There has been a recent shift in tone in approaches that employers should take with regard to equality laws and practices. Long-term, these developments will have important implications for businesses. In this newsletter, we take a broad overview of the concepts involved and consider what the impact on employers might be.
DEI or EDI?
The terminology in this area can be confusing. DEI stands for ‘diversity, equity and inclusion’. EDI usually stands for ‘equality, diversity and inclusion’. In both cases ‘diversity’ means that a workforce is made up of staff coming from a variety of backgrounds and ‘inclusion’ means ensuring that diverse individuals are employed and feel welcome so that they perform to the fullest of their abilities.
‘Equality’ versus ‘equity’
The difference between these two words, which superficially seem to mean something similar, is key.
‘Equality’ is the more familiar term to us in the UK: it forms the title of our main anti-discrimination law, the Equality Act 2010. It means ignoring protected characteristics in, say, hiring and promotion, so that businesses treat everyone the same, regardless of their race, sex, age and so on. It used to be called ‘equal opportunities’.
‘Equity’, another word for ‘fairness’, takes a different approach. This sees certain individuals as part of ‘marginalised’ groups that have been historically under-represented or disadvantaged. It aims to ensure that their interests are actively promoted so that they are not disadvantaged by their membership of the group. It seeks equality of outcome – for example, that a workforce contains 50 percent of both sexes or that its ethnic make-up reflects the proportion of each ethnic group in wider society.
What does the law say?
The basic approach taken in UK law is equality. Hiring anyone because of, say, their ethnic background, is always unlawful (subject to a few minor exceptions such as it being necessary for a drama). This means that firms can never ‘positively discriminate’ directly in favour of, say, people from a particular nationality, however good their intentions. What is permitted as ‘affirmative action’ in parts of the United States, for example, is banned as race discrimination in the UK.
Does that mean in the UK we should ignore protected characteristics completely?
No, it’s not that simple. In UK law, indirect discrimination is also unlawful. This is where a policy, for example, is the same for everyone but puts people who share a protected characteristic at a disadvantage. For example, a policy that recruits must speak Japanese disadvantages people who are not Japanese. The key difference between this and direct discrimination is that indirect discrimination can be justified because of business needs.
Positive action
Further, the law does allow for very limited measures to improve workforce diversity, such as targeted recruitment and training for underrepresented groups. However, hiring or promoting employees based solely on protected characteristics is always unlawful. Firms can maintain aspirational diversity goals but must never cross legal boundaries.
And employers can take measures that can only apply to specific groups. Maternity rights, for example, directly benefit only women and returning new mothers can get preferential treatment in consideration for job vacancies. Parents get parental leave. Disabled people are entitled to have reasonable adjustments made for them.
Pay gap reporting
Pay gap reporting remains public policy for tackling workplace inequality. UK employers with over 250 staff must publish gender pay gap data annually, while the government has plans to extend this to ethnicity and disability reporting. It is not yet known how this will work in practice but it is sure to impose extra burdens on larger businesses.
What of the future?
There are signs that the ‘DEI’ approach is on its way out, through it will take a long time to be extinguished completely.
Recent global shifts, particularly in the US, have prompted some major firms to reassess their DEI policies. For example, in early 2025, Google announced it would remove diversity hiring targets for underrepresented groups, citing the need to comply with new U.S. executive orders affecting federal contractors. And the Trump administration has brought in a raft of measures to squeeze DEI initiatives out of federal government.
Where America goes, so often the UK follows. The BT Group recently adjusted its DEI strategy, removing diversity-related targets from bonus calculations for around 37,000 middle managers. Previously, managers had up to 10% of their bonuses tied to goals linked to gender, ethnicity, and disability representation. Now, bonuses for these managers will reflect broader measures of overall employee engagement, although senior executives will continue to have specific DEI metrics. BT maintains that its broader diversity commitments remain unchanged, emphasising a continued focus on long-term inclusion.
How 3CS can help
At 3CS, our experienced employment solicitors help businesses comply with evolving equality laws and practices. We offer clear, practical advice on policy updates, legal obligations, and risk management. If you need guidance on flexible working, redundancy processes, or inclusion strategies, feel free to get in touch.
