UK: Women on Boards - EHRC guidance on the limits of lawful positive action

In March 2014 Business Secretary Vince Cable was reported to back the use of women-only shortlists by headhunters searching for candidates to fill board positions.  At the same time a review of the Voluntary Code of Conduct for Executive Search firms was published recommending that the Equalities and Human Rights Commission should create guidance on the legality of women-only shortlists for the executive search sector.  That guidance has been published today and is available here. 

The guidance discusses the legal framework and notes that:

• both companies and the headhunters they engage may be liable for discriminatory acts carried out in the recruitment process; 
• there is likely to be indirect discrimination if a company uses only informal recruitment methods such as word of mouth and personal recommendation (given these tend to perpetuate recruitment of individuals of the same profile), or confines the search for candidates to those already in such roles, where women are under-represented;
• it should be relatively straightforward to justify taking some general positive action steps (such as the use of targets, reserved places on training, mentoring programmes etc) once a company has established gender under-representation at board level in the company or sector, provided the steps taken are proportionate;
• the law only permits employers to prefer the under-represented gender when choosing between candidates of equal merit (as a tie -break provision), and there is unlikely to be sufficient evidence of equality of merit at the longlisting and shortlisting stages.  The guidance states that the EHRC "does not believe it is lawful to address under-representation by longlisting or shortlisting only female candidates to the detriment of male candidates".  It is also not lawful to adopt artificially low thresholds for criteria to allow more candidates into a tie-break position; 
• companies should obtain and consider up to date information indicating the scale of under-representation, what other action has been taken to address it and what progress has been made, before deciding to use the tie-break provision.

See our previous blog item on the March review for a discussion of lawful steps companies can take.

The EHRC has also launched a GB-wide inquiry into the recruitment and appointment practices of the top 350 listed companies at board level. The aim is to identify recruitment practices which make a difference and deliver open, fair and merit based appointments. This inquiry builds on a previous EHRC report, which found that the appointment of women to FTSE 350-listed non-executive director roles is being held back by selection processes which favour candidates with similar characteristics to existing largely male board members. The findings of the inquiry are due to be published in spring 2015 and used to produce best practice guidance.