Large UK employers face a major expansion of pay transparency rules as the government moves forward with mandatory ethnicity and disability pay gap reporting.
In its response to a 2025 public consultation, published in late March 2026, the government confirmed it will introduce the requirements for employers with 250 or more employees through the planned Equality (Race and Disability) Bill.
The move fulfills a manifesto commitment outlined in “Our Plan to Change Britain” and was referenced in the King’s Speech in July 2024.
A consultation on implementation details ran from March to June 2025, drawing strong support, with 87% of respondents backing mandatory reporting for large employers to boost transparency and address workplace barriers.
What will employers have to report?
In an analysis of the proposed changes, legal firm Browne Jacobson notes that the new obligations largely mirror the six calculations already required for gender pay gap reporting. These include:
- Mean and median differences in average hourly pay
- Mean and median differences in bonus pay
- Percentage of employees receiving bonus pay
- Proportion of employees in each pay quartile (ranked from highest to lowest hourly pay)
For ethnicity, reporting will include:
- A binary comparison: White (including White Other) vs. all other ethnic groups combined.
- Where employee numbers meet minimum thresholds,, breakdowns across five categories: White; Asian or Asian British; Black, Black British, Caribbean or African; Mixed or multiple ethnic groups; and Other ethnic groups.
For disability, employers must report a binary comparison of disabled vs. non-disabled employees, using the definition in section 6 of the Equality Act 2010.
Large employers will also publish:
- Overall workforce breakdowns by ethnicity and disability status.
- The percentage of employees who did not disclose their ethnicity or disability information.
Browne Jacobson notes that the government is still finalising exact thresholds for disaggregated reporting to safeguard anonymity and plans to collaborate with the Information Commissioner’s Office on this.
Employers must also produce action plans detailing steps to improve equality for ethnic minority and disabled employees. These will integrate with existing requirements for gender pay gap and other equality action plans.
What are the timelines?
The rules will apply to private and voluntary sector employers in Great Britain with 250+ employees, plus relevant public bodies in England. Smaller employers (under 250 staff) face no mandatory requirement but are encouraged to report voluntarily.
Enforcement will fall to the Equality and Human Rights Commission (EHRC), consistent with gender pay gap rules. The geographical scope and snapshot/reporting dates are expected to align with the current gender regime.
No firm implementation date has been set yet. The government will now develop full legislation and supporting regulations, along with guidance and tools to help employers collect data, calculate gaps, and address disparities.
Prudent companies are already reviewing their HR and IT systems for ethnicity and disability data collection, as some may need to align categories or definitions with the new standards, Browne Jacobson said.
Why now?
Ministers argue the reporting will shine a light on persistent inequalities. Official data shows a national disability pay gap of around 12.7% in recent years, while ethnicity pay gaps vary significantly, for example, Bangladeshi and Pakistani workers have historically faced larger gaps compared to White British employees.
Supporters, including many consultation respondents and equality advocates, say mandatory transparency will drive accountability, similar to how gender pay gap reporting has kept the issue on corporate agendas since its introduction.
Critics and some employers have raised concerns about additional administrative burdens, data privacy, and the challenges of accurate self-reporting for sensitive characteristics like disability.
The government has reiterated that it is designing a “workable” framework that minimises complexity while delivering meaningful insights.
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