Preparing for the next wave of pay gap reporting: what EDI professionals need to know

Seven practical steps to prepare for expanded pay gap reporting

1. Build data literacy before you collect data 

Before asking employees to share sensitive information about their ethnicity or disability status, organisations must create an environment where people understand why their data matters and how it will be protected.

This means clear communication about:

• Why you are collecting the data and how it will be used
• Where data will be stored and what protections are in place
• How the data will directly benefit employees by improving the workplace
• Your organisation’s commitment to GDPR compliance and going beyond minimum requirements

2. Ensure your data infrastructure is ready 

Moving beyond annual anonymous surveys to integrated HR systems provides the ability to track how different groups experience your organisation over time. This longitudinal view is essential for understanding patterns in progression, retention and equitable treatment.

3. Get your categories right 

Ethnicity reporting will likely require alignment with census categories, even if your organisation chooses to use more inclusive language in your internal data collection tools. The important thing is to ensure your data can be mapped back to census classifications when required for reporting.

Disability data will probably follow a binary model based on the Equality Act definition. While this loses some nuance, it provides a baseline for comparison and reporting.

4. Balance transparency with simplicity 

There is a natural tension between comprehensive intersectional analysis and practical reporting requirements. While you might want to understand the experiences of specific intersecting identities, small sample sizes can make this impossible without breaching GDPR protections.

This is where understanding different data types becomes important:

• Broad category data provides high-level patterns and large enough sample sizes for statistical analysis, but loses nuance by grouping diverse experiences together.
• Specific category data allows more targeted understanding while maintaining anonymity, sitting between broad categories and individually identifiable information.
• Complex qualitative data captures rich individual experiences and intersectionality, but cannot be easily analysed at scale or reported publicly without risking identification.

The most effective approach combines all three. Use broad and specific category data for your quantitative analysis and reporting, then deploy qualitative research (focus groups, interviews, open-ended survey questions) to understand the context and lived experiences behind the numbers.

5. Look beyond representation to the whole employee experience 

Representation numbers tell you who is in your organisation, but not what their experience is like. For meaningful EDI work, you need to analyse the complete employee journey from recruitment through to retention and progression.

This means examining data on:

• Application and hiring rates by demographic group
• Promotion and progression patterns
• Pay and reward equity
• Performance ratings and development opportunities
• Retention and reasons for leaving
• Sickness absence and wellbeing indicators
• Engagement and inclusion survey results

6. Make data collection as inclusive as possible 

Small details in how you collect data send powerful messages about your organisation’s values.

• List all demographic options alphabetically rather than placing majority groups first.
• Always include a ‘prefer not to say’ option – it tells you how many employees are not yet comfortable sharing information.
• Use inclusive language throughout.

7. Create a culture of data use, not just data collection 

The most sophisticated data collection system in the world means nothing if insights do not translate into action.

When you identify a pay gap, your action plan should:

• Acknowledge the gap honestly and provide context
• Explain the likely causes based on your analysis
• Set out specific, measurable actions you will take
• Include timelines and accountability measures
• Commit to reporting progress

This narrative approach allows you to combine your quantitative findings with qualitative insights from employees, creating a story that explains not just what the data shows, but why it matters and what you will do about it.

How this supports embedding EDI in your organisation

Expanded pay gap reporting is not just about compliance. When approached strategically, it provides EDI professionals with powerful tools for embedding inclusion into organisational practice.

• It creates a baseline for measuring progress. Pay gap reporting provides objective measures that can track change over time and demonstrate the impact of interventions.
• It shifts conversations from intentions to outcomes. Senior leaders may genuinely believe they are creating equitable workplaces, but data reveals whether that belief matches reality.
• It highlights where systems may be perpetuating inequity. Pay gaps do not typically result from deliberate discrimination. More often, they emerge from seemingly neutral systems around recruitment, promotion, pay reviews or flexible working that have different impacts on different groups. Data helps you identify which systems need examination.
• It makes EDI everyone’s responsibility. When pay gap data is reported publicly with an action plan attached, accountability becomes organisational rather than siloed in the EDI team.
• It engages employees in meaningful dialogue. Transparency about pay gaps, when coupled with genuine action, can actually build trust.

Start now, improve continuously

The timelines for expanded pay gap reporting are tight. Waiting for final legislation before beginning preparation will leave many organisations scrambling to meet requirements with poor-quality data that offers little insight.

Instead, start with these immediate actions:

• Audit your current data capability. What ethnicity and disability data do you currently collect? What are your disclosure rates? How is the data stored and can it be analysed effectively?
• Talk to employees about data. Run engagement sessions or surveys to understand what concerns people have about sharing information and what would increase their confidence in your data processes.
• Review your technology. Can your HR systems accommodate the data you need to collect? If not, what upgrades or changes are needed?
• Build your analysis capability. Does your team have the skills to analyse pay gap data, identify patterns and create compelling narratives? If not, where will you source this expertise?
• Learn from gender pay gap reporting. What lessons did your organisation learn from existing gender pay gap reporting? What worked well and what could be improved for the expanded requirements?

Most importantly, remember that good data takes time to develop. The organisations now benefiting from rich, insightful data started building their capability years ago. Your investment in data quality now will serve you long after the initial reporting requirements are met.

Join the conversation on data-driven EDI

The expansion of pay gap reporting represents a significant shift in how organisations approach equity and inclusion. For EDI professionals, this is an opportunity to demonstrate strategic value. By building robust data capability now, you position yourself to lead evidence-based conversations about organisational change. The data you collect and the stories you tell with that data can drive meaningful improvements in how people experience your workplace.

Want to stay ahead of legislative changes and access practical EDI insights? Subscribe to Inclusion Insights, Inclusive Employers’ free thought leadership programme. You will receive expert analysis on emerging EDI trends, practical resources to support your inclusion work, and access to a community of EDI professionals navigating similar challenges. Join us in building workplaces where equity is measured, understood and actively improved.