For any company, diversity and inclusion is indispensable when seeking to build a strong, engaged and open workforce.
Whilst the sentiment expressed above is not new, recent events such as the Black Lives Matter protests make clear that employers must both actively engage in diversity and inclusion initiatives and to seek to understand and manage a diverse workforce. These recent events have emphasised the need for education, understanding and action in relation to diversity and inclusion in the workplace. Having a good understanding of both the diversity and the emotions of your workforce will help you to better manage and develop your business in the most appropriate way.
Below we look at how employers can safely conduct diversity, equality and inclusion monitoring and our article here looks in further detail at how can employers be better allies for ethnic minority groups.
1. What is the position in the UK? Am I obliged to assess diversity in the workplace?
In the UK "race" is (non-exhaustively) defined as including (i) colour, (ii) nationality and (iii) ethnic or national origins, and recent cases have confirmed that the definition of "race" also includes caste. The UK's Equality Act 2010 – the primary anti-discrimination legislation in the UK – prohibits direct discrimination, indirect discrimination, harassment, and victimisation on the grounds of a number of protected characteristics (including race and ethnicity).
These are blanket prohibitions, and the Act does not go as far as prescribing how this should be done. Perhaps unsurprisingly, there is also no general direct requirement on employers in the UK to assess diversity and equality of opportunities in the workplace.
There are some specific diversity requirements (for example, Gender Pay Gap Reporting requirements apply to employers with 250 or more employees to publish statutory calculations, and employers in Northern Ireland must register with the Equality Commission if they employ more than 11 full-time employees each working more than 16 hours and submit an annual monitoring return giving information about the religious composition of their workforce), but these are rare.
There are two separate positive action provisions under the Equality Act, which apply where individuals who share a protected characteristic (such as race) suffer a disadvantage connected to the characteristic, have particular needs, or are disproportionately under-represented. The two positive action provisions are: (1) general positive action; and (2) positive action in recruitment and promotion. Public sector employers are also under a separate, specific equality duty.
In terms of positive action in recruitment and promotion, where an employer reasonably thinks that employees with particularly characteristics, such as race, are disadvantaged or disproportionately under-represented within the organisation, the employer can take steps to treat those employees more favourably than others in recruitment or promotion, as long as the affected employee is as qualified as other employees.
These positive action provisions do not allow employers to positively discriminate, which is still an unlawful practice; however, it is one – albeit small – step towards driving greater diversity and inclusion in the workplace.
2. If I'm not subject to a specific requirement, where should I start?
The starting point for most employers in responding to these concerns will be to assess and understand diversity across their business, so as to take appropriate further action.
There are no restrictions under UK employment law in carrying out diversity monitoring involving the collection of race / ethnicity information. However, there are data protection restrictions that can apply that we discuss further below. It is worth noting that employers will need to take care when processing such information given both the sensitivity of the data and of the implications for any related lack of compliance or misuse.
The safest way to carry out diversity monitoring is by way of an anonymous survey, making sure that staff cannot be identified directly or indirectly from the information collected (for example, an individual may be identifiable where there is only one woman in a team and employees are required to disclose their gender and their team).
That said, a truly anonymous survey may not always be possible given the size of the business or the relevant teams, and may in any event be something of blunt instrument. Further, such a survey may be of limited use where it leaves the business unable to identify particular areas of concern and introduce specific measures where most needed.
Accordingly, we consider in further detail below possible steps for employers who want to take a more tailored approach to understanding their workforce and implementing change.
3. Carrying out personalised diversity monitoring
There are some specific circumstances in which employers are required to carry out diversity monitoring, as noted above, but these are unlikely to apply to the majority of employers or specifically to the processing of information relating to race and ethnicity.
As a general rule, personal data revealing racial or ethnic origin is considered ‘special category’ data, and its processing is prohibited unless a condition applies. Two such conditions in the Data Protection Act 2018 are available to employers when processing data revealing racial or ethnic origin.
