17. Pay and ethnicity

Equal pay in practice checklist 17 race and ethnicity

Most of the legal cases to date in the field of pay and reward have been taken under the Equal Pay Act and relate to gender. But unequal pay affects a significant number of employees from different equality groups, and needs to be seen within the context of wider employment disadvantage. Research shows that differences in pay across the equalities areas vary, and have different causes. While this may appear to suggest that a ‘one size fits all’ approach to reducing unequal pay across all equalities areas is unlikely to succeed, experience of applying good equal pay practice to the gender pay gap within the workplace suggests that in practical terms what works for women works for other disadvantaged groups as well.

The best way to identify any problems is to carry out an equal pay audit that looks at pay differences not only between women and men, but also between other groups, such as disabled and non disabled employees, and ethnic minority and white British employees.

What do we mean by ethnicity?

Here we talk about race and ethnicity as set out in the Equality Act 2010. The Act makes it unlawful for employers to discriminate against a person because of their race, colour, nationality, ethnic or national origin in the arrangements they make for recruitment and selection, and in the terms and conditions on which they offer employment, training or promotion. For more on the Equality Act 2010 and employment, see the Employment Code of Practice.

Public sector employers are covered by the Race Equality Duty. This duty will be replaced by the new public sector equality duty, which covers race along with gender, disability, age, sexual orientation and religion or belief, and is due to come into force in April 2011.  For more information on this new duty see The new Public Sector Equality Duty

The existing general duty requires public authorities to:

  • Eliminate unlawful racial discrimination
  • Promote equality of opportunity between persons of different racial groups
  • Promote good relations between persons of different racial groups

Amongst the existing specific duties, there is an employment duty that applies to most public authorities bound by the general duty, under which employers must monitor, by racial group, the numbers of:

  • Staff in post
  • Applicants for employment, training and promotion
  • Where an authority has 150 or more full-time staff, they should also monitor the number of staff from each racial group who:
    • receive training
    • benefit or suffer detriment as a result of its performance assessment procedures
    • are involved in grievance procedures
    • are the subject of disciplinary procedures
    • cease employment

Authorities are also required to publish the results of this monitoring annually. For more information see the Race Equality Duty.

In the workplace there can often be overlaps between issues of ethnicity and religion or belief. For information see  religion and belief.

What do we know about pay and ethnicity?

Research shows that belonging to an ethnic minority group can bring pay disadvantage. However, there is a lot of variation across and between ethnic groups. Recent research shows significant hourly pay gaps for several groups of ethnic minority men, most especially Pakistani, Bangladeshi and black African men, when compared to white British men. The research also shows that all ethnic minority women experience a pay gap relative to white British men. 

Research - Pay gaps across equalities areas

What lies behind these pay gaps?

Ethnic pay gaps are complex, and are influenced by differences in education and employment patterns as well as by pay discrimination. However, even when we control for factors like education and qualifications, unequal pay still exists. In fact, evidence shows that some ethnic minority employees, especially Indian and black African workers, tend to be more highly qualified than white British employees, but pay patterns don’t always reflect this.

The small proportion of ethnic minority employees who are not British born also experience unequal pay linked to their immigration status. Research shows that migrant workers and refugees suffer particular pay penalties, with refugees earning on average 79% of the pay of ethnic minority groups in general (Bloch 2004). This is despite evidence that many refugees and migrant workers possess high education levels and former work experience before entering the UK. Amongst the reasons for these differences are problems with the recognition of overseas qualifications and language barriers.

However, pay gaps by ethnicity can also be the product of workplace discrimination. This discrimination may be direct in nature, for example:

  • Making assumptions about ethnic minority people’s capabilities, education or cultural background.
  • Treating job applicants or employees who are foreign nationals less favourably due to a lack of knowledge about who is allowed to work legally in the UK and the documents required to show this.

Other problems may arise from indirect discrimination, for example:

  • Rewarding some types of jobs less than others that may in fact be of equal value. Where analytical job evaluation has not been done and ethnic minority employees predominate in certain areas of organisations this can lead to these employees being paid less than those working in other areas.
  • Restrictions on part time working or discrimination against part time workers, likely to negatively affect some groups of ethnic minority employees.

