As the UK’s Black History Month (1st to 31st October) ends, and Disability Awareness Month (20th November to 20th December) is about to start, now is the perfect time to start thinking about ethnicity and disability pay gap reporting.
After eight years of mandated Gender Pay Gap reporting, and as the government's first consultation on the proposed Equality (Race and Disability) Bill closes, organisations should start preparing for extended pay gap reporting requirements now.
A history of pay gap reporting
In 2017, the UK’s Gender Pay Gap Reporting Regulations were introduced as a way of promoting gender equality in UK workplaces. Since then, organisations with more than 250 employees have been required to publish their gender pay gap figures annually. More importantly, they must outline what action they will take to reduce the gaps wherever they are being identified.
Reflecting on the last eight years of Gender Pay Gap reporting, Barry Boffy, DEI Consultant at FAIRER Consulting says: “These requirements were always intended to be much more than just ‘a statutory reporting requirement’, but a way for organisations to be able to see clearly, sometimes for the first time, where barriers to access, opportunities, inclusion, and promotion for women exist across the organisation…”
Barry goes on to stress, “…and more importantly, to explicitly commit to taking action to actively mitigate or remove those barriers in order to reduce those pay gaps.”
For many organisations, this pay gap reporting process was a welcome tool to support already existing initiatives and commitments to tackling gender inequalities, both in industry and organisationally. The data being generated – particularly after the first few years of reporting, when trends began to emerge – provided evidence of need: that crucial “why?” that should always be considered when outlining commitments, or writing strategies and action plans aiming to tackle inequalities.
As the Gender Pay Gap Reporting Regulations came into effect, many assumed that the UK Government would extend mandated reporting requirements to ethnicity and disability. This is something the Equality and Human Rights Commission (EHRC) were quick to recognise by issuing guidance the following year on voluntary disability and ethnicity pay gap reporting.
This guidance was intended to encourage organisations to consider voluntarily carrying out pay gap monitoring and reporting in other areas. Additionally, it aims to help them understand specific ethnicity- and disability-related pay disparities as a way of taking meaningful action to reduce related workplace inequality – much in the same way as the Gender Pay Gap reporting does.
As anticipated, the government announced its intention to legislate to deliver mandated ethnicity and disability pay gap reporting for larger employers in 2024. Organisations and individuals were invited to provide their thoughts on the proposed Equality (Race and Disability) Bill via a public consultation earlier this year, of which mandated pay gap reporting is just one part.
The consultation’s aims were to seek views on not only how to introduce mandatory ethnicity and disability pay reporting, but how they could work in practice. Responses submitted during the consultation period are currently being analysed, and it was announced in October 2025 that a draft bill would be published for pre-legislative scrutiny. Although further consultation will be taking place before any regulations are made to implement the changes, it is expected that these race and ethnicity pay gap reporting requirements will likely come into effect in 2027.
What does this mean for organisations?
It’s important to start preparing now. As we come to the end of 2025, organisations with more than 250 employees who have not already been voluntarily publishing ethnicity or disability pay gap data should now be preparing for this new requirement.
We know that the reporting requirements will mirror those of the Gender Pay Gap reporting process, with employers being required to report using the same six pay gap measures. However, what employers may find more problematic might be the lack of relevant demographic information that they have access to, especially around disability.
The new ethnicity and disability pay gap reporting requirements will include a provision to report the percentage of employees who have not disclosed their ethnicity or disability status through existing self-declaration demographic data collection methods. This, in turn, is likely to expose large gaps in data in these areas for employers with either zero-returns or a disproportionately large number of employees selecting ‘prefer not to say’.
Recognising the problems associated with using incomplete data sets to produce credible and accurate pay gap reports, Barry says: “It’s relatively commonplace for organisations to be able to capture rich workforce demographic data where it relates to employees’ sex or gender, which makes gender pay gap reporting much easier to not only carry out, but to also have confidence in the integrity of the data being analysed and reported.”
We know that it is much more difficult for organisations to have the same rich data in other areas, particularly where it relates to employees’ disability status, for many reasons. Barry goes on to reflect: “Even though there are an estimated 9.8 million people of working age with a disability in the UK – that’s an astonishing 23% of all those between the ages of 16 and 64 – the ongoing stigma associated with disability does still prevent many from sharing this information with their employer, particularly if they don’t have to, which is where covering and masking can provide a way for individuals to function at work without drawing attention to their disability status or their individual needs.”
There is also the added complication of whether employees consider themselves ‘disabled’ based on the definition outlined in the Equality Act 2010, which may not be widely understood. Employees may worry that requesting reasonable adjustments could put their job at risk or label them as a ‘demanding' or 'problem employee’. With some exceptions, disability is not always easily ‘visible’, so disclosure often depends on employees working in a psychologically safe environment and feeling confident about sharing this information.
