Mandatory ethnicity and disability pay gap reporting for large employers

The government has confirmed it will introduce mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees, following a 2025 consultation in which 87% of respondents supported mandatory reporting. The government's intention is for reporting to help increase transparency, expose pay disparities and encourage actions to remove barriers affecting minoritised ethnic and disabled employees in the workplace.

Which employers will be required to report?

The regime will mirror gender pay gap reporting, in that it will apply to the following employers if they have 250 or more employees (defined as large employers):

• Private and voluntary sector employers in England, Wales and Scotland
• Public sector bodies in England
• Certain public authorities operating in Great Britain in relation to non-devolved functions

Extra reporting duties for public bodies were originally proposed but these are not being taken forward.

Smaller employers may report their ethnicity and disability pay gaps on a voluntary basis.

What will large employers need to report?

Large employers will need to report:

1. The same six measures as for gender pay gaps:

• mean differences in average hourly pay
• median differences in average hourly pay
• pay quarters – the percentage of employees in four equally-sized groups, ranked from highest to lowest hourly pay
• mean differences in bonus pay
• median differences in bonus pay
• the percentage of employees receiving bonus pay

2. The breakdown of their workforce by ethnicity and disability, and the percentage of employees who did not declare their ethnicity or disability status.

The workforce breakdown is intended to provide context to pay gap data and mitigate concerns that some employers would stop hiring minoritised ethnic or disabled people to avoid higher pay gap figures. Further context would be provided by the declaration rates – if a high percentage of employees do not report their ethnicity or disability, this can point to cultural issues eg a lack of trust in the employer in relation to sharing personal data. 

3. Action plans to tackle ethnicity and disability pay gaps

These are aligned with the new requirements for gender pay gap and menopause action plans, meaning employers can produce a single action plan. The government has recently published step-by-step guidance on creating an action plan.

Ethnicity definition and thresholds

Large employers will be required to report:

• binary comparisons of White (including White Other)/all other ethnic groups, save where it would prejudice confidentiality; and
• broader comparisons between the five broad ethnic groups in ONS guidance (1: White, 2: Asian or Asian British, 3: Black, Black British, Caribbean or African, 4: Mixed or multiple ethnic groups, 5: other ethnic groups), where minimum employee thresholds are met.

In relation to collection of ethnicity data, the government has said:

• Employees will identify their ethnicity using the GSS harmonised standards (accessible here). Note that there are slightly different questions in the GSS across England, Wales and Scotland and the government will provide guidance for employers on this.
• The data will then need to be aggregated in line with ONS guidance (as set out above).
• Employees must be asked to provide their ethnicity voluntarily and be able to choose a 'prefer not to say' option. There will be a minimum threshold for employees for each ethnic group (probably 10 per group) to protect anonymity.

Disability definition and thresholds

In relation to disability reporting, employers will be required to report a binary comparison of disabled/non-disabled employees.

The government has given the following guidance on disability data collection:

• Employees will be asked to share their disability status voluntarily, providing a 'prefer not to say' option
• The definition of disability under the Equality Act 2010 will be used
• There will be a minimum threshold for each group of employees, to protect anonymity, with that threshold to be determined

Reporting dates and enforcement

Ethnicity and disability reporting will use the same 'snapshot' dates and deadlines as gender pay gap reporting ie:

• Private/voluntary sectors: a snapshot date of 5 April, with the report due by 4 April the following year
• English public sector: a snapshot date of 31 March, with the report due by 30 March the following year

Reports would be submitted via the same online reporting service as for gender pay gap reporting.

Enforcement would sit with the Equality and Human Rights Commission, which also mirrors gender pay gap rules.

When will the changes come into force?

There is not yet a confirmed implementation date for mandatory ethnicity and disability pay gap reporting. However, the government has committed to introducing the regime and has published draft primary legislation alongside its consultation response, which envisages subsequent regulations setting out the detailed reporting requirements. In practice, it may take several years before employers are required to report formally for the first time.

The government will issue guidance ahead of commencement to help employers prepare, including covering:

• Detailed step-by-step guidance on how to make the calculations
• Advice on actions to address ethnicity and disability pay gaps
• Guidance on how employers can improve employee declaration rates on ethnicity and disability, including building employee trust and psychological safety

We will report on the guidance once published.

How can large employers prepare for ethnicity and disability pay gap reporting?

Employers with 250+ employees, and smaller employers who wish to report voluntarily, should work on the basis that mandatory reporting will be implemented. Early steps to prepare include:

• Review data systems: can existing pay gap reporting processes accommodate the requirements for ethnicity and disability reporting (eg GSS-aligned ethnicity classifications, Equality Act disability data and 'prefer not to say' responses)? Are data collection processes transparent and secure?
• Engage employees: employee disclosure rates are likely to be a key challenge for employers. Engaging with and building trust with employees around the purpose of collecting data, confidentiality and security of data collection systems is likely to boost disclosure rates.
• Trial-run the calculations: using existing data and keep an eye out for the government's guidance on calculations in due course.
• Review policies and practices: to identify any risks or structural barriers for minoritised ethnic and disabled employees and start gathering evidence for future action plans.
• Build governance and accountability: who will your reporting leads be and who will have internal oversight (eg DEI or risk committees)? How will the single action plan for gender, ethnicity and disability pay gap reporting be coordinated?
• Prepare for annual reporting cycles: work with HR and payroll to align timelines with existing gender pay gap reporting processes, and plan internal sign-off procedures for publication.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, April 2026