Ethnicity & Disability Pay Gap Reporting: What Employers Should Be Doing Now

The government has confirmed that, from 2027, large employers will be required to report on ethnicity and disability pay gaps.

Even though this isn’t mandatory yet, the expectation to act is already here — and many companies aren’t prepared.

Unlike gender pay gap reporting, where data is usually straightforward, ethnicity and disability data are far trickier to handle.

This isn’t just about ticking boxes — it’s about data, culture, and risk.

What’s Being Proposed

The upcoming changes will require larger employers to report on:

• Ethnicity pay gaps

• Disability pay gaps

• Workforce data to give context and transparency

While the rules will initially apply to organisations with 250+ employees, the direction is clear: transparency around pay is increasing, and it’s only going to matter more.

Why This Is More Challenging

For most companies, the challenge isn’t reporting — it’s the data itself. Common hurdles include:

• Low employee disclosure rates

• Incomplete or inconsistent data

• Sensitivity around sharing personal information

• Systems that aren’t set up to capture or analyse data

Disability is often invisible, and many employees choose not to disclose it. Without addressing this, companies will struggle to get an accurate picture of pay gaps.

On top of that, ethnicity and disability data are ‘special category’ personal data under UK GDPR. That means extra care is needed in how you collect, store, and process it — mishandling could create discrimination risks.

Why This Matters for Employers

This isn’t just about compliance:

• Transparency expectations are rising — employees notice who gets paid what.

• Employees know their rights and are more aware of equity issues.

• Poor or inconsistent reporting can damage reputation and trust.

• Legal risk is real — discrimination tribunal compensation in the UK is uncapped, so gaps in pay equity can have serious financial consequences.

Even if you’re smaller than 250 employees, this is worth thinking about. Being proactive signals transparency, builds trust, and reflects a positive workplace culture.

Where Employers Go Wrong

Many companies wait because reporting isn’t mandatory yet. That often leads to:

• Last-minute data scrambles

• Employees not engaging with disclosure requests

• Inaccurate or incomplete reports

• Weak or missing narrative around the numbers

The result? A rushed process, mistakes, and unnecessary risk.

What Employers Should Be Doing Now

Getting a head start makes a huge difference. Here’s how:

✔️ Review the data you currently collect

✔️ Identify gaps in ethnicity and disability info

✔️ Encourage voluntary disclosure with clear, trust-building communication

✔️ Make sure systems can capture and report data accurately

✔️ Align your approach with wider diversity, equity, and inclusion strategies

Starting early lets you build a more accurate, meaningful picture over time — and keeps you ahead of the curve.

Conclusion

Ethnicity and disability pay gap reporting is coming — and it requires more than a last-minute scramble.

Companies that act now, strengthen their data, build trust, and put the right systems in place will be far better prepared when reporting becomes mandatory.

Start now: the sooner you begin, the more accurate, meaningful, and defensible your data will be.

Need support preparing for future reporting requirements?

HDHR can help review your data, strengthen your approach, and implement practical solutions — supporting people, protecting businesses.

Get in touch today