For SMEs without a dedicated HR or legal team, the Equality Act may not always be front of mind, but it is vital leaders know how it impacts staff recruitment and training, and how to protect their people from discrimination, harassment and victimisation.

Beyond complying with the law, it’s simply good practice for SMEs to ensure staff are cared for and included. Creating a diverse workplace where everyone feels safe helps attract and retain talent, boosts productivity and enhances the company’s reputation.

“Small business owners should be aware of the main principles of the Equality Act 2010 and the nine protected characteristics,” says Sean Beckett, employment law and HR adviser at Mentor. “Employers have a duty to take all reasonable steps to prevent unlawful discrimination in the workplace and should understand how unlawful discrimination can occur in their business.”

Protected characteristics comprise age, disability, race, religion or beliefs, sex, sexual orientation, gender reassignment, marriage and civil partnership, and pregnancy and maternity.

Under the act, discrimination is defined as either direct – when people are treated less favourably because they have a protected characteristic, someone thinks they do, or they are associated with someone who does – or indirect. Indirect discrimination can be less easy to identify, but no less damaging. It occurs when a company practice or policy, which applies to everyone, puts certain individuals at a disadvantage.

Harassment is prohibited, defined as creating an intimidating, degrading or offensive environment for the employee. Also unlawful is victimisation – the detrimental treatment of someone who has reported, or given evidence against, a company for discrimination.

The business owner needn’t be guilty of discrimination for the company to be sued – they are also liable for employee behaviour.

“This makes it vitally important that employers train staff and promote the principles encompassed by the act,” adds Beckett. “Failure to take all reasonable steps to prevent unlawful discrimination in the workplace may also leave employers vicariously liable for discrimination suffered by employees.”

There are additional protections under the act for those with a disability. Companies must make reasonable adjustments for disabled staff and customers, and bear the cost. People are also legally entitled to request specific adjustments to meet their needs.

“What is reasonable in the circumstances will vary depending on any disadvantage faced by the individual as well as the resources available,” points out Beckett. Factors an employer should consider include: what is practical and affordable in the circumstances; how much it will reduce the disadvantage of the person with the disability; and the effect the adjustment could have on others. “Examples of adjustments are almost limitless – from changing an employee’s working arrangements to providing specialist equipment, or offering one-to-one support for employees with a disability,” adds Beckett.

Meeting the legal requirements of the Equality Act can also have business benefits, such as avoiding legal costs. “Understanding the act helps protect businesses from potential claims for failure to uphold their statutory obligations, which can lead to costly legal proceedings,” says Beckett. “The financial and reputational impacts of these claims are more significantly felt by smaller businesses with less available time and resources to commit to handling them.”

Positive action on equality can also result in greater profitability. Removing stigma, bias and negative working conditions can improve staff performance.

“Where a business promotes individual rights and provides a safe environment, there will be more positive outcomes for all employees. Committed, engaged staff tend to be more motivated, providing better performance outcomes, including, but not limited to, productivity and innovation,” says Beckett. “In an inclusive and diverse workforce where employees feel valued, they are far more likely to share their views, experiences and insights, which is beneficial for a company looking to cater to a more diverse customer base.”

By extension, proactive workplace policies that promote people’s rights to an inclusive working environment will help SMEs attract and retain the best talent.

“The principles outlined in the Equality Act are relevant at all stages of the employee life cycle, from recruitment practices to determining pay and benefits, implementing training, and opportunities for development,” says Beckett. “By understanding these principles, businesses benefit from engaged and motivated employees and applicants who are selected for opportunities fairly, based on skill, experience and potential. This goes a long way in establishing a reputation as an attractive employer.”

With environmental, social and governance (ESG) issues coming under greater public scrutiny, transparently promoting equality can help bolster a business’s reputation both in the local community and the wider marketplace.

“A business known for not safeguarding human rights runs the risk of damaging its reputation with negative publicity, potentially hitting sales performance or damaging relationships with stakeholders,” warns Beckett. “This may limit the ability to develop or upscale the business into the wider marketplace or break into more diverse markets.”

The UK’s only independent, large-scale manufacturer of work surfaces, Worktop Fabrications offers its 72 employees ongoing equality training and support to help create a professional environment where everyone can thrive.

“All small businesses need to know the different kinds of discrimination there could be in the workplace, and to understand the legal obligations relating to the Equality Act,” says HR and personnel manager, Alison Green. “Worktop Fabrications has completed practical case studies to increase our knowledge, and learnt the benefits of a more diverse workforce. I’ve been on Mentor courses regarding discrimination and undertaken e-learning modules, which have been extremely helpful in becoming familiar with the nine protected characteristics.

“We’ve provided training to our employees through courses and online portals, and we sent out memos to all employees stating that Worktop Fabrications has zero tolerance on any kind of discrimination. This memo is also part of our new starter pack.

“Mentor’s professional advice has changed the way Worktop Fabrications works regarding all discrimination within the workplace, and highlighted how essential the correct disciplinary procedures are. Its support is a lifeline for all HR managers, especially in learning what is acceptable and what isn’t.

“I know from speaking to colleagues that all of our employees are now more respectful of others – and it has become clear that different characteristics are a good thing, and are to be respected rather than feared.”