Employee-referral schemes and discrimination law

Employee-referral schemes (‘introduce a friend’) are in common usage in recruitment. They carry a potential to discriminate by perpetuating an already unbalanced workforce (say, by gender and ethnicity). With this, or course, comes the risk of litigation and bad publicity as well as any inherent inefficiencies associated with discrimination. This article is threefold. First, it examines the present state of the law. Second, it is based on a survey of employers who use these schemes. Third, it analyses the range of schemes (and any safeguards) found to be in use. The scrutiny showed that, where the business is small and/or the recruitment rate via the scheme is low, there is little risk of unlawful discrimination. But there is a risk. As the numbers involved increased, seemingly small disparities can become significant and thus vulnerable to litigation. It also found that, although a range of safeguards against discrimination were employed, none monitored the existing racial/gender profiles involved, thus exposing the schemes to potential litigation. The key safeguard is relatively inexpensive monitoring of the protected characteristics (gender, ethnicity etc.) of the workforce, the relevant labour market, the pool of applicants, and the recruitment rate (via the scheme). This will highlight any patterns and suggestions of discrimination and will help identify the cause(s).