Public bodies will have to undertake a root-and-branch review of employment policies after the biggest change to race laws in a quarter of a century.
Home Secretary Jack Straw said public-sector employers will have a legal duty to promote race equality. Exemptions for some bodies, including the police, Immigration Service, Civil Service and the Prison Service, from laws against indirect race discrimination will also end.
Ethnic minority staff adversely affected by policies in these sectors will now have the same right as all employees to take tribunal action. Penalties will be in line with existing racism cases.
The Race Relations (Amendment) Bill will force the public sector to step up ethnic monitoring and push equality into mainstream policy-making.
Recruitment, pay and appraisal systems, promotion, career development and training will come under the microscope.
Straw said he wants public bodies to take a lead in ending race discrimination and has put the spotlight on the previously neglected area of indirect bias. He made no changes to the law banning private-sector firms from indirectly discriminating but the renewed emphasis on the issue will place greater pressure on them to improve employment practices.
Public-sector HR directors welcomed the law changes and said some bodies had neglected equality policies. "For some organisations it will just mean fine tuning; for others it will mean more fundamental change," said county personnel officer at Gloucestershire County Council Alwyn Rea.
Rita Sammons, president of local authority HR body Socpo, said the changes combined with the Best Value scheme would force all councils to improve ethnic monitoring. Francesca Okosi at Brent council said the private sector needs to follow suit.
Unions say they have no plans for a witch hunt in the public sector but warned that all employment policies would be scrutinised.
Sir Herman Ouseley, outgoing chairman of the Commission for Racial Equality, said the laws will be "a decisive step" towards setting standards on race issues.
By John Robinson