Written evidence from Professor Kim Hoque, Warwick Business School and

Professor Nick Bacon, University of London (DEG0104)

We are academic researchers who have conducted considerable research in the area of disability employment. We are founder members of Disability@Work, and Warwick Business School co-provides the secretariat to the All Party Parliamentary Group for Disability.

This submission focuses on the Committee’s question regarding how DWP can better support employers to take on and retain disabled employees, and to help them progress in work. It also addresses the Committees’ question regarding the effectiveness of the Disability Confident scheme.

We would hope to see the inclusion of all of the recommendations below in the Government’s National Strategy for Disabled People.

The submission covers four key areas: mandatory disability employment and pay gap reporting; Disability Confident; the leveraging of government procurement expenditure for social value; and the role of trade unions. These are areas on which we have either conducted research or written extensively in the recent past.

1.  Mandatory disability employment and pay gap reporting

1.1 We argue the government should introduce mandatory disability employment reporting for all large employers (with 250+ employees). This would involve reporting publicly the proportion of their workforce that is disabled.

1.2 The government itself is fully aware of the transformative benefits of disability employment reporting, and it has detailed these in its framework for Voluntary reporting on disability, mental health and wellbeing,[1] which it introduced in November 2018. This document, which encourages employers to report the prevalence of disabled people in their workforce on a voluntary basis, argues that transparent reporting has the potential to help employers: “Improve employee engagement and retention, with consequent gains for performance and productivity”; “Better understand the experiences of disabled people”; “Better monitor internal progress in building a more inclusive environment”; and “Access a wider pool of talent and skills through promoting inclusive and disability-friendly recruitment, retention and progression policies”.

1.3 One route by which mandatory employment reporting could be introduced would be for Part B of the current framework for Voluntary reporting on disability, mental health and wellbeing to be made mandatory. However, if this route is chosen the framework would need to be amended in a number of ways: 

i) All employers using the voluntary reporting framework should be required to report their workforce disability prevalence (this is not the case currently).

ii) The question employers are recommended to use to ask their employees about their disability status would need to be brought into line with the harmonised Equality Act measure of disability used for national reporting (it is not currently consistent with this).

iii) All employers would be required to use this question and not deviate from it. This would ensure the data collected are comparable across employers. This is important given small differences in question wording can yield large differences in reported figures.

iv) All employers would be required to collect data on a standardised basis, given differences in data collection methods can yield substantial differences in the reported figures. Our recommended approach would be for employers to collect data on an annual basis using a standard form that cannot be altered or changed. This is similar to the approach taken in the US under Section 503 of the Rehabilitation Act of 1973, which requires employers to invite employees to declare their disability status using a standard form, with the data collected then being used to ascertain workforce disability prevalence. The approach used within the US system could serve as a starting-point for a similar system in the UK, with the form used in the US being amended so that the question asked on the form is consistent with the Equality Act definition of disability.

1.4 In addition to reporting the disability prevalence within their workforce, employers should also be required to report the mean and median disability pay gap in hourly pay and bonuses, the proportion of disabled and non-disabled employees receiving a bonus, and the proportion of disabled employees who fall into each pay quartile. This will identify whether disabled people are distributed equally across the organisational hierarchy or whether they cluster into lower level jobs and pay grades. Disability pay gap reporting should be introduced as an extension of the current regulations on gender pay gap reporting. The government argued that gender pay gap reporting ‘is a key part of building a country that works for everyone’, by breaking down barriers to employment and career progression, thus creating ‘a more modern workforce’.[2] This rationale applies equally to disability pay gap reporting.

1.5 Mandatory pay gap reporting will be relatively straightforward for employers to implement if introduced in tandem with mandatory employment reporting (as outlined above). In calculating their pay gap, the first step for employers is to ascertain which of their employees identify as disabled. Information gathered for the purposes of mandatory employment reporting could be used to provide this.

1.6 There are a number of organisations that already report a range of disability employment metrics, thus illustrating that mandatory reporting is entirely feasible from a practical point of view. These include the BBC, ITV, Channel 4, Channel 5 and Sky, all of which have signed up to ‘Diamond’, which is a system for tracking on- and off-screen diversity. Channel 4, for example, has sought to develop a culture in which employees are willing to be open about their disability, and self-reported disability prevalence at Channel 4 is now 11.5%.[3] The NHS England Workforce Disability Equality Standard (WDES) requires NHS organisations to report ten specific measures that compare the workplace and career experiences of disabled and non-disabled employees. These metrics are then used to develop and publish action plans, and to enable organisations to measure year on year progress towards greater disability equality.[4] Annual workforce reporting by the civil service and government departments also identifies the proportion of their workforce who declare themselves disabled and this is reported by pay and grading levels.[5] Beyond this, it is a statutory obligation for universities to report on disability prevalence in their workforce to the Higher Education Statistics Agency, which publishes these data.[6] The aim of mandatory reporting would be to spread these many existing pockets of good practice across the economy more broadly.

