The Equality Act came into force yesterday. It strengthens anti-discrimination law and will make it easier for members of specified groups to win claims for discrimination, harassment and unfair dismissal. As such, the Act represents a further attack on the property rights of business owners, as well as a significant imposition in terms of the additional costs of legal advice, tribunals and so on.
This type of employment legislation also means that underproductive employees will be retained rather than replaced by more productive workers. The Act will make it even more costly to dismiss members of groups that have effectively been given special legal privileges by the government. The regulatory burden is likely to be disproportionately heavy on small businesses that lack specialist human resources and legal departments.
In the long term, the legislation may well prove to be counterproductive. The risk of costly future legal action may encourage employers to find surreptitious ways of discriminating against members of privileged groups during the recruitment process.
However, perhaps more worrying than the negative economic impact of this legislation is the message it sends about the coalition’s attitude to enterprise. The imposition of significant new costs on firms suggests that, despite some encouraging rhetoric, this government isn’t serious about deregulation.
The sad thing about this particular legislation is that it is completely unnecessary. For example, this recent IEA publication showed that inequality of pay has little if anything to do with discrimination. Attempts to deal with inequality in this way just reduce the range of opportunities available to those groups that are considered disadvantaged.