The risks and penalties of money laundering for charities and how to guard against it
Today will see the start of the UK’s first Race Equality Week (an initiative “to unite organisations and individuals in activity to address issues affecting ethnic minority employees”). Whilst initiatives like this and, indeed, the UK’s first ever Ethnicity Pay Gap Day (8 January 2021) are very welcome and a cause for celebration and hope in relation to such matters, there is much work yet to be done on the issue of race equality and we cannot afford to be complacent. The ethnicity pay gap is one aspect of this that still needs to be addressed, despite the recent publicity around it and the increasing pressure on Government to take action.
Is there an issue?
We wrote about the ethnicity pay gap in December 2019, drawing attention to the findings of the Office for National Statistics (“ONS”) in July 2019 (based on data from 2018) of pay gaps of up to 20% between white employees and other ethnic groups.
Over a year on, the ONS again carried out research and data analysis on ethnicity pay gaps (based on data before the COVID-19 pandemic) comparing the hourly average earnings of White British employees and 10 ethnic minority groups. Its findings were published in its “Ethnicity pay gaps: 2019” report released on 12 October 2020. The report found that, while the pay gap between White and ethnic minority employees has narrowed to its smallest level since 2012 in England and Wales, most of the minority ethnic groups analysed continued to earn less than White British employees. It also found that the ethnicity pay gap differs across regions and is largest in London (23.8%) and smallest in Wales (1.4%). The finding about the ethnicity pay gap in London was particularly shocking and widely reported at the time.
Not long after the ONS findings were published, there were news reports of Lloyds Bank having disclosed that its Black workers were earning a fifth less than other colleagues. The Bank blamed this discrepancy on the fact that Black workers are “disproportionately under-represented at senior levels”, with Black staff making up 1.5% of its total workforce and 0.6% of its senior management. In response, the Bank pledged to take action, including increasing the number of Black staff in senior roles to at least 3% by 2025 to bring it into line with the Black population in England and Wales. Although the figures from Lloyds were grim, it is also worth noting that it is the first major UK bank to reveal its ethnicity pay gap. The fact that it has, despite being under no legal obligation to do so, and has resolved to take decisive action to address the issues identified, is to be applauded.
Shocking again (and quite close to home) was the report from The Law Society in December 2020. It found that White solicitors are earning a third more than their Black, Asian and Minority Ethnic (BAME) colleagues who are working longer hours to prove themselves. In particular, it noted a pay gap of more than £20,000 per year when comparing the average annual salary for full time solicitors and confirmed that the “ethnicity pay gap is clearly an issue”.
What has happened so far?
Following her review, Race in the Workplace (March 2017), Baroness McGregor-Smith made wide ranging recommendations in order to improve the position of ethnic minorities in the workplace. One of those recommendations was the introduction of mandatory reporting of ethnicity data by pay bands by organisations with more than 50 employees. The Government launched a consultation on this in October 2018, which closed in January 2019. Over two years on, the Government has yet to respond (despite mounting pressure) and it is not clear when it will.
It was reported by the BBC in December 2020 that there were 321 responses to the Government’s consultation on ethnicity pay gap reporting and that 73% of respondents supported the idea for organisations with more than 250 staff (i.e. a similar reporting obligation to the existing gender pay gap reporting rules).
It is also worthy of note that, notwithstanding the lack of mandatory reporting rules, a number of large organisations (including Deloitte, PWC, Bank of England, KPMG, The Civil Service and EY) have begun reporting their ethnicity pay gap voluntarily in order to promote equal opportunities.
In a further move to jolt the Government into action, a petition was launched calling on the Government to introduce mandatory ethnicity pay gap reporting with 130,567 signatures, exceeding the threshold required for the matter to be considered by Parliament. The Government responded to that petition on 30 July 2020, referring to its consultation and stating that it would respond to that “by the end of the year”. That did not happen.
Meanwhile, the CBI launched a Change the Race Ratio campaign in October 2020, together with a number of high profile employers (including Aviva, Deloitte and Microsoft), to increase racial and ethnic participation in British businesses. Part of that campaign was to call upon employers to disclose their ethnicity pay gap by 2022 at the latest.
Also in October 2020, 30 business leaders brought together by Business in the Community, wrote a letter to the Prime Minister, urging him to recognise that a mandatory duty to report ethnicity pay gap is a tool to create fair workplaces, not a burden. The letter stated that the “UK’s businesses stand ready to make this country one of the fairest places to work in the world. Mandatory ethnicity pay gap reporting would be a monumental step towards that ambition: [they] are only waiting on [the Prime Minister’s] word”. That “word” has not, so far, been forthcoming.
Although the Government had set up the Commission on Race and Ethnic Disparities in July 2020 to review inequality in the UK and set out a new, positive agenda for change, its report has been delayed to the end of February 2021.
Whilst it may be understandable that the Government is currently engaged in tackling the urgent (and devastating) matter of the pandemic, it is also clear that the ethnicity pay gap remains an important issue (possibly exacerbated by the pandemic) and one that must be tackled. It is up to the business world and the public at large to keep this on the agenda (and we will), making it clear that it is not forgotten, nor is it no longer seen as a priority. It is, surely, only a matter of time before the Government takes notice of the strength of feeling and support that exists for addressing this matter. In the spirit of the Race Equality Week’s “Big Promise”, we now need action, not just words.
Bina is an employment law specialist with considerable experience in dealing with all aspects of the employment relationship. She particularly enjoys dealing with equality and discrimination matters. She acts for both employers and senior executives across various sectors with particular expertise in the legal, financial and other professional services and higher education sectors as well as with luxury brands. Bina is a tough negotiator and a formidable litigator and regularly deals with claims in the Employment Tribunal helping to achieve the best results for her clients.
Özlem is a Professional Services Lawyer in our employment team”.
Professional Support Lawyer
Skip to content Home About Us Insights Services Contact Accessibility