AAT urges government to go further on ethnicity pay reporting

The government is currently consulting on plans to make ethnicity pay reporting compulsory. AAT has surveyed its members to establish their views on the subject. We have over 140,000 members, 13% of whom identify as BME (black and minority ethnic), while almost 30% of our 250+ employees identify as BME.

AAT's ethnicity pay survey revealed that only 2% of respondents believe financial benefits would be a key benefit of ethnicity pay reporting. However, 10% believe it will improve company performance and 50% believe the key benefit is improving social justice, while 21% think that all three of these benefits will be realised by ethnicity pay reporting.

Phil Hall, AAT's Head of Public Affairs and Public Policy, says: "Ethnicity pay reporting could have numerous benefits for employers, employees and the wider economy, as demonstrated by the views of our members. That said, we also recognise that more needs to be done to ensure these requirements are meaningful and lead to sustainable and positive changes."

Kelly Tolhurst MP, Minister for Small Business, Consumers and Corporate Responsibility, who launched the ethnicity pay consultation, says: "Transparency is a vital first step towards harnessing the power of a diverse workforce. We have seen the power of transparency in Gender Pay Gap reporting.

"Reporting ethnicity pay information enables employers to identify – and then tackle – barriers to creating a truly diverse workforce. If there is a consistent approach to reporting, they can also benchmark and measure their progress by comparing themselves to other employers and learn from them."

Reporting threshold

Findings from the survey also show that a very clear majority favour a reporting threshold well below the 250+ employees cut-off point currently in place for Gender Pay Gap reporting.

Of those surveyed, 47% would like reporting requirements to be applied to companies employing more than 50 employees and notably almost one in five (19%) would like to go even further, wanting ethnicity pay reporting requirements to be imposed on all companies employing more than 10 people.

Phil Hall says: "99% of UK businesses employ less than 250 people so reducing the Ethnicity Pay Gap at smaller companies is likely to lead to much more compelling outcomes than simply requiring change at very large companies. That’s why AAT would like to see these requirements in place for all companies employing more than 50 employees."

Action plans

Gender Pay Gap reporting simply requires companies to report their pay gaps, but there is no requirement to do anything about them – there isn’t even an obligation to produce an action plan, although many employers voluntarily do so. This has been a significant criticism of Gender Pay Gap reporting and so AAT believes it would be foolish to repeat this mistake in relation to ethnicity pay reporting.  

The AAT ethnicity pay survey demonstrated overwhelming support for such action, with more than two-thirds (68%) supporting the introduction of a legal obligation on companies to publish an action plan.

"Those companies that voluntarily produce a Gender Pay Gap action plan are the types of companies that take these issues seriously and are committed to improvement anyway," adds Phil Hall, "and the same will be true of ethnicity pay reporting. By compelling such action for all companies, those that seek to do the bare minimum will be rightly challenged to do more."

The government consultation ends on 11 January 2018. You can read AAT’s full response to it in PDF.