New law will ban religious or sexual discrimination

New legislation banning workplace discrimination because of religion and sexuality would save businesses up to £32m a year, the Government will declare today.

Barbara Roche, minister for Social Inclusion, will lay before Parliament regulations making it an offence, for the first time, for an employer to act prejudicially against Muslims. In an effort to comply with EU directives, the regulations will also outlaw any harassment or discrimination at work against gay men and lesbians.

Both moves will come into force from December as part of a wider equalities package being introduced to improve the position of minorities. Separate legislation outlawing age discrimination will come into force from 2006.

Mrs Roche told The Independent there was evidence that combating workplace discrimination would improve economic performance. Figures compiled by the Office of the Deputy Prime Minister show that although there would be a one-off cost of £52m to firms of implementing the legislation, the cash would be recouped within two years in efficiency gains. The recurring net benefits are estimated at £26m to £32m a year as companies attract the best candidates for jobs. Research by the TUC found that 44 per cent of gay and lesbian workers had been subjected to discrimination, including malicious behaviour and death threats.

Mrs Roche said she often reflected on the speed at which attitudes had changed. "Most accept quite readily, now, that some people have a different sexual orientation to their own," she said. "And yet I still hear about the way in which gay workers have been subjected to intimidating, hostile or degrading treatment at work. Some tell a story of insidious behaviour: being frozen out of information necessary for the job, or consistently facing unmanageable deadlines over a long period."

Case law forbids workplace discrimination against Jews and Sikhs, and the legislation extends similar protection to Muslims. Mrs Roche said there was evidence of Islamophobia since 11 September. She added: "Social justice is one of the driving forces behind new legislation this week. But economic success provides just as powerful a rationale. If we're to have a real debate about equality in Britain, it's essential to recognise one can't be separated from the other."