The law could prevent employers from preferring female board members

In a report published recently, senior HR executive Charlotte Sweeney recommended that the Equalities and Human Rights Commission (EHRC) should draw up guidance on when and how ‘women-only shortlists’ could be used as an appropriate means to redress the gender imbalance on company boards.

Sweeney, who has considerable experience in diversity issues, was commissioned by the government last autumn to conduct an independent review of the voluntary Code of Conduct drawn up by the executive search industry in 2011to encourage gender diversity on the boards of UK listed companies.  

Law

Guidance has been recommended on this issue because it is an area fraught with legal difficulties because all-women shortlists require candidate selection to be made on the basis of gender. On the face of it, this would directly contravene fundamental principles of EU law prohibiting sex discrimination, as well as the UK’s domestic legislation in the form of the Equality Act 2010.

Positive action

There is, however, an exception in EU law which allows derogation (exemption) from the principle of non-discrimination if the action is being taken with a view to ensuring full equality in practice between the sexes. Measures providing specific advantages to men or women are allowed if they make it easier for the under-represented sex to ‘pursue vocational activity or to prevent or compensate for disadvantages in professional careers’. This exception is reflected in the Equality Act 2010 (section 159), which permits proportionate ‘positive action’ in recruitment if it is being taken to tackle underrepresentation, and provided the woman (or man) is ‘as qualified as’ a candidate of the opposite sex for the post. 

Case law

Although the Equality Act exception appears quite broad, our UK law has to be interpreted in a way that gives effect to EU law. The problem with this is it is not exactly clear what is, and is not, permitted by EU law. There has been some case law from the Court of Justice of the European Union on the question of positive action, and from those cases we can glean some general principles. The decisions suggest that women-only shortlists will only be lawful if all potential candidates (male and female) are objectively assessed on their merits before compiling the shortlist by reference to the requirements of the post and taking into account the candidates’ personal circumstances.

Assessment

It is questionable whether it is possible to perform that kind of assessment without interviewing a candidate first, in which case the short list could only be compiled quite a long way into the recruitment process. Furthermore, an all-women shortlist would only be permissable if, after performing that assessment, all of the women shortlisted are found to be at least as qualified as all of the male candidates. For that reason, employers would not be able to decide at the outset that they would definitely be able to have an all-women shortlist, any more than they could decide at the outset that they would recruit a woman to a vacant post.

Proportionate

An all-women shortlist would also have to be a proportionate way of tackling under-representation: if there was a less-discriminatory but equally effective way of tackling under-representation then this legal test is unlikely to be satisfied.

As Sweeney herself put it “this is a confusing minefield for both search firms and corporates”.  Guidance from the EHRC would certainly be helpful, but it is clear that any support of all-women shortlists would have to be heavily qualified.

Audrey Williams is a partner and head of discrimination law at Eversheds

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