Beyond gender

Pay gaps don’t only affect women, they also affect other protected groups. Building on the success of the gender pay gap reporting regulations, the Government has indicated that it wants to introduce pay gap reporting by ethnicity. The Equality and Human Rights Commission goes still further, and is working to extend the focus from gender pay gaps and make employers aware of the drivers of inequality in work for some ethnic minority groups and disabled people. But, before we look at the most recent policy and research developments, let’s look at the legal position.

Pay gaps – some definitions

A pay gap, on whatever grounds, does not necessarily signify unequal pay for equal work. Pay gaps may or may not, indicate labour market or workplace discrimination, but their existence suggests that there are factors that need addressing if the chances for equality in work, including pay equality, are to be achieved.

Pay gaps are most commonly measured using median or mean gross hourly earnings excluding overtime.

Before reading any research report about pay gaps it’s important to check the researchers’ definition of the pay gap being examined.  Of the definitions set out below, that for the gender pay gap is well-attested. For the other equalities areas the definitions are the working definitions used by researchers; they compare the average full-time pay for men and women from each potentially disadvantaged group to the average pay of men from the majority group.

  • The gender pay gap refers to the difference between men’s earnings and women’s earnings as a percentage of men’s earnings.
  • The disability pay gap refers to the difference between disabled men’s or women’s earnings as a percentage of non-disabled men’s or women’s earnings. Disability is defined as either causing limitations to daily activity or limitations to employment.
  • The ethnic pay gap refers to the difference between the earnings of men or women from various ethnic minority groups as a percentage of White British men’s or women’s earnings.
  • The age pay gap refers to the difference between the earnings of men or women from various age groups as a percentage of the earnings of men aged between 40 and 44.

 The legal framework

The principle that women and men are entitled to equal pay for doing equal work is set out in sections 64 to 80 of the Equality Act 2010 (the ‘equality of terms’ provisions). With one exception (see below) these provisions apply only to gender, but this does not mean that pay inequalities on other grounds cannot be challenged.

The right to equal pay for equal work is a contractual right enforceable through the Employment Tribunal, and while there is no parallel course of action available to an employee experiencing pay discrimination on grounds of age, ethnicity, or any other of the protected characteristics, this means only that such pay inequalities are not challenged as a matter of contract, but as a matter of discrimination. However, while there is an extensive body of case law on equal pay between men and women, there is little or no case law to draw on in respect of pay gaps in the other equalities areas.

Section 77 of the Equality Act 2010 provides that an employer cannot prevent their employees from discussing or providing information about whether or to what extent there is unlawful pay discrimination on any of the protected grounds. Section 77 is the only section of the ‘equality of terms’ provisions which applies to all of the equality strands. All the other provisions relate specifically to gender (equal pay as between men and women).

 The Public Sector Equality Duty

While the Public Sector Equality Duty has the potential to encourage attention to be paid to pay gaps more generally, mention of specific protected grounds is confined to Scotland and Wales.

In Scotland public bodies are required to gather employment information related to disability; to publish employment information in a ‘mainstreaming report’ every two years; and to publish equality outcomes relating to disability and report progress. From 2017, Scottish authorities with more than 150 employees have been required to publish a further equal pay statement containing information on occupational segregation and their equal pay policy which, for the first time, will include disability and race. The aim is to ensure that good quality information can be provided in a meaningful way to help assessment of progress on occupational segregation and equal pay policy for disabled and/or ethnic minority staff.

In Wales, public bodies are required to have “due regard to the need to have objectives that address the causes of any pay difference between employees who are from a protected group, and those who are not; if it appears reasonably likely that the reason for the difference is related to the fact that those employees share a protected characteristic, e.g. they are from a minority ethnic group”.

The Companies Act 2006

In so far as disability is concerned, a mechanism for reporting on any pay gap does potentially exist, in that the Companies Act 2006 requires companies employing more than 250 people to disclose in their directors’ reports information about their policy in respect of the employment, training and career development and promotion of disabled people. This could be read as including pay.

Pay gaps due to disability and ethnicity

The Equality and Human Rights Commission, in its report Measuring and Reporting on Disability and Ethnicity Pay Gaps notes that one potential way of monitoring and measuring disability and ethnicity pay gaps is by employers collecting data on ethnicity and disability, including on employment and pay gaps. The aim of measuring pay gaps is not just to assess the size of pay gaps, but also to understand their causes and identify potential solutions to addressing both the causes and the resulting pay gaps. Understanding the drivers of, and solutions for, differences in pay can help us to address pay gaps, which will be different across gender, ethnicity and disability. Given the differences between gender pay gaps and those to do with disability and ethnicity, the report bears reading in full – what follows are the key points.

The research sought to identify the extent to which employers are currently measuring and reporting on the ethnicity and disability pay gaps, and to identify good practice in the collection and publication of relevant data. As well as looking at pay gaps, the report also considers how employers are supporting in-work progression for people from different groups.

The majority of employers (77 per cent) reported that ensuring workforce diversity is a priority and many are committed to supporting employees with protected characteristics. However, this is not always backed up by collecting and analysing data to identify if there are differences in pay and progression for employees from different ethnic groups (only 36 per cent of employers do this), or for disabled and non-disabled employees (44 per cent of employers do so).