Action- what you can do to put things right

The other guidance notes in this equal pay in practice series set out a number of actions you can take to ensure your pay system is fair and transparent.

Ethnic minority employees should be treated in the same way as other employees in terms of salary, performance related pay schemes and any other employment related benefits. But you should review all existing terms and conditions to ensure that these are not likely to discriminate on grounds of race or ethnicity. Some areas to examine include appraisal systems, sick leave, performance related pay, employment benefits, occupational pensions and group insurance services. You should also look at other benefits and services like discount travel services, gym membership or luncheon vouchers. If your policies or workplace requirements conflict with employees’ cultural or religious practices you should think about whether it is practicable to vary or adapt the requirements.

It's a good idea to monitor and review pay systems and performance assessment results on a regular basis to ensure that ethnic minority employees don't receive lower average awards. Where the terms and conditions of employment include an element of performance related pay, you should make sure they don't discriminate against ethnic minority employees.

An example

A consultant of Egyptian origin was not awarded a discretionary point to take his salary above the standard, whereas his twelve colleagues, who were white and of British origin, had each been awarded at least one point. The tribunal upheld his claim of unlawful direct discrimination. It found that the members of the discretionary points committee did not independently record their assessment of each of the candidates against the appropriate criteria and guidelines. Nor were any notes kept of the discussions or the assessment process.
Nasr v Salisbury Health Care NHS Trust, Case No. 3102492/99

It may be that where pay gaps on the ground of ethnicity exist in your organisation, they arise from job segregation. Undertaking analytical job evaluation and ensuring that all roles are evaluated and rewarded fairly and equally is very important, especially when ethnic minority employees predominate in particular areas of your organisation.
Research shows that some ethnic minority employees are more likely to work part time. Others, for example Bangladeshi men, experience a higher than average level of disability. When reviewing your pay policies it is important to bear in mind that ethnic minority employees, along with other groups of workers, may be unable to comply with pay related criteria based on long hours or presenteeism. Therefore it is important to consider how your pay system can avoid de-incentivising flexibility and rewarding more fully those employees who don’t require it.

You should also consider the culture within your workplace, which should provide conditions where employees can develop and progress, and should recognise the education, qualifications and experience that many ethnic minority workers possess but may not be fully using. You may wish to use positive action initiatives when recruiting to encourage under-represented groups into your organisation, and to give existing employees from these groups training and encouragement to take advantage of opportunities in the organisation.

An example

A black African employee applied for the post of equal opportunities manager in his organisation. He was assessed as having the skills and ability for the job. However, his application was rejected, because unknown to him, the post was open only to permanent staff at higher grades than his. Monitoring data showed that the organisation had no permanent black African employees at the grades in question. The employment tribunal held that there was no justification for the requirement, and that it amounted to indirect discrimination on racial grounds.
Aina v Employment Service [2002] DCLD 103D

Having workplace equality policies in place will help you to check that qualifications required for promotion or transfer are justified for the job to be done, and to monitor the systems used to determine criteria for a particular job so that they do not exclude ethnic minority employees who would be capable of performing well in the job. You may then wish to consider redesigning job roles to make positions more accessible.

Organisations that attract and support ethnic minority employees are able to draw on the talents, skills, experience, networks and different cultural perspectives of a diverse workforce, thereby fostering good relations in the workplace and providing a better service to customers and clients.
Considering and taking action on these issues will help to ensure that ethnic minority employees are able to maximise their earnings opportunities and will help to promote and provide equal pay.

Whilst every effort has been made to ensure that the advice given in this note is accurate, only the courts and tribunals can give authoritative interpretations of the law.

Back to the Equal pay in practice home page.


Longhi, S and Platt, L. (2008) Pay Gaps Across Equalities Areas, EHRC
Bloch, A. (2004) Making it work: refugee employment in the UK, IPPR asylum and migration working paper 2

back to top