The government has confirmed plans to introduce mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees, following strong support in its 2025 consultation
CREDIT: This is an edited version of an article that originally appeared on Farrer.co.uk
The aim is to increase transparency, highlight pay disparities and encourage action to remove barriers affecting minoritised ethnic and disabled employees. While the detail is still being finalised, schools and trusts should assume this will become a formal requirement in the coming years.
Who Will Be Affected?
The requirements will apply to “large employers” with 250+ employees, including:
- Private and voluntary sector employers in England, Wales and Scotland
- Public sector bodies in England
- Certain public authorities in Great Britain (non-devolved functions)
For education settings, this means larger schools, academy trusts and multi-academy trusts (MATs) will be in scope where the employer has 250 or more employees across the organisation. In practice, reporting would sit at trust level rather than individual school level. Smaller schools and trusts below the 250-employee threshold will not be required to report but may choose to do so voluntarily.
What Will Need to Be Reported?
The reporting framework will broadly mirror gender pay gap reporting and include:
- Mean and median hourly pay gaps
- Pay quartiles (how staff are distributed across pay bands)
- Mean and median bonus gaps
- Percentage of employees receiving bonuses
In addition, employers must report workforce breakdowns by ethnicity and disability status, along with declaration rates (how many employees choose not to disclose this information). This context is intended to improve understanding of the data and encourage more accurate workforce reporting.
Employers will also need to produce action plans explaining how they will address any identified pay gaps. These can be combined with existing gender pay gap reporting requirements, reducing duplication for HR teams.
How Schools and Trusts Should Prepare
Although no start date has been confirmed, employers are being encouraged to prepare early. For schools and trusts, this is particularly relevant where internal HR systems, payroll tools or sector organisations may need to adapt.
Key preparation areas include:
- Reviewing HR and payroll data systems to ensure they can capture ethnicity and disability data securely
- Improving employee trust and encouraging voluntary disclosure
- Testing pay gap calculations using existing data
- Reviewing policies to identify potential barriers affecting inclusion and progression
- Aligning reporting processes with existing gender pay gap reporting cycles
Why This Matters for School Business Leaders
While this is primarily an HR and compliance development, it has clear implications for school business leaders, particularly within larger trusts and education groups. As reporting requirements develop, organisations will need reliable, secure and well-integrated data systems to accurately capture and analyse workforce information.
For school business leaders, this reinforces the importance of strong data management across HR and payroll systems, ensuring information can be accessed, reported and audited efficiently when required. It also highlights the growing need for joined-up systems that reduce administrative burden while supporting compliance.
While no formal implementation date has been confirmed, legislation has been published and further guidance is expected ahead of rollout. Employers should plan for a phased introduction over the coming years and begin preparing systems and processes accordingly.
