What is it?
Adverse impact, sometimes referred to as indirect discrimination, occurs when an ostensibly neutral employment policy or practice disproportionately affects individuals from a protected group (e.g., race, gender, age, or disability) negatively, even if unintentional. This can result in unequal opportunities or outcomes. Adverse impact is often identified through statistical methods, examining if specific groups are disproportionately affected by hiring, promotion, or other employment practices.
Why is it important?
- Legal Compliance: Adverse impact is a crucial aspect of employment law in Australia. Employers must ensure that recruitment, promotion, and employment policies comply with the Fair Work Act 2009 and anti-discrimination laws, such as the Racial Discrimination Act 1975 and Sex Discrimination Act 1984.
- Fairness and Diversity: Addressing adverse impact promotes fair treatment, supporting diversity and inclusion within the workplace.
- Risk Management: Failing to address adverse impact can lead to complaints, penalties, or legal action from the Australian Human Rights Commission or Fair Work Ombudsman.
- Reputation Management: Organisations that proactively address adverse impact are viewed as inclusive employers, aiding in talent attraction and retention.
- Workplace Equity: Identifying and mitigating adverse impact helps create a more equitable work environment by adjusting policies that may unintentionally disadvantage certain groups.
