Ethnicity and Disability Pay Gap Reporting - Employer Preparation Guide

On 25 March 2026 the government published its response to the consultation on mandatory ethnicity and disability pay gap reporting. It confirmed that employers with 250 or more employees will be required to report both pay gaps, alongside the gender pay gap figures they already publish.

The duty will be created by the forthcoming Equality (Race and Disability) Bill, with the detail set out in regulations. The design deliberately mirrors the gender pay gap regime: the same six calculations, the same snapshot dates and the same online reporting service.

The consultation ran from 18 March to 10 June 2025 and drew 857 responses. The government reported net agreement above 70 per cent on every question asked, and indicative draft clauses were published alongside the response.

None of this is law yet. As of July 2026 the Bill has not been introduced to Parliament, and mandatory reporting will not begin before 2027 at the earliest. That lead time matters, because the hard work sits in data collection rather than arithmetic. Employers who start preparing now will report from a much stronger position.

Primary sources: the government consultation response of 25 March 2026, the accompanying GOV.UK announcement, the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 that the new regime copies, and the existing gender pay gap reporting service.

Why This Matters

Around 10,000 organisations already report their gender pay gap each year. For those employers, the new duties will roughly triple the reporting workload, and the underlying data is considerably harder to assemble. Gender data usually sits in payroll already. Ethnicity and disability data must be volunteered by employees, and many organisations hold it patchily or not at all.

The government has also confirmed that in-scope employers will have to publish action plans to address the gaps they find, folded into a single equality action plan covering sex, race and disability. Published numbers will invite questions from staff, unions, journalists and bidders' procurement teams.

Declaration rates take years to build, because they depend on trust. An employer that waits for the Bill to pass before asking employees about ethnicity and disability will report its first figures on thin, unrepresentative data.

1. What Must Be Reported

The response confirms the same six calculations used for gender pay gap reporting: the mean hourly pay gap, the median hourly pay gap, the mean bonus gap, the median bonus gap, the proportion of each group receiving bonus pay, and the distribution of each group across four pay quarters.

For ethnicity, every in-scope employer must report a binary comparison as a minimum: White employees compared with all other ethnic groups combined. Where workforce numbers allow, employers must also report comparisons across five aggregated ethnic groups, with White as the comparator. Data should be collected using the Government Statistical Service harmonised ethnicity standard. Fuller breakdowns across the 19 detailed classifications remain voluntary.

For disability, reporting is binary: disabled employees compared with non-disabled employees. Breakdowns by impairment type will not be mandated. Employers must also publish the percentage of employees who did not state their ethnicity or disability status, which puts declaration rates on the public record.

2. Snapshot Dates and the Online Service

The regime borrows the gender pay gap calendar wholesale. Private and voluntary sector employers will use a snapshot date of 5 April and report by 4 April the following year. Public bodies will use a 31 March snapshot and report by 30 March.

Figures will be submitted through the same online reporting service used for gender pay gap data, so results will sit on a public, searchable government register. Employers will run one data exercise a year covering gender, ethnicity and disability together, which simplifies the timetable but concentrates the workload.

3. The 10-Employee Minimum and Suppression

To protect individuals, no comparison will be published where a group falls below a minimum size. The consultation proposed a minimum of 10 employees in each group being compared, and 73 per cent of respondents supported that figure. The response confirms a minimum will apply, with the precise threshold to be finalised in regulations.

In practice this means smaller in-scope employers, or those with low declaration rates, may only be able to publish the binary ethnicity comparison. Suppression protects confidentiality, but it also means poor data collection directly reduces what an employer can lawfully and meaningfully report.

4. How Disability Data Will Work

Disability will use the Equality Act 2010 definition: a physical or mental impairment with a substantial and long-term adverse effect on a person's ability to carry out normal day-to-day activities. The government chose this over the social model definition to keep one consistent test across all employers.

Status will be self-reported. Employees decide whether they meet the definition and whether to say so; employers should not demand medical evidence or infer status from occupational health or absence records. A prefer-not-to-say option must be offered for both ethnicity and disability questions.

This makes the self-identification question itself a piece of policy work. Staff need plain wording on what the Equality Act definition covers, what the data will be used for, who will see it, and an assurance that declining carries no consequences.

