Diversity Monitoring Projects: Navigating data protection in an employment context

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Diversity Monitoring Projects: Navigating data protection in an employment context

Published 7 March 2022

A number of our clients have recently been asking for advice about how to carry out workforce diversity monitoring, often on a global basis. We’ve set out below the reasons for this increased focus on diversity monitoring, and tips to be aware of if you are considering carrying out such a project.


Global businesses have renewed their interest in diversity monitoring not least because of:

  • The external pressure of movements like #Me Too and Black Lives Matter.
  • Continued political focus on diversity (such as the report last year by the Commission on Race and Ethnic Disparities as well as the Government’s renewed focus on disability inclusion with its consultation on possible disability pay gap reporting).
  • The fact diversity is an important strand of the emerging environmental, social and governance (ESG) agenda.
  • The potential for wider mandatory diversity pay gap reporting in the UK (notably the potential expansion to include ethnicity and disability, as well as gender).
  • The increasing focus on ED&I in Financial Services. The FCA, PRA, and Bank of England (BoE) published a joint discussion paper (DP21/2) in July 2021, setting out policy options to improve D&I in financial services, and the Financial Services Culture Board (FSCB) and the Financial Services Skills Commission (FSSC)’s recently reported on piloting a common approach to measuring inclusion across the UK financial services sector.

It also remains the case that 50 years on from the first equality legislation in the UK, under-representation of certain groups remains.  Employers want to understand the makeup of their organisation and use that diversity data to bring about change.


Understanding data protection in an employment law context is the key to success of diversity monitoring projects, together with careful planning.  In the UK,  the General Data Protection Regulation 2018 (UK GDPR) and the Equality Act 2010 need to be considered in parallel.

Apart from an understanding of the legal parameters, identifying the aim(s) for the project before embarking on any action is essential: there is little point in starting a diversity monitoring project if the information gleaned will not be used and acted upon.  Indeed, the organisation may put itself at more risk from an ED&I perspective by creating open documents which could be used to support a claim of discrimination in employment tribunal litigation.

Some key questions to ask at the planning stage are:

  • Why is the data being collected and what will it be used for?
  • What individuals will be covered (All current employees or just the Board and/or senior management? How about candidates for recruitment?)
  • How will the data be collected (On an identified or anonymous basis? If identified, who will have access to the identified data?)
  • What IT infrastructure will be used?
  • Which protected characteristics will be covered?
  • What jurisdictions will be involved?
  • What questions will candidates/employees be asked?
  • In what format will the data be reported (in an aggregated anonymised format or on an identifiable basis)?
  • Will data be transferred to third parties e.g. to be aggregated with data from third party run engagement surveys?

In order to ensure compliance with the UK GDPR, the candidate or employee will need to be given a choice over providing their personal data (both at the point of choosing to complete any survey and when they answer each question about personal data through a prefer not to say option). The consequence of this is that without reassurances regarding how the data will be used employers may get a limited response.  How to win the hearts and minds of the workforce to part with their data, through a persuasive communication campaign pointing out the benefits of the organisation having access to this information, also therefore needs to be considered carefully.  Senior sponsorship of the initiative is essential.

Another challenge is that it can be difficult to take a fully consistent global or pan-European approach as local data protection laws vary in respect of the collection and use of personal data.  There are also cultural issues to consider to ensure that questions, which can be asked lawfully, do not create unease among the workforce from a cultural perspective.  For instance, in Germany questions about race and religion are particularly sensitive given their history.  Once the legal position is clear, the questions need to be carefully crafted for each jurisdiction to ensure that any a cultural nuances are reflected in the questions, and to manage expectations in terms of how much data might be provided.

Once a plan is in place, a number of documents will need to be created to ensure legal compliance with both the UK GDPR and relevant equality legislation. This will include updating privacy notices and Data Protection Impact Assessments.

Having collected and analysed the personal data organisations can then consider what steps might be taken to address any under-representation. This is also a complicated exercise: in the UK only limited forms of positive action are lawful; stepping into positive discrimination is unlawful. The fine line between the two concepts is relatively untested.  Again, it can be difficult to take a global or pan-European approach as local laws vary regarding positive action and discrimination. However, we have plenty of experience guiding clients through these difficult legal issues so they can achieve their aims.

If you’d like more information about carrying out diversity monitoring please ask Khurram Shamsee, Ceri Fuller, Beth Harris, or your usual DAC Beachcroft contact.


Zoë Wigan

Zoë Wigan

London - Walbrook

+44 (0)20 7894 6564

Hilary Larter

Hilary Larter


+44 (0)113 251 4710

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

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