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New EU proposals for women on Boards contains positive disadvantages

Inevitably in diversity discussions, the topic of women on Boards or in other senior leadership positions will come up. Quite right too. Despite some progress in this area (the proportion of women on the Boards of the largest listed companies across the EU more than doubled from 10% in 2005 to 22% in 2015), it has generally been slow and there is still a long way to go.

Last week the EU Commissioner for Justice and Gender Equality, Vĕra Jourová, published legislative proposals to redress the gender pay gap in Member States’ businesses through a push to increase the number of women on company Boards. Under these proposals, companies whose non-executive Boards are more than 60% male would be required to “prioritise” women when candidates of “equal merit” are being considering for a position. Previous similar attempts by the EU to set targets for women on boards have been blocked by countries such as Germany, the Netherlands and Sweden as they fear Brussels intervening too much in domestic affairs. The UK already has legislation allowing (NB, not requiring) positive discrimination on recruitment and promotion where there is a material gender imbalance, but it is very little used. This is because of the difficulty in determining what constitutes “equal merit”, especially at Board level, and because the cost of failing to show that to be the case is a decision which is blatantly and unarguably discriminatory against the man. We will need to see what is meant in this context by “prioritise”, but it is hard to see how it will not be vulnerable to the same sort of practical and legal problems the UK rules have already experienced.

The EU’s proposals come just a few months after the UK Government published its own supposedly “world-leading” corporate governance reforms. We have previously commented on these here so I won’t dwell on them too much here. As with Theresa May’s description of the UK proposals, some of Vĕra Jourová’s comments seem a little, well, unevidenced. For example, “Women have a very good talent for long-term, sensible spending [and] for crisis-solving because they can come up with proposals for negotiation and compromise”, and the not remotely stereotypical “it is a necessary balance to the approach of men: attack and escape”.

This quota for Boards is the first of a series of legislative proposals to improve diversity and pay equality in the EU workplace. Another proposal that has been suggested by Ms Jourová is legislation to force listed companies to publish gender-specific statistics on pay. Sound familiar? We should stress however that the UK and EU’s recent proposals, on this subject are just that, proposals. We will have to wait and see which are eventually implemented into national and EU law. In the meantime, here are a few things UK employers can think about:

  • If your organisation is required, or is volunteering, to publish a Gender Pay Gap report, a gentle reminder that the reporting deadline is 4 April 2018.

  • Whether you are publishing a report or not, if you have workplace initiatives to combat gender pay differentials or improve diversity in the workplace, make sure these are achievable and measureable.

  • Including a narrative explaining these measures in any Gender Pay Gap report is only going to look good if they are genuine and followed through.

  • When recruiting for senior or Board level positions, consider the split of male and female candidates short-listed for these roles. If you use external recruiters, work with them on this. But beware of requiring agencies to provide you with 50/50 split shortlists or rewarding them if they do, since this may encourage them to put people forward on grounds of gender and not necessarily merit. However well-intentioned, that is unlawful discrimination.

  • Consider training sessions for all employees on unconscious bias and inclusive leadership. If employees at all levels in your organisation understand these principles, it may help build them into the workplace culture.

Content Writer: Imogen West

© Copyright 2017 Squire Patton Boggs (US) LLP

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