The first condition under the Data Protection Act 2018 is a substantial public interest condition of equality of opportunity or treatment, which broadly corresponds to the general positive action provision under the Equality Act 2010. This condition is available to employers where the processing is "necessary for the purposes of identifying or keeping under review the existence or absence of equality of opportunity or treatment…with a view to enabling such equality to be promoted or maintained" for certain diversity information (namely personal data (i) revealing racial / ethnic origin, (ii) revealing religious or philosophical beliefs, (iii) concerning health, and (iv) concerning an individual's sexual orientation). However, this condition cannot be used if:
The first bullet can be problematic where an employer identifies individual cases revealing an absence of equality of opportunity or treatment – but which do not amount to discrimination under the Equality Act 2010. In this case, taking a decision to promote equality of opportunity would breach the employer’s obligations under the Data Protection Act 2018, despite the positive action provisions in the Equality Act 2010. Of course, where an absence of equality of opportunity could amount to discrimination under the Equality Act 2010, an employer must take an individual decision to remedy the discrimination. The relevant lawful basis under data protection law for doing so in this case would be the need to comply with the employer’s employment law obligations.
The second condition under the Data Protection Act 2018 is a substantial public interest condition of racial and ethnic diversity at senior levels of organisations, which broadly corresponds to the provision of positive action in recruitment and promotion under the Equality Act 2010. This condition allows employers to identify BAME individuals to hold senior positions within the organisation for the purposes of promoting or maintaining diversity of BAME individuals at senior levels. As with the first condition, an employer cannot rely on this condition if the processing of the employee’s racial or ethnic origin data is likely to cause him or her substantial damage or substantial distress. However, unlike the first condition, an employer can take decisions relating to specific individuals, specifically so as to identify "suitable individuals to hold senior positions". The Data Protection Act 2018 defines ‘senior positions’ as an officer of a company, a partner in an LLP or other partnership, or a ‘senior manager, which itself is defined as someone who plays a significant role in managing or making decisions about the management of the organisation (or a substantial part of it). The clear limitation with this second condition is that an employer is still prevented from considering individuals for non-senior management positions.
4. Carrying out employee opinion surveys
We have seen an increase in the employers wanting to understand more about their employees' feelings, concerns and emotions with regard to diversity, particularly in the wake of the BLM protests. This may include questions about how employees feel about diversity within the business, opportunities, staff conduct and so on.
As with diversity monitoring, the safest approach to this is to conduct such surveys on an anonymised basis. For these types of surveys, anonymised information is less likely to reduce the value of the information, so worth considering. However, as mentioned previously the size of the company or team may mean that the data is not truly anonymised but is instead ‘pesudonymised’, i.e. the direct identifiers (such as name) have been removed or kept separately, but the remaining identifiers can still lead to the identification of an individual. In this case, an employer must still ensure that the processing of the data from the survey complies with data protection law.
In practice, it is hard for employers to get employees to engage with such surveys and to ensure that the responses are useful unless employees feel that they won’t suffer any repercussions as a result of speaking their mind. Whilst employee communications are key in reassuring employees, the fact that a survey is anonymised is often the best practical way of assuring employees that the business is more interested in what they have to say than who said it.
Although employers may want to take a more personalised approach, this is not without risk compared to the fact-focused diversity monitoring referred to above. To comply with data protection obligations, employers will likely rely on their legitimate interests for processing employee opinions, and should therefore undertake a balancing test to ensure that the interests of employees do not outweigh the employer’s legitimate interests. Where questions in an opinion survey solicit employees to reveal special category data, which includes racial and ethnic origin, then the only available lawful basis will be the employee’s explicit consent. Consent can be problematic in the employment context as there is a presumption that it cannot be ‘freely given’ (one of the conditions for consent) owing to the imbalance of power between an employer and an employee (see below).
5. Can't I just ask employees to consent to personalised diversity monitoring / opinion surveys?
Whilst there is nothing to stop employers taking this approach, there are several risks with doing so.
