IoD/ Disability@work: Government Must Get Balance Right On Mandatory Disability Reporting Reforms
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The Institute of Directors and Disability@Work have backed the government’s plans to introduce mandatory disability pay gap reporting in the upcoming Equality (Race and Disability) Bill.
However, they caution that these reforms will be undermined unless employers are required to put their pay gap figures in context by also reporting the percentage of their workforce that is disabled (also known as disability employment reporting).
In the 2024 King’s Speech, the Government committed to tackling the UK’s persistent disability pay gap by introducing mandatory disability pay gap reporting for large employers.
IoD and Disability@Work argue in their report ‘Progress through transparency: the case for mandatory disability employment and pay gap reporting’ that for the full benefits of mandatory disability pay gap reporting to be realised, employers should also be required to report the percentage of their workforce that is disabled.
Explaining the importance of this, Kim Hoque, report author and Professor of Human Resource Management at King’s Business School, said:
“Used on its own, disability pay gap reporting could lead to some potentially misleading conclusions. For example, where employers report very small disability pay gaps, this may seem a positive outcome. Yet if this is because they employ proportionately very few disabled employees who happen to be in relatively senior positions, this should not be seen as a clear indicator of success.
“Conversely, in instances where employers have a relatively large disability pay gap, this might in some cases be due to noteworthy efforts by these employers to hire large numbers of disabled employees into entry-level roles, with a view to promoting them on merit at a later stage.
“Such instances would become more apparent if employers were to report the percentage of their workforce that is disabled alongside their pay gap figures. Mandatory employment reporting would therefore provide essential contextual information in helping understand employers’ gap data.”
Alex Hall-Chen, Principal Policy Officer for Employment and Skills at the Institute of Directors, added:
“A key recommendation of the IoD’s 2022 Commission into ‘The Future of Business: harnessing diverse talent for success’ was for the government to introduce mandatory disability workforce reporting for employers with 250 or more staff. We are therefore pleased to support the current government’s intention to introduce mandatory disability pay gap reporting for large employers.
“However, it is essential that disability workforce reporting requirements are carefully designed and implemented, to ensure that the compliance burden for business is minimised, while engendering real change in disability inclusion in the workplace and expanding the talent pool to which employers have access.
“We believe that the detailed recommendations in our paper with Disability@Work regarding how mandatory disability reporting should be implemented provide an excellent foundation for getting that balance right.”
As Chair of the IoD commission I am delighted that the IoD has collaborated with Disability@Work to produce this excellent document. Mandatory employment reporting is a top recommendation of the commission, given the importance of disabled people having equal opportunities to develop their career on merit and realise their potential.
It is extremely positive that mandatory disability pay gap reporting will be included in the draft Equality (Race and Disability) Bill. However, it is essential that the Bill also includes disability employment reporting, given that just 54 per cent of disabled people are in employment compared with 82 per cent of non-disabled people. This will encourage employers to focus on the critical issue of how many disabled people they employ as well as whether disabled employees are fairly remunerated.
It should also be recognised that the IoD/Disability@Work proposals will not only be good for disabled people by providing them with information on the employers that are most likely to hire, retain and develop them, but will also be good for business, given they will ensure that employers have the data they need to benchmark their progress on disability employment, thus helping them broaden their labour pool and fill their skills gaps.