How can you encourage employees to self-declare information about their disability status and ethnicity?
We would strongly encourage organisations to begin recording the demographic makeup of their workforce, particularly in relation to ethnicity and disability status. To do this effectively, employers must ensure they have the systems and capabilities in place to collect and store this data securely, while also being clear on how they intend to use it to drive inclusion efforts, tackle inequalities and inequities, and inform attraction, recruitment and retention strategies.
This is an important step, as we would recommend that all employers who are collecting demographic data should be able to clearly communicate this ‘why?’ to all their employees, both in advance of its collection and into the future.
7 steps to encouraging demographic data collection:
- Create an opportunity for employees to have open and honest conversations about race, ethnicity, disabilities, neurodiversity and the many other differences that are present in the workplace.
- Carry out engagement (sentiment) surveys that explicitly ask employees to provide their feelings of inclusion or sense of belonging in the organisation.
- Engage with members of your employee resource groups (ERGs) early, asking them for their advice and guidance on how to successfully encourage employees to self-disclose. Early engagement will help ensure that ERG members understand and support your plans, can act as critical friends to the organisation, and advocate for disclosure within their networks.
- If you don’t have any ERGs or other ‘affinity networks’ in place, take the opportunity to set them up. Encouraging employees from diverse backgrounds to actively contribute to the effective running of the organisation is a great way of giving employees a voice, building trust and creating an avenue for constructive dialogue.
- Encourage individuals in senior positions – particularly those at Board, C-Suite or other senior management levels - to be open about sharing information about their identity by using storytelling. This has a number of positive effects, including ‘humanising’ your leadership teams, but will also ensure that there are visible, diverse senior role models in the organisation, which will encourage employees to feel less worried about sharing this type of information with you.
- Develop a clear communications plan that outlines what you intend to do, why you are collecting demographic data, how it will be stored securely (including who will and won’t have access), and how the data will be used to support inclusion efforts, address inequalities, and inform workforce strategies.
- Educate line managers and senior leaders on your intentions to start collecting demographic data and ensure that they are in a position to be able to competently and confidently respond to any questions or concerns from your employees.
Case study: disability demographic data collection at Volkswagen Group UK
At our annual London conference in October 2025, Aman Sidhu, Diversity, Equity and Inclusion Business Partner, and Louisa Hughes, Head of Engagement and Inclusivity at Volkswagen Group UK shared the success of their recent disability inclusion journey.
Volkswagen Group UK was able to boost disability disclosure from under 2% to 16% by promoting and cultivating psychological safety in the workplace. Through a multi-targeted approach, the organisation was able to drive meaningful change across disability diagnosis, support and understanding, and workplace adjustments.
Key activities included:
- The ENABLE employee network (disability related ERG) at Volkswagen Group UK provided safe spaces for sharing experiences and informing new disability initiatives.
- Through neurodiversity training for all line managers, reverse mentoring programmes and by encouraging leadership to share their own personal experiences, Volkswagen Group UK was able to drive cultural change.
- Accessibility audits and guest speakers helped normalise conversations around disability.
Complying with General Data Protection Regulation (GDPR)
When collecting what is defined as ‘special category data’ under General Data Protection Regulations (GDPR), it is important to note that employers have a responsibility to ensure that their employees understand why information about their ethnicity or disability status is being requested and collected.
Often, when organisations first attempt to collect demographic data about their employees, there is a general nervousness being expressed by employees that this feels either intrusive, or irrelevant, most often because they don’t understand why the data is being collected, or what it is being used for. As such, it’s vital that organisations are transparent about:
- how the data will be collected,
- how the data will be kept safe and secure, including the steps you’ll take to ensure no individual can be identified from any published data or analysis
Summary
Organisations must remember that pay gap reporting is a means to an end – importantly, it is a way of identifying, addressing and removing disability- and ethnicity-related disadvantage – and creating workplace cultures where difference is truly valued, and where everyone is treated with respect and dignity.
Legal mandates provide a starting framework for organisations – they help define expected behaviour, provide better protection and drive accountability. As a result, equity becomes a shared goal and expectation across the board.
To be truly equitable, organisations must first be aware of the systemic challenges that certain groups face. By unveiling hidden biases – and promoting conscious inclusion – businesses can move from insight into action, breaking down barriers and working towards a workplace that is fairer for everyone.
Our conscious inclusion training is designed to help business leaders embed equity into decision-making, systems and processes – to ensure that workplace policies, procedures, pay, promotions and behaviours are fair for all employees.
For more information on pay gap reporting, please get in touch for a complimentary one-to-one consultation with one of our experts.
