Ethnicity and Disability Pay Gap

On 25 March 2026, the government published its long-awaited response to the consultation on mandatory ethnicity and disability pay gap reporting. After several years of speculation and shifting signals, the direction of travel is now clear, and at Pecunia Pro we want to help our clients get ahead of it.

Large UK employers will be required to report on both ethnicity and disability pay gaps, alongside the existing gender pay gap obligations. If you employ 250 or more staff, this is the moment to start preparing. If you’re smaller than that, it’s still a strong indication of where good practice, and ultimately wider regulation, is heading.

What the response confirmed

The headline points are:

• Mandatory reporting of ethnicity and disability pay gaps will apply to employers with 250 or more employees, mirroring the threshold for gender pay gap reporting.
• The reporting framework will use the same six metrics already familiar from gender pay gap reporting: mean pay gap, median pay gap, mean bonus gap, median bonus gap, proportion of each group receiving a bonus, and pay quartile distribution.
• Employers will use the same 5 April snapshot date and the same reporting deadlines as gender pay gap reporting.
• Large employers will be encouraged to publish action plans voluntarily from April 2026, with action plans becoming mandatory in 2027.
• Consultation support was strong: 87% of respondents agreed that large employers should be required to report these gaps.

Some elements originally on the table, including mandatory reporting on recruitment, retention, progression and pay by salary band for public bodies, won’t be introduced at this stage. The first full mandatory reports are unlikely to be due before April 2028.

Why this matters even before the deadline lands

We see three reasons not to simply file this away for 2028.

First, the data infrastructure required is non-trivial. Ethnicity and disability data is, by definition, self-declared, and many employers don’t currently collect it at all, or hold it in a form that can’t easily be reconciled to payroll. Building reliable, GDPR-compliant data collection takes time, and waiting until 2027 to start will leave very little room for error.

Second, voluntary action plans become a competitive signal. From April 2026 the government is actively encouraging large employers to publish action plans alongside their gender pay gap reports. Customers, investors, prospective employees and procurement teams will start using those publications as a credibility test. Silence will be conspicuous.

Third, the methodology cuts both ways. The six standard metrics work well for the kind of pay distribution most UK organisations have, but they can produce volatile or misleading results when applied to small ethnic or disability sub-populations. Employers who run a dry-run calculation now will spot those issues, and have time to think about how to contextualise them, well before they have to publish.

What we recommend doing in 2026

A practical roadmap looks something like this:

Quarter two (April to June 2026): Audit your current HR and payroll systems for ethnicity and disability data. Identify gaps, inconsistent categories and records that can’t be matched to payroll. Plan a disclosure exercise to invite employees to update their information, with clear messaging about why the data is being collected and how it will be protected.

Quarter three (July to September 2026): Run a private dry-run of the six pay gap metrics for ethnicity and disability against your current data. The point is not the headline number. It’s to understand where your data is thin, where the calculation methodology produces unhelpful results, and where you may need to suppress small population groups for privacy reasons.

Quarter four (October to December 2026): Decide whether you’ll publish a voluntary action plan in 2027. If yes, brief leadership on what realistic, evidence-based commitments look like, and what they cost. Action plans that promise more than they deliver will age very badly when reporting becomes mandatory.

A note for employers under 250 staff

The 250-employee threshold means most UK SMEs sit outside the formal regime, but we’d encourage you not to dismiss it. Larger customers, particularly in the public sector and regulated industries, are increasingly asking suppliers to demonstrate pay equity in tenders. Voluntary, proportionate reporting, even informally, is fast becoming a procurement asset rather than a compliance burden.

How Pecunia Pro can help

For over a decade we’ve been helping UK businesses get their payroll data right: clean, accurate, joined-up and audit-ready. That foundation is exactly what makes ethnicity and disability pay gap reporting straightforward when the time comes.

We can help you:

• Audit and reconcile your existing pay, role and demographic data.
• Build a dry-run of the six standard pay gap metrics so you understand the picture in private first.
• Integrate any new data collection with your payroll process, so reporting becomes part of business as usual rather than an annual scramble.

Ready to get ahead of the 2027/28 reporting deadlines? Speak to our team. Call us on 020 8143 1529 or email info@pecuniapro.co.uk for a no-obligation conversation about how to prepare your payroll and people data for what’s coming.