Class Pay Gap Reporting: A Social Mobility Tool For Employers In The UK?

Published date23 December 2021
Subject MatterCorporate/Commercial Law, Employment and HR, Corporate and Company Law, Discrimination, Disability & Sexual Harassment, Employee Benefits & Compensation, Employee Rights/ Labour Relations, Diversity, Equity & Inclusion
Law Firmlus Laboris
AuthorMr Tom Heys (Lewis Silkin)

Some employers in the UK are seeking to analyse and tackle social mobility disadvantages in the workforce, but issues around definitions and data arise.

There's a growing trend in employment law towards using transparency as a method of driving change. Whilst mandatory class pay gap reporting might not be imminent, this article considers the drivers behind an increasing number of organisations reporting voluntarily in this area as a measure to address social mobility disadvantage in the workplace and identifies the legal and practical issues employers need to consider.

Background to class pay gap reporting

There have been various moves over recent years by the UK government to address workplace inequality in the form of mandatory gender pay gap reporting and CEO pay ratio reporting. Calls for mandatory ethnicity pay gap reporting are increasing, although the government is still to set out its plans.

In 2019 the Trades Union Congress (TUC) called for mandatory class pay gap reporting to address 'institutional discrimination'. This policy also featured in the Labour Party's 2019 general election manifesto. Although the current government has no plans to legislate to force companies to report their class pay gaps, this is likely to be an area of increasing focus in the years to come.

In the meantime, some employers in the UK are starting to take their owns steps to measure and analyse their class pay gaps in the workplace. Accountancy giant PwC recently published its 'class pay gap', showing the difference in pay between their average lower socio-economic background employee and the average professional or intermediate socio-economic background employee. Rival firm KPMG has similarly calculated and reported its class pay gap.

In the wake of the pandemic, employers are increasingly adopting value-driven employment initiatives and policies which go beyond strict legislative compliance. Many organisations explore voluntary pay gap reporting as part of a wider diversity strategy. Applying some of the lessons of gender pay gap reporting, these employers are routinely analysing gaps each year and so forced to continually consider the issues, keeping social mobility high on the diversity and inclusion agenda.

What is class pay gap reporting?

Class pay gap reporting involves comparing the pay of the average low socio-economic status person in a workplace to the average higher socio-economic status person.

Defining socio-economic status

'Class', or socio-economic...

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