1.8 Mandatory disability employment and pay gap reporting is important not only given the transformative effects it can have in its own right, but also as it provides an essential foundation for reforms to Disability Confident and procurement. Were mandatory reporting to be implemented, reforms to Disability Confident and to procurement would become much more straightforward to introduce (as outlined below).

2.  Disability Confident should be replaced with a new award based on objective disability employment outcomes

2.1 Disability@Work research on the Two Ticks scheme (the predecessor to Disability Confident) shows that employers with Two Ticks were no more likely to employ disabled people than those without Two Ticks, and were barely any more likely to have adopted disability equality policies and practices. There is also very little evidence that Two Ticks improved disabled employees’ experience of work (regarding well-being, job satisfaction, fair treatment, contentment etc.) or that it closed gaps between disabled and non-disabled people regarding these outcomes.[7] There is also no evidence showing Two Ticks employers were any more likely to uphold the specific commitments formally expected of them than were non-Two Ticks employers.[8] Many Two Ticks employers were migrated over to Disability Confident in 2016.

2.2 There is no reason to assume Disability Confident will have had any greater success than Two Ticks in terms of improving outcomes for disabled people or encouraging employers to adopt better disability equality policies and practices. As was the case for Two Ticks, Disability Confident does not have an independent inspection regime, hence it leaves open the possibility that firms will seek accreditation to benefit from the potential reputational effects but will not necessarily make any substantive changes to their disability equality policies and practices with a view to improving outcomes for disabled people. In addition, as with Two Ticks, Disability Confident focuses on the processes that employers have adopted to manage disabled people, rather than on outcomes (regarding the number of disabled people they employ, for example). As such, it is possible for an employer to have Disability Confident, yet to not employ any disabled people. Even the very few employers at level 3 are required simply to make a commitment to employ at least some disabled people (following reforms in November 2019), and the government does not specify the proportion of disabled employees in the workforce required in order to secure accreditation.

2.3 In addition, take-up of Disability Confident is highly limited. Disability@Work analysis shows that in November 2019 almost half (7,464) of all Disability Confident employers (15,123) were located in the voluntary or public sectors. In terms of the proportion of private sector employers that have Disability Confident, there were, in November 2019, 1.39 million private sector businesses in the UK that are not sole traders, and there were 6,480 Disability Confident private sector businesses. This suggests that only 0.47 per cent of private sector businesses were Disability Confident. As such, even if Disability Confident did encourage employers to improve their treatment of disabled jobseekers and employees, this would still benefit a very small number of disabled people.[9]

2.4 As such, we would argue that Disability Confident should be redeveloped and rebranded, with a key change being that eligibility should be based on disability employment outcomes regarding the proportion of disabled employees in their workforce, and minimal disability gaps in pay and career progression, for example. The revised scheme would thus require employers to demonstrate they have above a given minimum threshold percentage of disabled people in their workforce, and below a minimum disability pay gap in each quartile of their pay distribution.

2.5 Assessments of employers’ eligibility for the scheme would require employers’ workforce disability metrics to be measured in a standardised way, to ensure comparability of figures across employers. However, the necessary data would be available automatically should the recommendations in section 1 above regarding mandatory disability employment and pay gap reporting be implemented. The figures employers report for the purposes of mandatory disability employment and pay gap reporting could be used to determine their eligibility for the rebranded Disability Confident reward scheme.

2.6 It is important to note that a scheme of this nature would be fairer to small firms than the current Disability Confident scheme. Disability Confident relies significantly on employers demonstrating they have formal disability equality policies and practices in place, which small firms are less likely to have implemented. However, recent evidence shows the prevalence of disabled people in the workforce is no different in small firms than in larger firms.[10] As such, they would be more likely to be eligible for a revised scheme based on disability employment outcomes than they would for Disability Confident in its current guise.  

3. Leveraging central government procurement expenditure for social value

3.1. The government has consulted on reforming the Public Services (Social Value) Act 2012 to require all public sector commissioning to factor in economic, social and environmental well-being in allocating £284 billion of public contracts.[11] In the reforms announced in September 2020, the Cabinet Office introduced a requirement for employers to demonstrate the steps they are taking to reduce the disability employment gap, by demonstrating action to increase the representation of disabled people in the contract workforce; supporting disabled people in developing new skills relevant to the contract, including through training schemes that result in recognised qualifications; and influencing staff, suppliers, customers and communities through the delivery of the contract to support disabled people

3.2 This is a positive step. However, the government could go significantly further. In addition to the reforms announced by the Cabinet Office, employers’ disability equality outcomes (regarding the proportion of their workforce that is disabled and their disability pay gaps) should be taken into account in determining the allocation of contracts, and employers that win contracts should be required to commit to certain disability employment outcomes.[12]  

3.3 This additional reform would require comparable data on disability outcomes between employers. However, the necessary data would be automatically available (at least for large firms), should the recommendation in section 1 above regarding disability employment and pay gap reporting be introduced. As such, the proposals we put forward here would be low cost and straightforward to implement for many employers.

