Disability pay gap reporting brings the increased risk of non-compliance as well as the potential for significant rewards. But only if you get your strategy right, says Bar Huberman, content manager, HR strategy and practice at Brightmine.
During the King’s speech at the state opening of parliament, the government trailed its draft Equality (Race and Disability) Bill. This will enshrine in law the full right to equal pay for ethnic minorities and disabled people, which the government has said will make it easier for them to bring unequal pay claims.
The proposed bill will also place significant new reporting requirements on employers, by introducing mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees.
According to the TUC, the current disability pay gap stands at 14.6 percent, which is larger than a decade ago. While the proposed legislation creates additional burdens and risks for employers, the intention behind the bill is to create a more equal society and support a growing economy, and the potential rewards are significant. Greater transparency over gaps in pay between different groups can help us address the reasons behind the pay gaps.
Risks of non-compliance
With new legislation comes the risk of non-compliance, and failing to adhere to the law could lead to significant consequences for organisations, including legal penalties and reputational damage.
The draft legislation may mirror existing measures in place for gender pay gap reporting. While the gender pay gap legislation does not contain specific enforcement mechanisms or sanctions for non-compliance, the Equality and Human Rights Commission can take enforcement action, which could lead to legal repercussions for firms.
It may be that the proposed bill will place additional duties on employers, for example to publish a narrative to accompany the report or to take action to close pay gaps identified, as well as penalties for non-compliance.
Alongside the legal ramifications of non-compliance, failure to comply with pay gap reporting can cause serious damage to an employer’s reputation.
Employee driven change
More than half (52 percent) of HR and business leaders believe that employee expectations are driving the push for pay transparency, according to Brightmine and Executive Network’s research.
Employers that publish information on their pay gaps with a plan that showcases their commitment to tackling them are likely to be more attractive to potential future employees, and engender commitment and engagement among existing staff.
Some employers already go beyond the existing gender pay gap reporting requirements to publish data such as their ethnicity and disability pay gaps.
A proactive approach to disability pay gap reporting will help organisations to make sure they’re ready for new legislative duties, helping to avoid future non-compliance and demonstrating their commitment to equitable pay practices.
Identify pay gaps with technology
Pay equity technology and analytics solutions can prove useful tools to enable efficient data collection and analysis, and reporting of pay gap data.
Automated systems can help to ease the burden on HR teams, ensure accuracy and identify any pay disparities, including the causes for those disparities.
Firms should audit their existing data platforms, ensuring that they can capture and analyse metrics related to ethnicity and disability pay gaps. They will also need to make sure that their processes comply with data protection laws.
Strategies to address pay gaps
Once any pay disparities are revealed by data analysis, it’s time for action. Reporting a disability pay gap without a plan of action to close the gap can be damaging for the employer – employees may see the reporting as a hollow gesture, with no real intention to make progress on diversity, equity and inclusion.
Conversely, where an employer adopts clear strategies and targeted interventions, including setting measurable goals, and reports regularly on progress, employees and prospective new recruits are more likely to have confidence in the employer’s intentions.
Actions that may need to be taken to close pay gaps include enhancing career development opportunities for employees with disabilities, supporting employee resource groups (ERGs) and ensuring that reasonable adjustments are made where appropriate.
Any specific actions should flow from the organisation’s wider business and diversity, equity and inclusion strategies, and be specific to its own circumstances and diversity, equity and inclusion journey.
Approaching self-identification
Asking employees to self-identify their disabilities will be key to the success of disability pay gap reporting, but employers will need to approach this with sensitivity and care.
Employees may be unwilling to identify themselves as disabled, but creating a culture of trust and psychological safety will go a long way towards encouraging them to self-disclose.
Creating such a culture will not happen overnight, but there are many ways to begin to build an environment that encourages self-disclosure.
This should include reviewing all employee touchpoints for inclusivity, continually assessing everything from onboarding to rewards and benefits to performance management. This will help to develop an overall inclusive employee experience.
Clear communication
When it comes to self-disclosure, confidentiality and clear communication should be at the heart of every organisation’s approach. This should include processes for keeping employees’ data secure and confidential, and telling employees what those processes are, as well as giving them the tools to ask questions about these procedures.
Other steps include communicating the reasons why you are asking employees to disclose – yes, a legal requirement to report the data may be on the horizon, but what does the employer intend to do with the data – will it take action to close pay gaps?
Sharing results, acknowledging the gap may not be where you want it to be, setting goals for where you want to get to, and regularly reporting on progress will all help to encourage more disclosure. This sort of transparent communication from the organisation’s senior leaders can engender trust in the organisation.
The introduction of disability pay gap reporting has the potential to have a hugely positive impact, creating a more equitable and inclusive workplace for all.
Although the new pay gap reporting requirements will present some challenges, by staying ahead of legal and operational adjustments, developing inclusive strategies, and leveraging the pay equity tools available, employers can be well prepared and take steps to foster a more fair and inclusive workplace.
