Investment professionals have welcomed government plans to mandate ethnicity and disability pay gap reporting, with many viewing the move as a natural next step in the UK’s push for greater workplace transparency.
The government confirmed today that large employers – those with 250 or more staff – will be required to publish data on pay disparities across ethnicity groups and between disabled and non-disabled employees. The framework will closely follow the structure already in place for gender pay gap reporting.
The policy builds on commitments made in the King’s Speech 2024, where ministers pledged to expand reporting requirements to tackle wider inequalities. Officials say the changes will help shine a light on disparities that have historically been harder to measure, while giving employers clearer direction on how to address them.
Under the new rules, firms will need to disclose not only their pay gaps, but also the make-up of their workforce by ethnicity and disability, and the proportion of employees who have shared this data. Crucially, employers will also be expected to set out action plans explaining how they intend to close any gaps identified.
Public sector organisations will face additional scrutiny, including more detailed breakdowns by grade or salary band, alongside data on recruitment, retention and progression.
The announcement follows a consultation held between March and June 2025, with responses analysed by Explain Market Research. Feedback showed strong support for the overall direction of travel, particularly the decision to mirror the existing gender pay gap framework, including reporting timelines, calculations and enforcement.
Industry figures have also been quick to back the move. Noreen Biddle Shah, founder of Reboot, a campaigning group aimed to promoting greater diversity discussions in the workplace, said the policy marks a pivotal moment for the UK.
“Mandatory ethnicity pay gap reporting is an important milestone for the UK and a significant boost for national competitiveness. It gives employers, policymakers and the wider market the evidence required to improve workforce utilisation, support progression and strengthen long-term economic resilience,
“We thank the government for its commitment to reaching this point. But while this is an important step forward, it is only the start — and the value of this reform will depend entirely on how thoughtfully it is implemented, rather than it becoming a tick-box exercise.”
Biddle Shah added that mandatory reporting will provide much-needed transparency, helping employers, regulators and investors identify where talent may be underutilised, while strengthening governance and supporting better long-term decision-making.
She pointed to research from Business in the Community, which estimates the UK’s ethnic workforce could add £36bn to the economy by 2051.
While most respondents backed the plans, some raised questions around the finer details, including how to balance transparency with anonymity and whether the data will fully capture more complex, intersectional experiences.
Even so, the direction of travel is clear. For many in the industry, mandatory ethnicity and disability pay gap reporting represents a meaningful evolution of existing rules and a step towards a more complete picture of workplace inequality.