Equalities minister Harriet Harman was recently criticised for suggesting that the Equality Bill could be used to appoint more women to senior positions in the City. Alex Denny and Christabel Oh discuss the issues concerning ‘positive action’, one of the new measures contained in the Bill.
The Equality Bill has been hailed as an important move in the harmonisation of discrimination law and the promotion of equality. It will also create significant changes in this area, which include broadening the scope of permitted positive action in favour of under-represented or disadvantaged groups.
The controversy
Equalities minister Harriet Harman has denounced the financial industry as a "breeding ground for discrimination and unfairness" after figures from the Equality and Human Rights Commission (EHRC) showed that women working in the City were being paid up to 60% less than their male counterparts. She has recently come under criticism for hinting that the government might use equality legislation to compel the appointment of more women to managerial positions in banks. This has stirred up much controversy and thrown a glaring spotlight on one particular new measure contained in the Equality Bill – that of ‘positive action’.
The law as it currently stands allows only a limited form of positive discrimination which is known as positive action. This allows an employer to take positive action to address the under-representation of a particular disadvantaged group of employees in the form of targeted support or training. The Equality Bill seeks to widen the scope of positive action in order to allow employers to favour candidates from under-represented groups (for example, women) when selecting between two equally-qualified candidates for recruitment or promotion. This would result in an extension of the scope of positive action into what would currently be unlawful positive discrimination.
Ms Harman’s comments have misinterpreted what the positive action provisions of the Equality Bill actually say, even prompting a response from the British Banker’s Association that while they "would be supportive if a woman was the best person for the job" they were "not in favour of positive discrimination".
The reality
The reality of the situation is that where there are two equally-qualified candidates, employers would be permitted, but not required, to take account of under-representation and could use these criteria to decide between them, provided that there is no automatic selection of under-represented groups. The aim of the extended positive action provision is to give employers greater freedom to select candidates from under-represented groups in certain circumstances. The employer has the choice whether to exercise this provision and in doing so it must be able to demonstrate that (i) the chosen candidate is from an under-represented or disadvantaged group and (ii) they are not less qualified than any other applicant. Contrary to Ms Harman’s views, the government has made it clear that the new provisions will not permit employment quotas or positive discrimination, which it views as recruiting or promoting individuals who are less qualified than other candidates.
The impact
Even though the EHRC will be publishing guidance on the new positive action provisions which will illustrate the range of actions which employers will be permitted to take, the provisions as drafted in the Equality Bill are likely to create practical difficulties in terms of how they will be implemented. In particular, employers will have to grapple with the meaning of the term ‘qualified’ when choosing between candidates.
Employers usually consider a wide range of different factors such as level of experience, skills and other strengths and weaknesses when making decisions on recruitment or promotion. A candidate’s qualifications would only be one of many factors that an employer would take into account. Unless one candidate is clearly outstanding, an employer’s final decision will usually be based on subjectively weighing up different factors. If and when the Equality Bill becomes law, this could lead to an increase in employment tribunal claims from disappointed candidates claiming that they were better qualified than the chosen candidate and challenging the employer to prove the contrary. The voluntary nature of the positive action provisions would likely lead most private sector employers to sidestep positive action altogether.
Conclusion
To the extent that the Equality Bill serves to encourage women to play a bigger role in banking and financial institutions in the City, this can only be a good thing in an area which has historically been dominated by men. However, according to EHRC research, the reason for the alarming pay gap between men and women in the financial services sector stems from the lack of women working in head offices, a relative lack of qualifications and their continuing domination of lower status roles.
It would seem then that women are under-represented in the financial and banking industries because there are simply more male candidates than women at manager-director level. The positive action provisions in the Equality Bill can only serve to address and strengthen such inequality if men and women are truly equally represented in the financial services sector. At present, men still dominate and until the underlying causes for this are addressed, the value of the new positive action provisions will be of reduced significance.
Alex Denny is a partner and Christabel Oh is an associate at Faegre & Benson
