Business Necessity

Meaning & Definitions

A business necessity describes a legitimate and necessary criterion on which an employer’s actions must be based to achieve optimum results in his or her business operations. Workplace policies, job and contract requirements, and other employment-related decisions made by employers concerning employee safety, productivity, or compliance may be based on business necessity and limit an employer’s options regarding employees. Business necessity can refer to requirements that ensure employee performance and safety. 

Important features of Business Necessity

• Supports the authenticity of job descriptions and workplace policies.
• Encourages equitable decision-making regarding hiring or promotion.
• Protecting an organisation during audits, errors, or any legal actions.
• Facilitating policies are based on actual business needs.
• Preventing the inappropriate use of unreasonable HR-related decisions.

Compliance Requirements

It is important that business necessity be applied objectively and consistently.

The employer must:

• Provide evidence establishing an operational or safety requirement.
• Make employment decisions based on actual job-related performance.
• Avoid the use of indirect discriminatory practices or those that create an unfair impact.

If a business necessity is not used properly, it may create issues of compliance or fairness.