The UK government is moving forward with plans to introduce mandatory ethnicity and disability pay gap reporting, marking a significant expansion of existing pay transparency requirements. Building on the framework established by gender pay gap reporting, these reforms are intended to provide greater insight into how different groups are represented and rewarded across the workforce, and to support more informed action to address disparities.
In March 2026, the government published its response to the consultation on ethnicity and disability pay gap reporting, confirming that it will legislate to require large employers to report on these gaps. The response sets out a clear direction of travel, including alignment with the existing gender pay gap regime, the use of standardised calculations such as mean and median pay gaps, and additional requirements around workforce composition and declaration rates. While the detailed regulations are still to follow, the core structure of the reporting framework is now established.
These measures are expected to be introduced through the proposed Equality (Race and Disability) Bill, which will extend pay gap reporting obligations to employers with 250 or more employees across Great Britain. Alongside reporting, the government has also signalled that employers will be expected to take action to address identified disparities, reinforcing the shift from transparency alone towards accountability.
What is ethnicity and disability pay gap reporting?
Under the proposed Equality (Race and Disability) Bill, large employers will be required to calculate and disclose the difference in average pay between ethnic minority and non-ethnic minority employees, and between disabled and non-disabled employees. This follows the same structure as gender pay gap reporting, focusing on differences in average earnings across a workforce rather than equal pay between individuals doing the same role.
Employers will be required to report six standard measures, including mean and median pay gaps, bonus gaps, and the distribution of employees across pay quartiles. Alongside this, organisations will need to publish information on the composition of their workforce by ethnicity and disability, as well as the proportion of employees who have not disclosed this data.
The purpose of this reporting is to provide a clearer picture of how different groups are represented and rewarded within an organisation. It is designed to highlight structural patterns, such as underrepresentation in senior roles or concentration in lower-paid positions, which may not be visible through individual equal pay claims alone.
Importantly, a pay gap does not, in itself, prove unlawful discrimination. It is an indicator of potential inequality in outcomes across a workforce. The intention behind the legislation is that employers use this data to understand the drivers behind any disparities and take informed action to address them.
In practice, this will require organisations to build more robust data collection processes, encourage employee self-declaration, and develop a clearer link between workforce data and equality strategies.
The difference between equal pay and closing the pay gap
Securing equal pay for workers doesn’t necessarily close the pay gap between workers from different ethnicities. Equal pay means paying a white worker and a non-white worker the same rate for carrying out the same job, or one of equal value. The pay gap highlights the difference in the average wage of non-white and white workers, or disabled and non-disabled workers across the workforce. An organisation can have a fantastic equal pay record because all workers within the same pay grade earn the same. However, an ethnicity pay gap could persist if some ethnicities of workers predominantly occupied lower pay grades within the organisation.
For example, the Mayor of London’s office conducted a pay audit of organisations within the Greater London Authority. This revealed a significant 37% ethnicity pay gap, an analysis of the data found that this was due to ethnic minority employees’ predominance within jobs on lower pay bands. Analysis carried out last year by the Trades Union Congress showed that ethnic minority men are almost twice as likely to be in insecure employment as white men.
Equal pay claims have seen Birmingham City Council go bankrupt trying to pay back compensation, with Trade Unions taking cases against a number of public and private sector employers, including Asda and Glasgow City Council.
What is the current law around equal pay?
Under the Equality Act 2010, which incorporated the Equal Pay Act 1970, if an employee’s contractual terms, such as those relating to pay, are less favourable than a colleague of a different gender doing equivalent work, such terms are automatically modified to be no less favourable. This would come after the result of an equal pay claim. Where an employer is in breach of the sex equality provisions, an employee can bring an equal pay claim to an employment tribunal under different rules than a standard discrimination claim. Successful equal pay rulings mean people can claim arrears of pay going back up to six years in England and Wales and five years in Scotland.
What else might follow?
The confirmation of pay gap reporting suggests wider reform may follow during this Parliament. There is already discussion around requiring employers to go further than reporting alone, including the potential for mandatory equality pay audits and more structured action planning.
Enforcement is also likely to be a key feature. There are clear signals that reporting without consequences will be seen as insufficient, with the possibility of penalties for non-compliance under consideration. The introduction of the Fair Work Agency under the Employment Rights Act is likely to take a key role in investigating claims of pay disparity.
There is also scope for expansion. Future reforms could extend pay gap reporting to other protected characteristics or workforce metrics, depending on how the current framework beds in.
Taken together, this points to a steady tightening of expectations around pay transparency and workplace equality. Organisations that begin building their data, governance and action planning capabilities now will be better placed as these requirements move from policy into law.
