Ethnicity Pay Gap Reporting in the UK: Voluntary Today, Mandatory Tomorrow?

Voluntary today: what "no legal requirement" actually means

Unlike gender pay gap reporting, which has been a statutory duty since 2017 for Great Britain employers with 250 or more staff, ethnicity pay gap reporting has no equivalent legal footing in the UK as of 2026/27. No employer, regardless of size, is currently required by law to calculate or publish an ethnicity pay gap figure.

That does not mean nothing is happening. A number of large employers — particularly in banking, professional services, and parts of the public sector — publish ethnicity pay gap data voluntarily, often alongside their statutory gender pay gap report, as a matter of transparency or reputational positioning. Because there is no statutory template, these voluntary reports vary widely: some use a single "White versus all ethnic minority employees" comparison, others break results down by specific ethnic group, and there is no common snapshot date or enforced format.

The UK government has, as part of its broader Employment Rights agenda, set out an intention to extend mandatory pay gap reporting duties to cover ethnicity and disability for large employers. At the time of writing this remains a policy direction rather than a rule with legal force — no threshold, snapshot date or format has been confirmed in legislation. Employers should treat current ethnicity pay reporting as a voluntary, forward-looking exercise rather than a compliance deadline.

How the ethnicity pay gap is calculated — reusing the gender pay gap model

Where employers do report voluntarily, the near-universal approach borrows directly from the statutory gender pay gap methodology: a mean and median hourly pay comparison between groups, plus a breakdown across four pay quartiles.

Worked example 1 — mean and median gap at a 600-employee professional services firm. Suppose the firm defines two groups for comparison: White employees (420 staff) and employees from an ethnic minority background (180 staff). Mean hourly pay is £24.50 for the first group and £20.10 for the second:

(£24.50 − £20.10) ÷ £24.50 × 100 = 18.0% mean ethnicity pay gap

If median hourly pay is £19.80 for White employees and £17.20 for ethnic minority employees:

(£19.80 − £17.20) ÷ £19.80 × 100 = 13.1% median ethnicity pay gap

As with gender pay gap reporting, a mean gap noticeably larger than the median gap usually points to a concentration of one group in a small number of very highly paid, senior roles rather than a uniform pay difference across the whole workforce. Employees comparing their own hourly rate to figures like these can use

to see what a difference of, say, £19.80 versus £17.20 an hour means for actual monthly take-home pay after tax and National Insurance.

Quartiles and representation: where the real signal often is

Worked example 2 — quartile representation at a 500-employee retailer. Say the workforce is 20% ethnic minority overall (100 of 500 employees). Ranking everyone by hourly pay into four quartiles of 125 people each might show:

Even though the overall workforce is 20% ethnic minority, representation falls to 12% in the top-paid quarter and rises to 28% in the lowest-paid quarter. This pattern — a lower share of ethnic minority staff in the highest-paid band and a higher share in the lowest-paid band — is the same structural signature that drives the mean and median gaps in Worked Example 1, and mirrors exactly how gender pay gap quartiles are read.

Worked example 3 — bonus gap, if voluntarily reported. A firm might also choose to report a bonus gap, following the gender pay gap bonus methodology. If the mean bonus for White employees is £3,200 and for ethnic minority employees is £2,450:

(£3,200 − £2,450) ÷ £3,200 × 100 = 23.4% mean ethnicity bonus gap

Because there is no statutory obligation, an employer could choose to report the hourly pay gap only and omit a bonus gap — voluntary reporting means the employer decides the scope.

Why ethnicity data is harder to report than gender data

Gender pay gap reporting benefits from a relatively simple, near-universal binary categorisation already held in most payroll systems. Ethnicity reporting is structurally more complex for three main reasons:

• More categories. UK census-aligned ethnicity classifications include groups such as Asian, Black, Mixed, White, and Other, each with further sub-categories, meaning there is no single "gap" figure without first deciding how groups are combined or compared.
• Smaller sub-group sizes. A company that is fine calculating a gender gap across 250 men and 250 women may only have 15 or 20 employees in a specific ethnic sub-group, making a mean or median figure for that sub-group statistically noisy and potentially capable of identifying individuals.
• Incomplete self-declaration. Ethnicity data relies on employees voluntarily disclosing their ethnic background on HR systems, and disclosure rates are often incomplete, which can bias any resulting calculation if non-disclosure correlates with particular groups or seniority levels.

These challenges are a large part of why the government has moved more cautiously and slowly toward mandatory ethnicity reporting than it did with gender, and why any future statutory guidance is expected to include rules on minimum group sizes and data suppression to protect anonymity.

Preparing now for a possible mandatory duty

Employers — especially those already reporting a statutory gender pay gap under the 250-employee threshold — are widely advised to begin two things ahead of any mandatory ethnicity reporting duty: improving ethnicity self-declaration rates in HR systems, and auditing how "ordinary pay" and bonus pay are defined in payroll so the data is ready to be sliced the same way gender pay gap data already is. Employers reviewing payroll definitions as part of this work may also want to check related entitlements using tools such as

for benefits-in-kind treatment or for how bonus payments are taxed, since accurate underlying payroll categorisation underpins both current voluntary reporting and any future mandatory duty.

For employees, an employer's ethnicity pay gap — voluntary or, eventually, mandatory — is an organisation-wide average and does not describe any individual's pay. It remains a distinct concept from the legal right to equal pay for equal work under the Equality Act 2010, which already applies regardless of whether an employer chooses, or is required, to publish an ethnicity pay gap figure.