Last week, the UK government's Department for Business, Energy & Industrial Strategy (BEIS) announced plans to launch a five-year review aimed at monitoring women's representation in FTSE companies. This follows the government's previous Hampton-Alexander Review, which was very successful and saw a 50% increase in women on FTSE boards from 2015 to 2020.
Business Minister Paul Scully urged companies not to "take their foot off the gas" and to continue improving gender diversity in their senior leadership. However, despite such encouragement, it is important to remember the boundaries put in place by the law.
Back in 2017, the requirement for large employers to publish gender pay gap data led to many companies setting targets to address gender disparity in the workplace. It is understandable, and indeed encouraging, that the desire to be inclusive and promote a diverse workforce is now becoming a priority for many employers. However, in a desire to achieve those diversity goals, and perhaps even self-set "targets", employers must be careful not to inadvertently discriminate against another group.
In a recent Employment Tribunal decision, two senior directors succeeded in their claims for sex discrimination and victimisation after being made redundant. Shortly before the redundancy exercise, the employer had revealed a high gender pay gap of 44.7%. In a presentation at a conference following this publication, it had stated an intention to "obliterate" its reputation of promoting "white, British, privileged, straight men". Complaints were made about this presentation by the Claimants and others. The Claimants were subsequently selected for redundancy and alleged this was an act of direct sex discrimination by their employer in an attempt to address its gender pay gap.
While the Employment Tribunal accepted that the Respondent had pursued legitimate aims by trying to promote diversity in its workforce and to reduce its gender pay gap, it also found that the Respondent's reason for selecting the Claimants was their sex. It was also noted in the reasoning that a female director had been removed from the selection pool, and was therefore "protected" from redundancy, because she was female.
This case demonstrates that employers must avoid approaches to improving gender pay gap disparities and/or achieving diversity goals which are themselves discriminatory. Men cannot be sacked for being male or for having a detrimental effect on gender pay gap results. Positive action is only permissible in limited circumstances.
When can you take positive action?
In the UK, an employer can only assist protected groups that are disadvantaged or under-represented in a particular job in limited, prescribed situations. Two types of positive action are permissible: "general positive action" and "positive action in recruitment and promotion".
General positive action allows employers to make "reasonable adjustments" to meet the specific needs of those with a protected characteristic. This is subject to the caveat that any action taken must be proportionate. This does not permit favouring certain persons over others. For example, if an older employee was struggling to adapt to newer technology, the organisation could organise training specifically for that employee.
The second type of permissible positive action does enable employers to favour persons with a protected characteristic during the recruitment and promotion process. However, in order to do so, three conditions must be met: firstly, the person with the protected characteristic must be equally as qualified as the person over whom they are being favoured; secondly, the employer must not have a policy of treating such persons more favourably; and thirdly, favouring the individual must be a proportionate means of achieving a legitimate aim. That legitimate aim can be to increase diversity in the workforce.
Tribunals will not excuse discrimination, even in the name of diversity. Setting targets for diversity in gender and representation is commendable, but the steps to achieve those aims must remain proportionate with that goal and not inadvertently discriminate against another group. While positive action can be used, it must be exercised within the limits set out above.