EHRC publishes guidance on improving the representation of women on boards
The EHRC’s guidance
The guidance is aimed at companies, search firms and recruitment agencies. It sets out a number of measures that can be taken to improve the number of women on boards, including:
· Setting aspirational targets for increasing female board representation within a particular timescale
· Reserving places for women on training courses in board leadership
· Offering opportunities for women to shadow existing board members and/or observe board proceedings
· Placing advertisements where women are likely to read them, and encouraging a pipeline of applicants
· Targeting networking opportunities for women and
· Providing mentoring and sponsor programmes to assist in the development of female talent.
The guidance also contains short discussions of some of the legal aspects around driving more female appointments at board level, including on the Equality Act 2010, the liability of company and their agents, relevant EU law and “tie break” provisions in relation to board appointments. (Whilst tie-break provisions do exist to address under-representation where candidates are judged to be of “equal merit”, businesses should be extremely wary of relying on them without rigorous scrutiny of whether they meet the challenging criteria for doing so.)
Unlawfulness of women-only shortlists
The EHRC guidance confirms that using women-only shortlists in order to increase gender representation on boards is unlawful under equality law. As the guidance says:
· “Appointments to boards must be made on merit, demonstrated through fair and transparent criteria and procedures.
· In general, it constitutes unlawful sex discrimination to select a person for a role because of their gender. The law does not permit positive discrimination when making an appointment or a promotion.
· However, the law provides scope for companies to address any disadvantage or disproportionately low participation on boards by enabling or encouraging applications from a particular gender, provided selection is made on merit.”
David Cubitt, leader of Osborne Clarke’s national Employment Law Team, comments:
“The EHRC’s confirmation that women-only shortlists are unlawful is both unsurprising and also a welcome contribution in the debate over how to increase the number of women on listed company boards. The idea of using women-only shortlists has generally not been popular in the UK, although it has stronger supporters in other EU jurisdictions. The EHRC guidance will instead focus attention on the practical and more immediate steps that boards and their advisers can take to increase senior female representation in our largest companies.
Many companies have already put in place measures of the kind suggested by the EHRC, and this guidance will encourage more to do so – both in the corporate world and also amongst other constituencies such as professional services and the public sector.”
Inquiry into the recruitment and appointment practices of FTSE 350 companies
The EHRC also announced an inquiry into the recruitment and appointment practices of the top 350 listed companies at board level, in the context of equality law. The EHRC’s aim in conducting this inquiry “is to ensure fair, transparent and merit-based recruitment that leads to an improved representation of women on the boards of major companies” The main term of reference for the inquiry is to:
“Examine how FTSE 350 companies carry out recruitment and make decisions on suitability for board director roles in light of the provisions of the Equality Act 2010 and the Financial Reporting Council’s Corporate Code of Governance (as amended September 2012).”
There will be no “naming and shaming” of organisations. The EHRC’s intention “is to use our evidence gathering to identify common challenges across all FTSE 350 companies, and make recommendations that result in improvements across all companies”.
The Commission intends to publish its findings and recommendations in Spring 2015.
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