Very few employers publish data on their ethnicity or disability pay gaps. Where employers report on workforce make-up or pay by ethnicity, they tend to use binary categories (such as White, Black and ethnic minority) rather than reporting at a more detailed level. Reporting on the disability status of the workforce is less common, but when it occurs employers also tend to use binary categories (disabled and non-disabled). This tends to be because of concerns around confidentiality and the need to avoid identifying individuals in reporting. The organisations that are most successful in encouraging staff to share information on ethnicity and disability tend to put significant effort into encouraging employees to provide information and explaining how the data they will use the data.

While relatively small proportions of employers analyse or publish pay gaps data (other than for the gender pay gap), more than half (55 per cent) collect data around progress and pay. Just under a quarter (23 per cent) of all employers collect pay and progress data that could be used to analyse differences by ethnic group or between disabled and non-disabled employees. Just over half of employers (51 per cent) report barriers to collecting data on the ethnicity of employees, and 52 per cent to collecting data on disability. These barriers include stating that data collection is too intrusive, that employees do not want to share the information and that data collection is too onerous. Employers suggested that ways to overcome these barriers could include explaining to employees how the data will be used (70 per cent agreed); developing a way of collecting the information easily, for example through an online form (58 per cent); and making it mandatory to collect the information (48 per cent). However, 13 per cent of employers said that nothing would help overcome barriers.

While few employers report on their disability and ethnicity pay gaps, many more are working towards ensuring disabled people and those from ethnic minorities do not face barriers in terms of progression to the highest levels of an organisation. Examples of good practice actions (both mandatory and voluntary) by employers include:

  • collecting information on, and encouraging staff to self-report, their ethnicity and disability status on a rolling basis
  • running internal communications campaigns before collecting data, to highlight to staff how data will be used to support equality
  • publishing details of the proportion of staff who are from an ethnic minority or disabled, and conducting a pay review publishing equality reports that show workforce breakdowns of employees by protected characteristics
  • using frameworks to identify how protected characteristics affect issues such as recruitment and annual reviews
  •  monitoring recruitment bias by looking at the percentage of those with protected characteristics who applied for jobs, were shortlisted, and appointed, and
  • establishing working groups or develop action plans to address the ethnicity and disability pay gaps, and take action (for example, running leadership workshops targeted at staff from ethnic minority groups).

Pay gaps due to ethnicity

Over the past year EqualPayPortal has been working with Professor Carol Woodhams, formerly of the University of Exeter, and now at the University of Surrey, to explore how measuring pay gaps due to ethnicity might work in practice. Woodhams carried out her work with a number of NHS Trusts across England.

While it is easy to see why taking the regulations as they apply to gender and applying them also to ethnicity might be attractive, not all organisations will be recording ethnicity, which means that before pay gap reporting could be introduced, employers – and employees – intended to be brought within the scope of any future regulations would first need to be encouraged to do adopt ethnic monitoring. Ethnic monitoring is voluntary, and its success depends upon the willingness of employees to declare their ethnicity, and it remains to be seen how many would be willing to do so, and how accurate that self-reporting might be.

Moreover, whereas in general, sex is a binary variable (male or female), (and, for tax and national insurance purposes, employers are already capturing information on employees’ pay by gender) the situation with regards to ethnicity is much less straightforward. Ethnicity is a multi-valued measure and data will have to be collated and analysed according to a number of categories. The Office for National Statistics groups individuals into 19 ethnic groups, and, in the interests of comparability with national statistics on ethnic pay gaps, it is possible that employers would be asked to do the same. In addition, they would have to compare not only their ‘White British’ pay with that of the other 18 groups, but also to compare each of the groups with all of the others.

And, given what we already know about the correlations between gender and ethnicity, and between pay gaps and hours of work, for the results to be meaningful, employers would also have to consider each of the groups by gender and by part-time/full-time. In her work with NHS Trusts, Woodhams used seven categories: White British, White EU, White International,  Black African, Indian Subcontinent Asian, South Asian (including Chinese) and ‘other / mixed ethnicity’. Category membership was self-nominated

Woodhams’ work has shown that, even with a narrower range of categories, identifying ethnic pay gaps at workplace level is a sophisticated exercise, which may be beyond the capacity of organisations unfamiliar with multivariate analysis.

Further layers of complexity arise when the data has been analysed, in that the range of factors potentially contributing to any pay gap could be larger than that for gender. For gender the contributory factors are, broadly, education, occupational segregation (both vertical and horizontal), the differential impact of caring responsibilities, and discrimination. But for ethnic minorities, factors such as qualifications (as distinct from education), length of time in the job, country of birth (that is, whether people are immigrants or were born in Britain) and where the jobholder was recruited from (from within Britain, or from, say, Europe or Asia), can have a major impact on the size of any pay gap. For example, for an employee self-classifying as White Other or White International, a pay gap may be influenced by whether their qualifications were obtained in this country or in Europe, while the pay gap for an employee classifying themselves as South East Asian might vary according to whether they were born in Britain or in South East Asia, and/or according to whether they were recruited here or abroad.  And in some organisations, such as the NHS, length of service overseas (as a proxy for experience) may also have an impact.

