Introduction

President Trump has, to say the least, had a busy start to his second term, and diversity, equity and inclusion (DEI) has been a particular focus. DEI policies are typically designed to promote the fair treatment of all individuals, whilst also addressing inequalities faced by groups that have historically been underrepresented or discriminated against. Several high-profile organisations have rolled back their commitments to DEI in response to President Trump’s agenda. Other companies have specifically dropped the ‘diversity’ element, including Bank of America and Paramount who both scrapped diversity targets from their hiring practices. It is, however, important to understand the differences between UK and US law and what the implications might be for UK companies that choose to change their DEI policies.

President Trump’s Executive Orders

President Trump has signed two executive orders targeting what he describes as ‘radical and wasteful’ DEI programmes, both within government and the private sector:

• Ending Radical and Wasteful Government DEI Programs and Preferencing; and
• Ending Illegal Discrimination and Restoring Merit-Based Opportunity.

The first executive order applies to the Federal Government and mandates the elimination of all DEI roles, ‘equity’ plans, and DEI-related performance requirements. The second executive order revokes a directive originally issued by President Johnson in 1965, which requires federal contractors to implement affirmative action plans to address underrepresentation. In addition to this, organisations receiving federal funding will now be required to confirm that they do not operate any illegal DEI policies.

US vs UK employment law

In the US, the law permits affirmative action. This is a policy approach originally intended to address historic discrimination and promote equal opportunities in employment. Affirmative action measures can include hiring quotas, the provision of financial support, or other targeted interventions aimed at increasing representation from underrepresented groups.

By contrast, affirmative action policies would not be lawful under UK employment law. For example, mandatory quotas based on characteristics such as race or gender would constitute positive discrimination, which is prohibited under the Equality Act.

The UK does, however, allow for some positive action. This is a limited exception to the general principle that individuals with protected characteristics should not be treated differently, even if the treatment is favourable. Positive action permits employers to provide additional support to individuals who share a protected characteristic (such as race, sex or disability) where they experience disadvantage, have different needs, or are underrepresented in a particular activity or workforce.

The aim of positive action is to ‘level the playing field’. This may include initiatives such as leadership schemes aimed at helping an underrepresented group progress to more senior positions or tailored training for a group because they have specific requirements.

There is also limited permitted positive action in recruitment or promotion. This involves actions that reduce disadvantage when it comes to deciding equally qualified candidates. For example, choosing to hire one equally qualified candidate over another because they belong to a group that is underrepresented within the organisation. Importantly, even these limited forms of positive action are voluntary.

What has been the response?

Since the beginning of President Trump’s second administration, analysis by Bloomberg News suggests that around 20% of companies in the S&P 100 have scaled back their DEI commitments. Several high-profile names including Amazon, Google and Meta have reverted on their previously strong support for DEI initiatives. Notably, not all companies are following suit as last month Apple urged its shareholders to vote against a proposal to remove its diversity policies.

The impact is not just being felt in the US however, as the US government has also sent letters to EU-based corporations, demanding compliance with the executive order banning DEI programmes. These letters state that the order applies to any organisation providing services to the US government, regardless of whether they are based within or outside the United States.

Even closer to home in the UK, international law firm White & Case (who have offices in London) were one of the 20 asked by a US federal agency to demonstrate that they were recruiting ‘lawfully’. The law firm confirmed last week that it was disbanding its diversity and inclusion function and replacing it with a new initiative which focuses on ‘professional skills training and engagement for all…non-partner lawyers and business services professionals’.

Lessons for employers

Some UK companies are likely already feeling pressure to reassess their DEI policies, weighing whether to reaffirm their commitment or scale back. However, any decisions should be carefully considered within the framework of UK law.

As outlined above, UK legislation does not permit affirmative action; such practices would likely constitute positive discrimination under the Equality Act 2010. As a result, UK DEI policies are less likely to fall foul of President Trump’s executive orders. In addition, the UK has longstanding legislation, consolidated in the Equality Act, protecting employees from being treated less favourably because they have a protected characteristic. As such, employers who step back from DEI initiatives, put in place in part to ensure compliance with these legislative obligations, risk facing discrimination claims and exposure to significant compensation awards, as awards in the Employment Tribunal are uncapped.

Going forward the Employment Rights Bill seeks to strengthen equality protections further, for example through the introduction of equality action plans, including gender pay gap action plans, for companies of a certain size.

Beyond legal and financial implications, there may be wider reputational and organisational consequences. Scaling back on diversity initiatives could damage employee trust and morale and may deter new talent, particularly if competitors continue to champion inclusive workplace policies.

For UK employers, the key takeaway is this: avoid knee jerk reactions. Instead, review DEI policies through the lens of UK legal obligations, organisational values, and long-term business goals. Now more than ever, a thoughtful, compliant, and values-driven approach to diversity, equality and inclusion is essential, both to navigate the shifting international climate and to retain the trust of employees, clients, and future talent.

For further information, or to discuss the issues raised within this case, please contact us to speak to a member of our Employment Team.