Society concern over Mandatory Ethnicity and Disability pay gap reporting
The IR Society has responded to the Government's proposal to extend gender pay gap reporting to ethnicity and disability, calling for minimum ‘response rate’ thresholds for employee data (on ethnicity/disability) before any employer publication becomes mandatory, to reduce the risk of misleading/unreliable reporting. Measures requiring that employers seek to collect this data (on a voluntary basis) from employees may be more appropriate at this stage.
The Investor Relations Society
Office 605 Birchin Court, 20 Birchin Lane
London EC3V 9DU
Race Equality Unit
Cabinet Office
1 Horse Guards Road
London
SW1A 2HQ
By email: equalitybill@cabinetoffice.gov.uk
10th June 2025
Dear Sir, Madam,
Re: Mandatory ethnicity and disability pay gap reporting
Thank you for giving us the opportunity to respond to your consultation on Mandatory ethnicity and disability pay gap reporting. This response is made on behalf of the UK’s Investor Relations Society (‘the IR Society’).
The IR Society represents Members working for publicly listed companies and investor relations focused service providers, to assist them in the development of effective two-way communication with the markets. It has approaching 800 Members, drawn mainly from the UK, including the majority of the UK FTSE 100, many of the FTSE 250 constituents and some from companies listed overseas.
The IR Society’s mission is to promote best practice in investor relations; to support the professional development of its Members; to represent their views to regulatory bodies, the investment community and Government; and to act as a forum for issuers and the investment community.
Our response has therefore been primarily constructed through the lens of a corporate issuer, and as such reflects the views of those very much at the ‘coal face’ of investor engagement and reporting.
By way of background, we note that you propose mandatory ethnicity and disability pay gap reporting for large UK employers (with at least 250 employees), based around the six measures in the existing gender pay gap reporting regime, to be collated as at a snapshot date of 5 April each year and published within a year.
We set out below our concern regarding one aspect of your proposed reporting regime that is of most relevance to our Members, which would need to be addressed before we can support this proposed transparency.
Our concern relates to the lack of any minimum ‘response rate’ thresholds for employee data before employer publication/reporting becomes mandatory. We believe it is important and necessary for a sufficient number/proportion of employees to have responded/provided data to the employer before the employer should be required to report. This is essential to reduce the risk of any such employer reporting being unrepresentative and thus potentially misleading/unreliable.
Even if employers establish systems to capture this data, it is provided from employees only on a voluntary basis, and therefore employers may only have the relevant data for a small minority of the workforce. There are many factors that can affect this, for instance it can be easier to collect this data at the point of hiring, so employers with a stable, low-churn workforce may be less successful in collecting this data over time.
If employers are required to report before their underlying data is sufficiently representative, even if the response rate is published, it is likely that only the more sophisticated readers will understand that the reporting is unrepresentative, and it is also possible that journalists and other commentators will report on the headline numbers without providing this context.
By way of example, we are aware of one corporate that has this year, for the first time, voluntarily published ethnicity pay gap information, after several years of attempting to collect this data from employees (only this year did the corporate feel the data was sufficiently representative, having reached around two thirds of staff). We also note that investors have not so far expressed interest in this voluntary ethnicity pay gap reporting.
We understand that disability data appears to be much less available and therefore is likely to prove even more problematic in this regard. For instance, the WDi Findings Report 2024 (page 40) indicates that, of the companies participating in their survey, whilst the vast majority of employers (98%) were able to provide gender data, only two thirds of respondent companies were able to provide this data broken down by ethnicity and only 28% of companies were able to provide this data broken down by disability.
Measures requiring that employers seek to collect this data (on a voluntary basis) from employees may be more appropriate at this stage than mandating the reporting.
We hope you find these comments useful. Please do not hesitate to make contact if you have any questions.
Yours faithfully,
Liz Cole
Head of Policy and Communications
Investor Relations Society
(Email: enquiries@irsociety.org.uk, Tel: + 44 (0) 20 3978 1980)
Published 10 June, 2025