Diversity, equity and inclusion ("DEI") has hit the headlines in recent weeks with new Executive Orders in the US entitled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" and "Ending Radical and Wasteful Government DEI Programs and Preferencing" causing much controversy. A further order has been signed in the US recognising only two sexes – male and female and opposing the concept of gender identity. Many businesses are questioning what impact this should have on their approach to DEI, in particular businesses seeking to take a global approach.
What is the position in Great Britain?
First and foremost the law has not regressed. Employers in Great Britain still have to comply with the Equality Act 2010 ("the EqA"), accompanying legislation and relevant codes of practice. The EqA protects individuals from discrimination based on nine protected characteristics:
- Age
- Disability
- Gender reassignment
- Marriage and civil partnership
- Pregnancy and maternity
- Race
- Religion or belief
- Sex
- Sexual orientation
Individuals are protected against direct and indirect discrimination, harassment and victimisation. In the context of disability there is further protection in relation to discrimination arising from disability and employers' duty to make reasonable adjustments.
Additional protection was introduced in October 2024 when the new duty for employers to take reasonable steps to prevent sexual harassment in the workplace came into force. Under the Employment Rights Bill we can expect this duty to be extended to taking "all reasonable steps" and the re-introduction of third party harassment protection. The direction of travel is clear – DEI remains a top priority for the current government.
It is important to remember that trans people are protected from discrimination under the protected characteristic of gender reassignment under the EqA. The recent ruling of the Supreme Court in the case of For Women Scotland Limited v The Scottish Ministers (please read our legal update) confirmed that the legal definition of woman in the EqA is based on biological sex, however the Court was keen to point out that this finding should not be seen as watering down of trans rights.
The Equality and Human Rights Commission ("EHRC") has issued interim guidance for employers and service providers following the judgment pending an updated Code of Practice expected in the summer – please see our legal update. Although the judgment from the Supreme Court has created clarity over the legal parameters, there is still much controversy surrounding the case and a number of practical difficulties for entities seeking to comply with the law. Following the interim EHRC guidance does not protect an employer or service provider from litigation which will is likely to follow – caution should be taken and the wording of the EqA carefully considered. DEI is at the centre of this issue, together with the importance of employers and service providers balancing different protected characteristics. Employers which roll back their DEI frameworks in Great Britain in light of the latest trends from the US increase their risk of legal claims, not to mention the possible reputational damage and difficulty attracting and retaining talent.
What is happening in the US?
As mentioned above there have been a number of Executive Orders relating to scaling back DEI protection. It is important to note however that the starting position in the US is different to Great Britain. For example, in the US there has been an evolving concept of affirmative action designed to address past disadvantage and discrimination. Affirmative action has now been significantly curtailed in the US but in Great Britain it was never permitted. Our closest law to this is the much limited positive action under the EqA. Employers may take positive action where persons who share a protected characteristic suffer a disadvantage connected to the characteristic, have particular needs or are disproportionately under-represented. There is also specific protection allowing employers to take positive action in recruitment and promotion. An example of positive action from the EHRC is placing job adverts to target particular groups. Positive discrimination (more akin to the now scaled back US affirmative action) on the other hand is generally not permitted. Positive discrimination is where an employer treats one person more favourably than another because they have a protected characteristic. There are narrow exceptions where positive discrimination is permitted in relation to occupational requirements and in relation to a person's disability.
How can an international employer align policies on DEI when the global political landscape is so different?
The key is to establish core values which represent the employer's global commitment to DEI and then to adapt these values to local laws. By balancing global values with local adaptations, employers can create inclusive environments that respect diverse political landscapes. Having a true understanding of the employer's own cultural identity is of paramount importance. Communication and engagement on a global scale is fundamental.
Ensure employees are trained on the DEI global overarching framework and the importance of local legal compliance and cultural sensitivities. Be prepared for challenges and seek regular feedback from countries to help ensure ongoing compliance and that areas requiring improvement can be quickly identified and appropriate action taken.
It is important to remember that everyone at an organisation will not necessarily have the same beliefs. We have seen more and more cases where employers have had to balance competing beliefs (for example please see our legal update on the case of Higgs v Farmor's School in relation to gender critical beliefs). Employee engagement plays a crucial role in reducing divisiveness by fostering a more inclusive, collaborative and positive work environment. Educate employees, encourage allyship and promote a culture of togetherness, embracing diversity and all the benefits it brings.
What steps should employers in Great Britain be taking?
Educating the workforce
DEI law is both complex and nuanced. The benefit of educating the workforce cannot be underestimated. From the boardroom to the shop floor, there should be no doubt on standards expected. Failure to do so leaves employers open to risk, particularly in relation to the new duty to prevent sexual harassment in the workplace. Senior leaders have a role to play here by setting a tone from the top that DEI remains a priority.
Policies and procedures
Policies and procedures should be regularly reviewed and updated. The law is fast changing and it is important that the employer's rules reflect the latest position and standards.
Reporting of DEI information
It is mandatory for certain companies in Great Britain to report on DEI. For example employers with over 250 employees must report their gender pay gap and quoted companies must report the numbers of persons of each sex who are directors, senior managers or employees. Many employers also choose to voluntarily report. Further a consultation has been launched on how to introduce mandatory ethnicity and disability pay gap reporting for employers with 250 or more employees.
Equality action plans
Under regulations following the Employment Rights Bill large employers (250 plus employees) will be required to develop and publish equality action plans showing what steps they are taking in relation to prescribed matters related to gender equality and to publish prescribed information in relation to their plans. Matters such as addressing the gender pay gap and supporting employees going through menopause will be covered. Consideration should be given to what those plans would look like and what action should be taken now.
Comment
The recent Executive Orders in the US have sparked significant debate and uncertainty regarding DEI policies, particularly for businesses with a global presence. Despite these changes, employers in Great Britain must continue to adhere to the EqA, which provides robust protections against discrimination based on nine protected characteristics.
Employers should focus on educating their workforce, regularly updating policies and procedures, and ensuring compliance with reporting requirements. Additionally, it is crucial to remember the protection afforded to trans individuals under the EqA, despite recent legal clarifications on biological sex.
Employers which are able to show a genuine continued commitment to DEI in the face of adversity will inevitably reap the rewards.
If you need any guidance with regard to the issues raised in this article please do not hesitate to get in touch with Tracey Groves or Kate Meadowcroft.