For consent to be valid, it must be "freely given, specific, informed and unambiguous". The validity will also depend on whether an employee can refuse to give consent and withdraw it once given without facing any detriment. Given the perceived imbalance of power between an employer and an employee, consent will almost always be invalid in the employment context. However, where employees have genuine choice without suffering repercussions, then consent may be valid. We would recommend speaking with your legal advisers to assess whether consent can be valid in your circumstances.
As mentioned previously, consent must be capable of being withdrawn at any stage, and employers must make it as easy for individuals to withdraw consent as to consent in the first place, meaning that it is both risky and impractical for employers to rely on this ground for processing data in relation to these types of activities.
6. Is there anything else I should consider?
There are various compliance requirements with which an employer undertaking this kind of diversity monitoring must comply.
7. Once I have carried out a review and have a better understanding of the workforce, what should I do?
Depending on what you identify, you may consider a number of further actions including:
However, as discussed above, taking decisions or measures in respect of a particular individual will be problematic.
Employee communications and engagement are important. One way of creating transparency and engagement with employees would be to report back to employees once you have analysed the feedback collected from your review. When doing so, you should consider the form and impact of any such reporting, including how to discuss actions or steps to tackle any areas of concern identified. You should bear in mind the sensitivity of these matters, and be alert to any reputational or branding implications.
You should also consider how regularly you want conduct this type of review. You will of course also need to consider how you will store and protect the integrity of the information collected, and when and how you will delete or destroy the information once it is no longer required for the purpose for which it was collected.
Please see our article here which looks in further detail at how can employers be better allies for ethnic minority groups.
8. What if I get it wrong?
The risks in incorrectly conducting race or ethnicity monitoring include the following:
9. What next?
Although the Equality Act 2010 and the Data Protection Act 2018 provide employers the legal means to take positive action to support and promote employees with protected characteristics, such as BAME employees, the law does not oblige employers to take positive action and there is still a distinct lack of transparency around race and ethnicity diversity reporting.
There have also been a number of initiatives on understanding the racial and ethnicity pay gap, such as the ONS’s inaugural 2018 report Ethnicity pay gaps in Great Britain, and the Confederation of British Industry’s Bridge the gap report, published in February 2020, in addition to countless government-commissioned inquiries and reports on broader racial inequality within society.
Following the introduction of Gender Pay Gap Reporting in 2017, there have been repeated calls for this to be extended to race and ethnicity, but no further action has, as yet, been taken by the government in this sphere.
10. What is the position in other EU jurisdictions?
Race and ethnicity are protected characteristics in most EU jurisdictions, noting that the definition of race and ethnicity, and what is protected can vary across the EU. In practice, this may mean that employers are under an obligation to prevent and/or protect employees from discrimination on these grounds in some form.
Very few EU countries impose an obligation on employers to directly monitor race and ethnicity or collect information about diversity. A number of EU countries impose restrictions on the collection of such data, going as far as preventing employers from processing such data about their employees altogether.
Race and ethnicity tend to be fairly nuanced concepts across the EU, heavily influenced by local history as much as the current political and social position. In some cases, 'ethnicity' may be a more sensitive matter than 'race' or 'colour'. This accounts for some of the variation in approach across jurisdictions, both with regard to the rights of employees and the obligations on employees to monitor or evaluate and to prevent and/or protect employees from discrimination on these grounds.
Accordingly, the approach of both EU national data protection regulators and employers to diversity monitoring varies significantly. For further consideration of these matters from an EU or global perspective, please see our HR Data Essentials microsite.
11. Concluding thoughts
There is clearly still work for employers, and society as a whole, with regard to equal opportunities and diversity. Given the high-profile nature of the BLM protests, we anticipate that we may see a number of changes in the near future, but as yet no indication of what changes we can expect has been given at the time of writing.
In particular, in the UK, the interaction between the positive action provisions under the Equality Act 2010, and the corresponding conditions in the Data Protection Act 2018 do not fit together seamlessly and certainly create a real and important gap and, possibly, a conflict in how employers address diversity within their organisations.
Prudent employers should consider the needs of their business, and how best to ensure the equality and diversity of their workforce going forward within the current framework, and keep an eye out for further developments.
