Amidst the flurry of employment law changes forewarned in May, and then set in motion by the King’s Speech in July, was a separate draft bill. While the Employment Rights Bill deals with the bulk of the promised changes, the Equality (Race and Disability) Bill is more targeted, directly addressing issues of disability and race pay gaps.
There has been much focus on the gender pay gap in recent years. It still exists (7.7%), but over ten years, the Office for National Statistics (ONS) reports that it has closed by 25% to April 2023. This new bill is intended to close these other pay gaps.
How serious is the problem?
Of course, unfair inequality in employment should be stamped out. In the briefing notes to the King’s Speech, it was stated that most ethnic minority groups earn less than the white British group; and that specifically, between 2012 and 2022, people classified as black British, black, African and Caribbean employees earned less than white counterparts. No direct figures were provided.
The briefing notes did provide a disability pay gap, though: 13.8% between median pay for disabled employees and non-disabled employees in 2021.
So how will this new law change things?
Measures in the Equality (Race and Disability) Bill
When enacted, the draft bill will enshrine in law the full right to equal pay for disabled people and ethnic minorities. While, in theory, the Equality Act 2010 should already ensure equal pay, this new law will make it easier to bring equal pay claims by providing greater legal certainty to claimants.
For organisations which employ more than 250 people, it will also introduce mandatory ethnicity and disability pay gap reporting, similar to gender pay gap reporting which has successfully shone a light on the disparity for women’s pay.
Equal pay law currently works through three equality clauses – one for sex equality, one for maternity equality and one for pensions equality. We anticipate that the draft Bill will work in a similar way with clauses for ethnicity and disability.
For example the sex equality clause gives a woman (or man) the benefit of more favourable terms received by the opposite sex if they are performing the same employment doing equal work. There is an exception if the difference is based upon a non-discriminatory material factor. This clarity makes it much easier to make a claim for pay inequality if an employee suspects they are being underpaid.
Despite this though, and the Equal Pay Act, women still earn less than men.
What action should SMEs take?
Prior to the Equality (Race and Disability) Bill becoming law, we would advise you to audit your pay levels to ensure that there are no existing inequalities that need to be addressed before you are exposed to greater risk.
If you are a larger SME, approaching or above 250 staff, you will also have to gear up for providing additional pay gap reporting.
If you don’t know where to start, don’t have the time or think you may have an issue and would like expert help, call us. We will be delighted to assist you.
