of ethnicity data. New workers will also need to be advised about how and why you collect, store and retain this information. 

General Data Protection Regulation

How you collect data in itself needs some very careful thought. Data relating to ethnicity is considered to be a ‘special category’ of personal data under General Data Protection Regulation (GDPR) and so you have the following two options.

  1. Gain specific consent to collect ethnicity information in a way that information gained is clearly linked to an individual – whilst more care will need to be taken in terms of GDPR compliance, this form of collection is likely to be more meaningful in the longer term. You may, for example, wish to involve your workforce in discussions about positive action and progress. How can you attract workers from a particular group, what are the barriers? You will be required to include action points and progress in your future reports. There are schools of thought that suggest these types of action plans could become mandatory as well.

  2. Collect ethnicity information in a way that is anonymous and cannot be linked to any individual. It appears that this approach will be accepted under the proposed legislation and the consultation paper asks what steps that should be taken to preserve the confidentiality of individuals. If this is your chosen approach, your processes must be robust in order to ensure true anonymity and so you don’t fall foul of GDPR requirements. It may be less helpful in the longer term.

What are the ethnic groups?

It is important that the data you collect is in line with the ethnic groups adopted by the Government.

The current ethnic groups are those included within the 2011 Census which uses 18 specific groups under 5 broad categories. These are included in Annex A of the Consultation paper.  

The consultation explores the current relevance of these classifications. For example, the white category groups together White British with individuals from other white backgrounds who may face different levels of disadvantage as a result of their ethnicity.

It is possible that further categories may be introduced by the time the legislation is introduced, but we expect that they will remain broadly in line with the existing classifications. 

Meaningful Data

It is noted that, when looking at work and progression, it is not the ethnic group of the worker in isolation that needs to be considered. Other factors such as age, education and gender can have an impact on the type of employment and the pay received. 

It is not yet clear whether or how factors such as education will be reported, although as they are highlighted as factors within the consultation paper, they could be a factor in the final reporting requirements. 

Discrimination and Bias

Despite discrimination legislation, Baroness McGregor-Smith suggests that a ‘lingering bias’ exists, which continues to disadvantage certain groups.

Most organisations will have policies in place which stress their commitment to equal opportunities and are clear that discrimination of any kind will not be tolerated. It’s really important that your organisation supports this through adopting a positive culture. Organisations that spend time on their plans for positive action and progress towards an inclusive culture will find themselves in a stronger position when it comes to reporting in this area. 

Changing the direction and culture of any organisation can take time and effort and therefore business leaders may need to consider areas for improvement now. 

This article is intended to be a practical guide for clients who wish to prepare ahead of the legislation being announced. If you have a desire to develop your processes and policies, please contact Kerri Constable or Laura Cerasale