Inclusive corporate culture: Challenges of introducing diversity policies

Promoting diversity is a strategic step in the current employment market that can benefit companies and employees in equal measure. Diversity creates an inclusive corporate culture, favours the development of new markets, increases attractiveness and creates new perspectives in the company. A general policy that addresses many different aspects of diversity is conceivable, as are policies that emphasise specific topics.

 

Do companies have to introduce a diversity policy?

In principle, there’s no obligation to introduce a diversity policy. An exception applies in the banking sector. For financial institutions, a diversity policy is a mandatory component of a proper business organisation. Listed stock corporations classified as large corporations in accordance with Section 267 (3) of the Commercial Code (Handelsgesetzbuch – HGB) and listed large limited partnerships based on shares have to include a description of their diversity concept in their corporate governance statement in accordance with Section 289f (2) no. 6 HGB.

 

Non-discriminatory diversity policy

If companies introduce diversity policies, they have to make sure the provisions of the diversity policy itself are non-discriminatory. Although diversity policies serve to promote and protect diversity, measures in favour of individual groups of people can constitute direct or indirect discrimination against other groups of people. For example, quota regulations can violate the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG) if they’re not considered to be a positive measure in accordance with Section 5 AGG.

Positive measures have to be suitable and appropriate to compensate for existing disadvantages. Businesses should always examine whether these requirements have been met with regard to individual measures on a case-by-case basis. If they violate the AGG, employers could face claims for damages and compensation by those affected.

 

Applicability of the Whistleblower Protection Act (Hinweisgeberschutzgesetz – HinSchG)/Complaints Office

If employees violate the provisions of a diversity policy, differentiation is required. If the offence also violates the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG), the person concerned can make a complaint to the complaints office in accordance with Sections 84 and 85 AGG.

Whether the Whistleblower Protection Act also applies depends on whether the violation is subject to criminal prosecution or a fine (see Section 2 (1) nos. 1 and 2 HinSchG). For example, behaviour relevant under criminal law, such as insults, would be conceivable. A violation of the AGG alone does not automatically lead to the applicability of the HinSchG, as the AGG doesn’t provide for sanctions that are punishable by criminal penalties or fines. But if the Whistleblower Protection Act applies, third parties can also report violations, for example other employees who are not themselves affected. The AGG doesn’t provide for the possibility of reporting for third parties.

 

Co-determination of the works council

In connection with implementing diversity policies, companies also have to take into account the works council’s existing co-determination rights. Depending on the content of the policy, different co-determination rights come into consideration, for example co-determination with regard to regulations on the organisation of the company and the behaviour of employees in the company in accordance with Section 87 (1) no. 1 BetrVG.

With regard to questions of work organisation, there would be co-determination in accordance with Section 90 BetrVG and if the diversity policy includes training or further training measures, this could also be co-determined in accordance with Section 98 BetrVG.

If the implementation of measures is also tracked with IT support, this may trigger co-determination in accordance with Section 87 (1) no. 6 BetrVG. If the diversity policy also has an influence on personnel measures, co-determination pursuant to Section 99 BetrVG may also be considered. So companies should always examine any co-determination rights of the works council on a case-by-case basis based on the intended content of the respective diversity policy.

 

Practical tips

Diversity policies strengthen the company in the market. They improve transparency and the protection of employees. And ideally they also increase the acceptance of diversity in companies.

When introducing diversity policies, businesses have to consider a number of legal areas of tension, in particular the works council’s co-determination rights and avoiding discrimination. Companies have to examine their individual circumstances to avoid being liable to pay compensation and damages to employees.