The legal issues to consider when amending or withdrawing from diversity initiatives

• The risks of all-or-nothing withdrawals. Despite media coverage, it is important for organisations to note that the focus in the US is on DEI practices that have overstepped what is legally permitted in the US, not necessarily all DEI initiatives being considered unlawful. The same principle applies in the UK and whilst our legal framework for taking positive action in the UK is different to the US (more on this below), it is prescriptive and restrictive in nature and employers should consider carefully whether their existing DEI initiatives in fact fall within what is lawfully permitted. 

• The risks of traditional discrimination claims remain. As traditional discrimination claims (that is, those from minority groups) appear to far outweigh the number of positive or reverse discrimination claims we see coming before UK courts and tribunals, ending diversity initiatives may not help to reduce legal risk for employers in the long term. Ending or reducing DEI initiatives, which had previously been cited by an employer as a necessary step to foster a more diverse and inclusive workplace, could be cited as evidence in traditional discrimination claims to demonstrate a withdrawal of support for minority groups, making the defence of traditional discrimination claims harder. Workplace diversity initiatives and training can also help to avoid or mitigate traditional discrimination claims and potential conflict in the workplace. Without such measures, the risks of traditional discrimination claims may be heightened in the long-term. 
• Listed company disclosures and reporting obligations. Listed companies in the UK are required to report in relation to diversity values, strategies and practices. Whilst some companies may wish to consider changing how they report on diversity in light of the current landscape, regulators may be interested to understand a change in approach from previous reporting rounds and whether this is due to a change in policy or practice (which may need to be disclosed), or other factors. 
• UK legal obligations. Employers may be under certain legal obligations to take steps to prevent discrimination or harassment from arising in the workplace. For example, in October 2024, the UK introduced a new proactive duty on employers to take steps to prevent sexual harassment from happening in the workplace. Ending or retreating from certain DEI initiatives could impact an employer’s ability to meet these obligations. 
• Regulatory expectations. Organisations that are considering a change in position on DEI should consider whether doing so could expose them to regulatory scrutiny in light of evolving regulatory obligations and expectations on DEI and workplace culture. For example, the UK financial services regulators have recently made clear that diversity and inclusion are core aspects of workplace culture and part of a firm’s overall risk management and governance framework and are considering wide-ranging proposals to boost diversity and inclusion across the sector. Whilst the status of those proposals is on hold (read more about the proposals here), we expect to hear more from the regulators in due course. Withdrawing or terminating DEI initiatives in the meantime could potentially leave firms exposed to future regulatory enforcement action or supervision. 
• The risk of marginalising particular groups with protected characteristics. If companies are cherry-picking DEI initiatives to withdraw or terminate, it could risk marginalising particular groups and expose employers to claims of direct or indirect discrimination. Any withdrawals from, or amendments to, DEI initiatives should be even-handed across all groups and considered carefully to ensure they do not indirectly target or subject persons with a particular protected characteristic to less favourable treatment than others. 
• Transgender rights. Whilst the US has issued an Executive Order declaring that the US will only recognise two binary, biological, and immutable sexes: male and female, the UK explicitly protects trans people from discrimination in the Equality Act as ‘gender reassignment’ is a protected characteristic. Employers should therefore be cautious when amending any existing diversity initiatives in the UK due to changes in US law which do not reflect the UK legal framework. Employers should also be mindful of employees’ rights to hold and manifest a protected belief in the workplace when considering any change in policy, practice or support for certain groups (read more about managing conflicting beliefs in the workplace here). 
• Consider local law frameworks. Businesses should be careful not to equate affirmative action in the US with the UK framework for taking positive action. Whilst the two regimes are similar, there are many differences in terms of legislative framework, scope and proportionality, market practice and enforcement. The same principle applies for any company looking to amend their global DEI initiatives as they should consider local law frameworks and regulatory requirements. 
• Consider privileged audits of DEI measures. In light of the evolving landscape and heightened risk of challenge, organisations that wish to review their current DEI initiatives may consider doing so as part of a legally privileged audit to understand and assess any areas of legal risk and to mitigate the risk of challenge (whether in the form of traditional or positive discrimination) and reputational harm.  
• The importance of comms and the risk of inauthenticity. Whilst not a legal risk per se, organisations and their leaders who publicly retreat from DEI commitments at this stage risk being considered inauthentic as their statements are compared with previous public displays of commitment towards DEI, particularly in the recent past following societal movements such as MeToo and Black Lives Matter, or in corporate literature covering DEI issues. 

What next?