Ethics in HR (AQA A Level Business): Revision Note

Codes of conduct

• A code of conduct is a formal document that sets out the standards of behaviour expected of all employees within an organisation

Purpose and value of a code of conduct

A code of conduct sets out clear expectations

• Employees understand what is and is not acceptable behaviour in the workplace

• This reduces confusion and the risk of misconduct

It protects employees and stakeholders

• By defining standards of professional behaviour, a code of conduct helps create a safe, respectful environment for everyone

It provides a basis for disciplinary action

• If an employee breaks the code, the business has a clear standard against which behaviour can be measured

It builds trust with employees, customers and investors

• A business with a visible, credible code of conduct shows that it takes ethical standards seriously

Meets legal obligations

• A well-designed code of conduct helps ensure the business meets its obligations under employment law, data protection regulations and health and safety legislation

It improves consistency

• All employees are held to the same standards regardless of seniority

• This reduces the risk of favouritism or double standards

An example code of conduct

• Most large businesses publish a corporate code of conduct covering areas such as anti-bribery, conflicts of interest, data handling and treatment of colleagues

Equality, diversity, inclusion and belonging

Key terms

Protected characteristics under the Equality Act 2010

• The Equality Act 2010 makes it unlawful to discriminate against employees on the basis of nine protected characteristics

  • Age

  • Disability

  • Gender reassignment

  • Marriage and civil partnership

  • Pregnancy and maternity

  • Race

  • Religion or belief

  • Sex

  • Sexual orientation

Key ethical issues

Direct discrimination

• Treating an employee less favourably because of a protected characteristic

  • It is both illegal and regarded as morally unacceptable

Example

A sales manager informs a member of her team that she will not be considered for an upcoming promotion because she is pregnant and is "unlikely to be fully committed to the role."

The decision is based entirely on her pregnancy rather than her performance or qualifications

Indirect discrimination

• Applying a policy or practice that disadvantages people with a protected characteristic, even if unintentionally

Example

A logistics company introduces a policy requiring all employees to be available to work every Saturday.

While the policy applies equally to everyone, it indirectly disadvantages Jewish employees, for whom Saturday is the Sabbath — a protected religious observance

Unless the business can fully justify the requirement, this is indirect discrimination

Unconscious bias

• Making decisions influenced by stereotypes without being aware of it

• It can affect recruitment, promotion and pay decisions even where no deliberate discrimination is intended

Example

Research into professional orchestra auditions found that when a screen was introduced to hide the identity of musicians during the selection process, the proportion of women chosen increased significantly

The same musicians who had previously been rejected were selected when interviewers could not see who was playing

Source: Goldin, C. and Rouse, C. (2000) — "Orchestrating Impartiality: The Impact of 'Blind' Auditions on Female Musicians", published in the American Economic Review, Volume 90, Issue 4, pp. 715–741

The glass ceiling

• The invisible barrier that prevents women and employees from minority backgrounds from reaching senior positions, despite being qualified to do so

Example

Despite women making up around half of the UK workforce, they hold fewer than one in ten chief executive positions in FTSE 100 companies

The pattern is consistent across sectors — women are well represented at junior and middle management levels but face barriers to progression to the most senior roles

Source: Cranfield School of Management — Female FTSE Board Report

Tokenism

• Making superficial efforts to appear diverse without making genuine structural changes to create a fairer environment

  • E.g. Appointing one person from an under-represented group to a visible role

Example

A construction company facing criticism for its lack of diversity appoints one woman to its twelve-person board of directors and prominently features her in its annual report and marketing materials

However, the company makes no changes to its recruitment processes, pay structures or workplace culture

The appointment improves the business's public image without addressing the underlying barriers that prevent women from progressing within the organisation

Intersectionality

• The way multiple protected characteristics can combine to worsen disadvantage

  • E.g. A woman from an ethnic minority background may face greater barriers than someone who faces just one form of discrimination

Example

Research by the Trades Union Congress found that Black women in the UK earn significantly less on average than both white women and Black men — a gap that cannot be explained by either race or gender alone

The combination of two protected characteristics compounds the disadvantage each group faces individually

Source: TUC (2020) — "BME Women and Work"

Why this matters ethically

• A business has both a legal duty and a moral responsibility to treat all employees fairly

• Businesses that fail to address these issues risk damaging their reputation, losing talented staff and making decisions that suffer from a lack of diverse perspectives

• Genuine inclusion is not simply about avoiding discrimination

  • It is about actively creating conditions where all employees can perform at their best

Pay gaps

The gender pay gap

• The gender pay gap is the difference in average hourly earnings between male and female employees across an organisation

  • It is important to distinguish this from unequal pay

  • Paying men and women differently for the same work has been illegal in the UK since 1970

• The gender pay gap exists because of structural factors

  • Women are more likely than men to work in lower-paid sectors and roles

  • They are more likely than men to work part-time

  • They are more likely to take career breaks for caring responsibilities

• UK businesses with 250 or more employees are legally required to publish their gender pay gap data annually

  • This measure was introduced to increase transparency and encourage businesses to take action

Key ethical issues

• The gap often reflects wider inequalities in society that businesses alone cannot solve

  • E.g. women bearing a disproportionate share of caring responsibilities

  • This does not remove their ethical obligation to address what they can control

• Risk of pay gap washing

  • Businesses publishing data and setting targets without making genuine structural changes to recruitment, career progression opportunities or pay

The gap between senior managers and other employees

• The executive pay gap refers to the difference between the earnings of senior leaders and the average pay of the workforce

• UK public limited companies are required to report the chief executive's total pay as a ratio to the average pay of all employees

• In recent years, many large UK businesses have reported ratios of 50:1 or higher

  • This means the chief executive earns 50 or more times the salary of the typical employee

Key ethical issues

• Is very high executive pay justifiable when workers are paid at or near the minimum wage?

• Does executive pay truly reflect individual contributions, or have they become disconnected from senior leaders' performance?

• Do bonuses, which disproportionately benefit senior employees, widen inequality rather than reward genuine performance?

• The impact on employee morale

  • Large visible pay gaps can damage trust, reduce motivation and undermine the sense of fairness across a workforce