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Ethnicity pay reporting – KPMG’s consultation response

Ethnicity pay reporting – KPMG’s consultation response

KPMG publishes its response to the Government’s consultation on ethnicity pay reporting.

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Partner, KPMG Law

KPMG in the UK


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KPMG has voluntarily published its ethnicity pay gap since 2017.  We welcome the Government’s plans to introduce ethnicity pay gap reporting for relevant organisations to enable equality of opportunity and fairer pay.

The Department for Business, Energy & Industrial Strategy and the Race Disparity Unit published a consultation on ethnicity pay reporting in October 2018.

Our article commenting on the consultation is available here.

KPMG’s Inclusion, Diversity and Social Equality specialists responded to the consultation.

A copy of that response is available here.

Our key comments are summarised below.

Our view

KPMG wishes to lead by example, having voluntarily published its ethnicity pay gap data since 2017.

We believe that organisations with 250 or more employees should follow our approach. This will aid employers and the government in understanding pay differences and comparing performance.
The next step would be for accountability and action to place, with the aim of closing any pay differences.

KPMG would like to see an additional consultation around ethnicity classification.

The current ethnicity classification mirrors the last census carried out in 2011. The UK’s ethnic make-up has since changed and new categories may be required in addition to the current 4 options.

Additionally, we would like to see a standardised approach being recommended by the Government, mirroring the gender pay gap methodology to aid organisations in their reporting.

Responses to a recent client survey we conducted indicated that half of participants felt binary reporting was too simplistic (i.e. grouping non-white participants and white participants into two groups and reporting the ratio as non-white: white).

We agree with this, and would like to see the Government consider a more nuanced approach.

Furthermore, half of our survey participants would like a narrative included in the report. This lets employers outline context such where the organisation operates, the nature of work performed and wider sector. We also agree with this approach.

We recognise that organisations may not readily hold ethnicity data for their employees. Where ethnicity data is held, this may not be for full staff populations. Responses to our survey indicated that 50% of participants collected ethnicity data. Of those who do collect ethnicity data, disclosure rates from staff vary widely. We believe that this could be improved by better informing staff about how their data is used and protected.

What should employers do now?

The Government is currently analysing the submissions it received to this consultation.

Whilst the timing of the Government’s response is unclear, there are a number of practical steps that relevant employers can consider taking now:

  • Review the workforce ethnicity data currently held:
    • Is this data collected at all?   
    • Is it complete and suitably nuanced? 
    • Are any steps needed now to improve employee disclosure rates?
  • Assess how ethnicity pay reporting could be integrated into existing processes for gender pay gap reporting;
  • Think about early disclosure on a voluntary basis:
    • Does the organisation currently have an ethnicity pay gap? 
    • What might the reasons be and what actions might be necessary?
    • How could any gap affect the ability to attract future talent?
    • If voluntary disclosure is adopted, what methodology would be appropriate?

How KPMG can help

KPMG has extensive experience of advising employers on all aspects of current pay gap reporting requirements.

If you have any queries, please get in touch with your normal contact or e-mail

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