3.4 A further limitation of the reforms to the Social Value Act recently announced by the Cabinet Office is that procuring bodies will be able to select the outcomes on which they would expect companies bidding for contracts to focus from a number of different forms of social value. As such, the procuring body may choose to require companies to focus on forms of social value such an environmental outcomes, air quality, or transport infrastructure concerns, rather than on the disability employment gap.

3.5 As such, we would advocate the implementation a separate stand-alone system that focuses specifically on disability employment, thereby requiring all firms to compete on the basis of disability equality (based on measures of workforce disability prevalence plus minimal disability pay gaps) when bidding for contracts, and to commit to meet certain disability equality outcomes should they win the contract. This is justified on the basis that the disadvantage disabled people encounter in the labour market significantly outweighs the disadvantaged encountered by other protected characteristics. A system of this nature operates currently in the United States under Section 503 of the Rehabilitation Act of 1973,[13] which prohibits federal contractors and subcontractors from discriminating in employment against individuals with disabilities and requires employers take affirmative action to recruit, hire, promote, and retain these individuals. The law requires bodies winning federal contracts to uphold a 7 per cent ‘utilisation goal’ (7 per cent of jobs across all job categories should be held by disabled people). Companies are assessed on whether they meet the 7 per cent goal on the basis of self-report data from disabled people in which employees are invited to declare their disability status using a standard US government form that cannot be altered or amended in any way (as outlined above).

4. Role of Trade Unions

4.1 A growing literature has identified the importance of equal opportunities (EO) practices for increasing disability employment rates, disabled employees’ relative wages and disabled employees’ perceptions of fair treatment by management.[14] Although four in five workplaces have an EO policy, many are ‘empty shells’ that lack substantive practices to deliver equality commitments.[15] The Workplace Employment Relations Study (WERS) 2011 data suggests that only approximately 10 per cent of workplaces with 5 or more employees monitor or review recruitment and selection and promotion by disability, and only 3 per cent review pay rates by disability, with the adoption of substantive equality practices appearing to have declined between WERS 2004 and 2011. Furthermore, WERS 2011 shows only 8 per cent of workplaces have special procedures to attract job applications from disabled people. It is highly unlikely, however, that disabled people’s employment outcomes will improve unless employers can be persuaded to adopt such practices.

4.2 One route by which this might happen is by encouraging joint regulation of equality and supporting the role of unions in engendering better disability equality practice. Our research shows that employers are more likely to adopt EO practices in unionised than nonunionised workplaces, and that unions offer an important source of support and advice to employees who are disabled or become disabled.[16] The findings show that adoption of equal opportunity practices is greater in unionised workplaces particularly where negotiation and consultation over equality issues takes place.

4.3 In seeking to promote equality, trade unions have also developed new types of workplace representatives, having recruited and trained equality representatives and disability champions in recent years. Our research suggests that these new forms of union representation can have significant positive effects for the employment of disabled people, but they need greater statutory support. The role of union equality representatives is to help promote equality and fairness by: encouraging employers to improve EO policies and practices; offering independent advice and guidance on equality issues and rights to employees; and raising the profile of the equality agenda within their unions. More than three-fifths of equality representatives report having had a positive impact on their employer’s disability equality practices.[17] Their impact does not vary between the public and private sectors, between small and medium-sized enterprises (SMEs) and large organisations, or between industry sectors. However, their impact is dependent on them having at least five hours or more per week to spend on their equality representative role, and having regular contact with management (for example, via attendance at equality committees). The research also shows that they are better able to influence employer disability practice positively where negotiation over equality takes place.

4.4 Where Disability Champions are concerned, these are a further new type of lay workplace trade union activist, whose role is to encourage employers to audit and improve disability policies and offer independent advice and guidance on disability issues to employees. Our research has shown that the majority of disability champions have had a positive impact on employer willingness to conduct disability audits and to amend and improve employer disability equality practices.[18] Similar to equality representatives, disability champions report greater influence where they are able to spend at least five hours a week on the role, and where they regularly attend an equality/disability committee. Also similar to equality representatives, our research also shows that disability champions are better able to influence employer disability practice positively where negotiation over equality takes place.

4.5 The evidence therefore suggests disability gaps in employment may be reduced by encouraging union recognition and requiring employers to negotiate or consult with unions on equality issues. This should help to increase the adoption of EO practices that are likely to help raise disability employment rates (and hence improve disabled people’s employment outcomes).

4.6 Although the research shows the effectiveness of both equality representatives and disability champions depends on them having sufficient facility time to conduct their role, they lack statutory rights to time off such as those afforded to union learning representatives. As such, equality representatives and disability champions should be provided with statutory rights to time off for their role, equivalent to those provided to union learning representatives.

For further details of our research on disability, go to: www.disabilityatwork.co.uk

All of the publications, working papers and briefs references in this paper are available either on our website or on request from the authors

December 2020