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Why discrimination is always bad for business

Published 21 April 2020

There are a lot of practices and occurrences that can be bad and costly for business, discrimination is certainly one of them.

There is no limit to the amount of compensation that can be awarded to a claimant in the event of a successful discrimination claim against an employer.

The Department for Works and Pensions (DWP) was last month (March 2020) ordered to pay out nearly £400,000 after an administrative officer won her claim for race and age discrimination (1).

While a small employer is unlikely to be forced to pay an amount that extreme, discrimination can still have a significant impact on the bottom line regardless of the size of a business.

There can be much wider implications in addition to the financial cost of discrimination.

Discrimination means treating a person unfairly because of who they are or because they possess certain characteristics.

The Equality Act 2010 highlights nine protected characteristics: (2)

  • Age
  • Disability
  • Gender reassignment
  • Marriage and civil partnership
  • Pregnancy and maternity
  • Race
  • Religion or belief
  • Sex
  • Sexual orientation

Discrimination that occurs because of one or more of the above characteristics is unlawful under the Equality Act.

As all of us has at least some of these characteristics such as age, race or gender, the Act protects every person from being discriminated against.

If an employee is treated unfavourably because someone thinks they belong to a particular group of people with protected characteristics, this is also unlawful discrimination.

The impact on the target of workplace discrimination can be devastating and it is no exaggeration to say in some cases life-threatening.

It is reported that another DWP employee who was disabled attempted to take his own life because of workplace bullying and discrimination (3)

As well as the enormous personal impact on the victim of discrimination, there can also be other serious and significant ramifications for employers.

Discriminatory practices can affect the job satisfaction of all employees  - not just those who are discriminated against.

For example, if individuals doing the same job, with the same experience, are paid less because of their gender, it can have a negative impact on staff morale and productivity.

Improvements to the gender pay gap between British men and women appear to have stalled, with official figures revealing that the difference widened slightly in 2019 among some groups.

Figures from the Office for National Statistics shows that the pay gap for full-time employees rose to 8.9 per cent in 2019 from 8.6 per cent the year before (4). The rise was described as ‘not statistically significant’.

Employees who witness discrimination are also much more likely to leave an organisation, which will increase staff turnover levels. Costs incurred from this can include productivity loss, the time it takes for staff to become fully effective in their new role, advertising costs and agency fees and cost of equipment (including uniform, badges/passes, desk equipment, etc.).

As far back as 2014 a study, by professional services firm Price WaterhouseCoopers, suggested that resigning staff was costing employers £42bn a year (5).

Discrimination can also impact negatively on the perception of an employer among clients and customers and cause significant reputational damage.

Disgruntled workers and ex-employees are likely to complain to family and friends, who may take their business elsewhere. Shrewd and talented jobseekers are also likely to research a prospective employer. With information readily available any discrimination claims against an employer can prove to be off putting.

Discrimination within an organisation is unacceptable and unlawful. Forms of discrimination can range from unintentional misunderstandings and lack of awareness through to deliberate and/or malicious acts.

Employers should take a zero-tolerance approach to any type of discrimination. Complaints should be taken seriously and investigated without unreasonable delay.


(1) Administrative officer won her claim for race and age discrimination [Internet] [Cited 21.4.2020]

(2) The Equality Act 2010 highlights nine protected characteristics [Internet] [Cited 21.4.2020]

(3) Employee who was disabled attempted to take his own life because of workplace bullying and discrimination [Internet] [Cited 21.4.2020]

(4) The Office for National Statistics [Internet] [Cited 21.4.2020]

(5) Resigning staff was costing employers £42bn a year [Internet] [Cited 21.4.2020]


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For free employment law advice or if you are affected or want information and support by any of the issues in this article please give us a call. 0333 772 0611

A reputation built on success

For employment law advice or if you are affected or want information and support by any of the issues in this article please give us a call. 


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