5. The Data Protection Overlap

Ethnicity and disability information are special category data under Article 9 of the UK GDPR, covering racial or ethnic origin and health. Processing them at workforce scale needs a lawful basis plus an Article 9 condition. The equality of opportunity or treatment condition in Schedule 1 to the Data Protection Act 2018 is the usual route, and it requires an appropriate policy document.

Large-scale processing of special category data will normally trigger a data protection impact assessment. The DPIA should cover collection wording, storage, access controls, retention and the suppression rules applied before anything is published.

Confidentiality safeguards are what make employees willing to disclose. Restrict access to named roles, hold the data separately from day-to-day HR records, aggregate before sharing internally, and update privacy notices before the first question is asked. Preparation for pay gap reporting and data protection compliance are the same project run once.

6. Timing and Bill Status

The Equality (Race and Disability) Bill was announced in the July 2024 King's Speech, but as of July 2026 it has not been introduced to Parliament. It was not carried into the legislative programme announced in the King's Speech of 13 May 2026, although ministers have restated the commitment.

The consultation response gives no commencement date. Once the Bill passes, regulations must follow, and the government has signalled a lead-in period so employers can prepare. On any realistic timetable the first mandatory snapshot will not fall before April 2027, and the absence of the Bill from the current programme makes a later start likely. Voluntary reporting is encouraged in the meantime.

Ethnicity and Disability Pay Gap Reporting at a Glance

What Employers Should Do Now

1. Start voluntary data collection. Ask ethnicity questions using the GSS harmonised standard and a disability question aligned to the Equality Act 2010 definition. Declaration rates build slowly, so an early start is the single biggest advantage available.
2. Write a self-identification policy. Set out why the data is collected, who sees it, how long it is kept, and confirm that disclosure is voluntary with a prefer-not-to-say option and no consequences for declining.
3. Build confidentiality safeguards. Complete a DPIA, adopt the Schedule 1 appropriate policy document, restrict access, update privacy notices, and set suppression rules for small groups before any figures circulate.
4. Dry-run the calculations. Run the six measures on current data using your gender pay gap methodology. A private dry run reveals gaps, data quality problems and suppression issues while there is still time to fix them.
5. Draft the narrative early. Decide how you will explain the numbers and what the action plan will commit to, rather than writing both in the week before a future deadline.

Common Errors to Avoid

• Making disclosure feel compulsory. Pressuring staff to declare undermines the fairness principle in the UK GDPR, corrodes trust and usually produces lower declaration rates, not higher ones.
• Inferring disability status from other records. Populating the dataset from absence, occupational health or reasonable adjustment records processes special category data beyond its original purpose and produces inaccurate figures.
• Using bespoke ethnicity categories. Categories that do not map to the GSS harmonised standard will need remapping later, and remapping self-declared data usually means asking everyone again.
• Skipping the DPIA. Large-scale special category processing without an impact assessment leaves the whole exercise exposed if the ICO comes asking, and weakens the assurances given to staff.
• Waiting for the Bill. Employers that start collecting after Royal Assent will face their first snapshot with low declaration rates and suppressed comparisons on the public record.

Enforcement and the EHRC

The Equality and Human Rights Commission will enforce the new duties, mirroring its role on gender pay gap reporting. The consultation response confirms the EHRC will be responsible for enforcing annual reporting and notes it has previously investigated statistically improbable submissions.

On the gender regime, the EHRC contacts employers that fail to report and can escalate using its statutory powers, including investigation and enforcement action. Publication on a public register adds its own pressure: late, missing or implausible figures are visible to anyone who looks, including employees and prospective recruits.

How Policy Pros Can Help

Preparation for pay gap reporting starts with the policy framework around the data. We write and update equality, opportunities and diversity policies that set out how self-identification works, what employees are told, and how the organisation responds to the gaps it finds.

Because ethnicity and disability information are special category data, the collection exercise stands or falls on its safeguards. Our data protection and confidentiality policies cover the appropriate policy document, access restrictions and retention rules the regime demands. For the legislative background, our Race Equality Act article traces how this Bill developed from the original manifesto commitment.

If your handbook and supporting procedures need bringing up to date before the regime lands, our HR policies and procedures service can prepare the full set, drafted for your organisation rather than copied from a template.