So, whereas with gender pay gap reporting it is relatively easy to produce a broad-brush but reasonably accurate picture of the structure of the gender pay gap, reporting on ethnic pay gaps will require employers to record a whole range of quite detailed information about their employees and to be able to manipulate this in ways that produce meaningful information.

A long-term solution to dealing with the sheer number of factors involved is to shift the focus away from employee characteristics as the key determinant of rates of pay, and towards a rate for the job. What demands does the job place on the jobholder? What qualifications does the job require? And so on. Paying a rate for the job reduces the likelihood of both pay discrimination, a fact long recognised by the equal pay legislation, and pay disadvantage. Such an approach is feasible: the methods used to identify and remedy unlawful gender pay discrimination, as described in the statutory Code of Practice on Equal Pay, and from authoritative bodies, such as the EHRC and Acas, can also be used to identify and remedy unlawful pay discrimination on grounds other than gender.

The Equality and Human Rights Commission

The research by the Equality and Human Rights Commission referred to above was carried out in the context of the Commission’s  strategy for tackling pay gaps across all the equalities areas. The Commission is calling on government, agencies and employers to take action in six areas:

  • Unlock the earning potential of education by:
    • Taking steps to improve attainment outcomes for pupils with a disability and/or SEND and holding relevant authorities to account when schools fail to make reasonable adjustments
    • Continuing to tackle stereotypes and encourage wider subject and career choice for women, ethnic minority and disabled students
    • Improving the participation and progression rates for under-represented groups in apprenticeships
  • Improve work opportunities for everyone
    • Investing in regional economies and training in sectors and industries to offer skills and opportunities
    • Developing regionally-based labour market strategies with specific actions to tackle significant gender, ethnicity and disability employment and pay
  • Make jobs at all levels available on a flexible basis
    • Making the right to request flexible working a day-one right
    • Offering all jobs including the most senior on a flexible and part-time basis
  • Encourage men and women to share childcare responsibilities
    • Introducing a dedicated non-transferable, ring-fenced ‘use it or lose it’ parental leave for fathers with a meaningful pay rate
    • Assessing the impact of statutory childcare and different models of provision on women’s participation in the labour market and making changes to improve this
  • Reduce prejudice and bias in recruitment, promotion and pay decisions
    • Supporting a new national target for half of all new senior level appointments in FTSE 350 organisations to be women
    • Consulting with employers and relevant organisations on extending the statutory requirement to report on gender pay gaps to disability and ethnicity to encourage employers to consider the scale and causes of all their pay gaps
    • Using fair, transparent processes for recruitment and development decisions that tackle discrimination and bias
  • Report on progress in reducing pay gaps
    • Developing national action plans to close gender, disability and ethnicity pay gaps and report regularly on progress
    • Monitoring the effectiveness of mandatory gender pay gap reporting on closing pay gaps
    • Publishing statistical information on the scale and trends in disability and ethnicity pay gaps
    • Consulting with employers on the most effective way of extending reporting requirements to ethnicity and disability pay gaps

You can find the strategy here

The Commission has also commissioned research into the disability and ethnic pay gaps, as well as that on gender. New research is expected to be published in May 2018.

Research report 107: the disability pay gap

Research report 108: the ethnicity pay gap

Research report 109: the gender pay gap

Research Report 117:  Measuring and Reporting on Disability and Ethnicity Pay Gaps

EHRC research contact:  david.perfect@equalityhumanrights.com

Other published research

As with case law, while there is a vast body of research into equal pay and the gender pay gap, there is much less research into the pay gaps for other protected characteristics. Research has tended to focus not on pay, but on employment rates or entry to the labour market. Research is also hindered by the small population size of some groups as compared to the much larger male/female populations from which statistics can be drawn and trends inferred. At workplace level, this difficulty may be exacerbated by low levels of disclosure of ethnicity, disability status, religion or belief or sexual orientation.

It is clear that pay gaps are an issue for several equalities groups and that we need to understand more about what is driving the pay gaps and penalties for different groups.  For more detail see the reports listed below, but some implications are self-evident e.g. that pay gaps and pay penalties for disadvantaged groups are unlikely to diminish if large proportions of those groups occupy part-time posts, or move into full-time, but low paid work. the following reports throw some light on the issues.

Pay equity after the Equality Act 2010: does sexual orientation still matter? Bryson, A, University College London, UK; IZA, Germany; NIESR, UK, 2016

Understanding the ethnic pay gap in Britain,  Brynin & Gueveli,  ISER, University of Essex, 2014

Multiple disadvantage and wage growth: the effect of merit pay on pay gaps  Woodhams, Lupton, Perkins & Cowling, University of Exeter, 2015

The Presence of Ethnic Minority and Disabled men in Feminised Work: Intersectionality, Vertical Segregation and the Glass Escalator Woodhams, Lupton & Cowling, University of Exeter, 2014

Last updated 19th September 2018