How does workplace discrimination affect businesses?

As an employer or business owner, ensuring your business does not tolerate workplace discrimination begins with understanding the impact discrimination has – both on the business itself and the workforce.

What is workplace discrimination?

Discrimination is the act of treating a person unfairly because of who they are, or the fact that they possess ‘protected characteristics’.

The Equality Act 2010 details nine protected characteristics:

  • age
  • gender
  • race
  • disability
  • religion or belief
  • pregnancy and maternity
  • sexual orientation
  • gender reassignment
  • marriage and civil partnership

It is against the law to treat any person unfairly or less favourably at work because of a protected characteristic.


Types of discriminatory behaviours

Different forms of discrimination can occur in the workplace, including:

  • direct discrimination: when someone is treated unfairly because of a protected characteristic
  • indirect discrimination: when a workplace practice or rule that may appear to treat everyone equally is less fair to those with a certain protected characteristic
  • harassment: unwanted behaviour, linked to a protected characteristic, which violates someone’s dignity or creates an offensive environment for them
  • victimisation: unfair treatment directed at an individual or individuals, after raising a complaint or supporting a complaint relating to a protected characteristic

Employees experiencing discrimination at work are likely to endure higher levels of psychological distress and health-related problems than those not discriminated against.

The consequences of workplace discrimination

Legal costs and lost time

When assessing the impact of discrimination, an obvious starting point is the risk of litigation. This would include legal costs and time spent away from the business dealing with any negotiations or legal proceedings, as well as the potential for lowered staff morale.

You may also face paying a significant order for damages or compensation. In addition, there are potential consequences for the business’ reputation, should the matter become public.

Research conducted by leading HR services specialist CIPHR has revealed that the average pay out for an age discrimination case in 2021 was £39,000. The largest award that year was £266,000 for a disability discrimination case.


Productivity and morale

The impact of discrimination on productivity and team morale is often hard to estimate in financial terms but should not be underestimated.

For individuals and groups of employees, the effect is often deleterious. It undermines motivation, commitment, engagement, and loyalty. It can also erode job satisfaction, which in turn affects productivity and performance.

Research by The Circular Board (a UK-based recruitment website) suggests a highly engaged team can sell up to 20 percent more than a team with low engagement.

In separate findings compiled by Gallup, it is estimated that the global economy loses £5.5 trillion annually through employee disengagement.

According to the report: “Highly disengaged companies bear the greatest burden of that [sum] … and the perception of discrimination can clearly deepen employee disengagement.”

Staff costs and reputation

The demoralisation of a workforce also impacts on staff costs.

Employees most affected may start to take periods of sick leave, as discrimination can leave an individual anxious, depressed, stressed and even physically ill.

Discrimination also affects staff churn rates, as a disengaged and unhappy employee will seek to work elsewhere.

Employee disengagement and unhappiness can also affect your business’ reputation. Reputation is an important distinguishing factor in a competitive marketplace for labour.

Along with increased HR costs, reduced productivity and potential legal costs, the net negative result of workplace discrimination can be problematic for a business’ bottom line.


Advice on preventative approaches for tackling workplace discrimination

Discrimination can take many forms: from explicit antagonism to subtle, unconscious biases. In addressing discrimination, businesses help to ensure staff engagement, productivity and loyalty.

However, minimising the potential for discriminatory practices and behaviours to damage your business can require you to adopt a proactive approach.

At Springhouse, our team of experienced employment law solicitors have the expertise and knowledge to advise you on ways to safeguard your business against discrimination, which may arise through workplace cultures, procedures, and policies.

We can also assist employers accused of discriminatory practices with the legal process of defending against a claim.

For more information on how we can help your business, please get in touch today.


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