Why disability pay gap reporting may not lead to increasing employment opportunities for disabled people

Angela Matthews, Director of Policy and Research here at BDF, assesses the Bill presented in the King’s Speech yesterday which could see disability pay gap reporting become mandatory for employers who employ over 250 employees.

In the King’s Speech (17 July 2024), measures to introduce disability pay gap reporting for employers with over 250 employees were proposed via the Draft Equality (Race and Disability) Bill. So what does this mean for BDF Members and Partners?

Some background: Our work on disability pay gap reporting

BDF’s Disability Data Monitoring Working Group has been working with the Government for the last three years to identify the benefits, challenges and unintended consequences that both employers and disabled employees experience when there is a requirement to report disability workforce and disability pay gap data. The research is due to be published in September, and we have spent the last year testing our findings with policy influencers, employers, and disabled workers.

Our CEO and I have been invited to numerous employment inclusion conferences by think tanks, sector regulators, and employers where we ‘tested’ our research findings over and over again with them. By doing this, we have been able to test these findings with thousands of employers. On each occasion, I have urged anyone in the audience who had evidence that disability workforce and pay gap reporting had improved inclusion and opportunities for disabled staff in their workforces to get in touch with me.

I was inundated. But they weren’t telling me how disability workforce and pay gap reporting had increased inclusion in their workforces. They were writing to tell me that this reporting was working against them becoming a more inclusive employer for disabled people. One employer said the mandatory reporting centric direction of employment policy is causing employers to “value numbers over the experiences of disabled staff”. How counterintuitive – certainly an unintended consequence. And how contrary to the very ambition disability workforce and pay gap reporting is seeking to achieve. [1]

Unintended consequences: Are we trying to increase employment or decrease figures?

Our research (and others’) consistently shows evidence for how introducing disability pay gap reporting reduces disability inclusive practices and opportunities in organisations. We hear the same ‘unintended consequences’ of disability pay gap reporting repeatedly.

It is common for disabled employees who can no longer do the job they were doing because of their disability to request themselves for their job to be altered. In fact, other research of ours shows that 31 per cent of disabled employees (n=1,480) were considering reducing the responsibilities and/or seniority of their role to help them stay in work while having a life outside of work and managing their disability.[2]  In addition, another popular adjustment requested by disabled employees is to reduce the number of hours they work in their current job. 55 per cent of disabled employees told us they wanted to do this.[3] However, our upcoming research with both disabled employees and employers shows that, even where employers had received request for the above adjustments from disabled employees and the employer has decided they were reasonable to grant, those requests were declined, because employers knew it would widen their disability pay gap. We actually started seeing evidence of this happening three years ago, and we were invited to the Work and Pensions Committee’ inquiry to present oral evidence on this. We were not the only organisation presenting such evidence at that inquiry.

This same inquiry also heard something that we continue to hear: employers who invest in disability and supported employment schemes naturally have a wider disability pay gap. This is caused by an employer’s significant intake of disabled people who are on entry level salaries which, of course, naturally widens the organisation’s disability pay gap. It was due to this evidence that the inquiry report recommended the Government should not seek to introduce disability pay gap reporting, because it would disincentivise employers from employing disabled people and investing in disability and supported employment schemes.[4]

We still see evidence today of what that 2021 inquiry heard. And, as a result, legislation that mandates large employers to report their disability pay gap risks leaving employers with an impossible decision:  reduce their disability pay gap by ceasing to take part in such employment initiatives or suffer judgement by Government and campaigners because of their wider disability pay gap while offering more disabled people employment opportunities.

Conclusions: Disabled people deserve better from policy

I have three key concluding thoughts, and the first is personal. The disability employment ‘sector’ is too stuck in the mindset that ‘more pay means more inclusion’. We, as a sector, are also too easily persuaded by ideas that ‘sound like a good idea’ without an evaluation of the evidence there is for or against proposals that are ‘on the table’. As a disabled person myself, that just doesn’t feel good enough. Getting the law right on this is just too important to rush through without rigorous investigation and assessment of the evidence for and against. Disabled people deserve a much deeper level of consideration in the policies and the laws that affect our lives.

Secondly, at BDF, we love data, we believe in the power of the law in people’s lives and, crucially, we follow the evidence. In principle, measuring the disability pay gap is something that we would not disagree with. But we must be led by the evidence and not stick with positions where we find evidence to support something different. We will always follow the evidence and the outcome must ultimately improve things for disabled people. We are yet to see evidence of how implementing disability pay gap reporting benefits employers or disabled people.

And, finally, employers and disabled people who contacted me after hearing our research findings repeatedly asked me how the Government and campaigners have planned to overcome the above unintended consequences that disability pay gap reporting causes. To date, I don’t have the answer to that question. But if pay gap reporting is introduced, they must be overcome. This means consulting with all stakeholders – including employers – to understand the complexities and nuances. It means that we need to be more sophisticated than headline figures alone but to share a narrative about what those figures are (and are not) telling us. Crucially, we need to measure the quality of the experience of disabled employees within organisations – not just how much they earn in comparison to their non-disabled peers.

We don’t doubt the intention. But the detail and nuances are so important to understand and we must get the detail right if disability pay gap reporting is to increase, not decrease, the meaningful inclusion of disabled people in the UK workforce.

[1] Our CEO and I pre-released our research findings at our recent conference on 2 July 2024. People Management covered the session: https://www.peoplemanagement.co.uk/article/1879465/business-disability-forums-angela-matthews-as-inclusion-profession-so-focused-targets-weve-forgotten-humans

[2] The Great Big Workplace Adjustments Survey 2023, page 101.

[3] Ibid.

[4]  See paragraphs 8, 37, and 39 of the inquiry’s second report here: https://committees.parliament.uk/work/751/disability-employment-gap/publications/