In brief

  • In March the government announced a refresh of the Equal Opportunity for Women in the Workplace Agency (EOWA) and its governing legislation.
  • This reform is in addition to the amendment by the ASX of its Corporate Governance Council Governance Principles and Recommendations (ASX Principles) announced last year and aimed at promoting diversity within Australian listed public companies.
  • The EOWA reforms and the ASX Principles are generally consistent.
  • However, there appears to be confusion about the substantive requirements of these measures.
  • Neither the EOWA reforms nor the ASX Principles require quotas for the representation of women in business, nor do they require businesses to engage 50% of women at all levels within an organisation.
  • Neither the EOWA reforms nor the ASX Principles mean that gender diversity is lawfully paramount to merit in the selection of candidates for particular roles.
  • An equal split of women and men at any level within an organisation is insufficient evidence of compliance with the EOWA reforms or the ASX Principles in respect of that level of employee.  

Introduction

On 9 March 2011 the Hon. Kate Ellis MP, Minister for the Status of Women, announced reforms to EOWA and the Equal Opportunity for Women in the Workplace legislation. While the detail of these reforms has not yet been released the Minister has indicated that it will require reporting of workplace gender composition by employers of over 100 employees from 2013. Non-compliance will disqualify organisations from government funding and eligibility for government work. The identity of non-compliant organisations will also be publicly disclosed.

From 30 June 2010 the ASX amended the ASX Principles relating to diversity in gender, age, ethnicity and cultural background within Australian listed public companies requiring policy disclosure in respect of board, executive and other employee recruitment and engagement and reporting against measurable objectives relating to the area.

Our recent experience with organisations seeking to understand and implement the recent changes in regulation shows that there are some strong misconceptions about the requirements of the rules.

Neither the EOWA reforms nor the ASX Principles require quotas for the representation of women in business or the compulsory appointment of women to 50% of roles at each level within an organisation. Further, the changes to regulation do not mean that anti-discrimination legislation can be ignored if recruiting or promoting women above men.

The EOWA reforms and the ASX Principles are generally consistent, with the EOWA reforms likely a subset of the relevant ASX Principles such that compliance by an organisation with the ASX Principles will likely mean that the EOWA reforms are also satisfied. On this basis we consider the likely additional compliance costs in respect of the EOWA reforms minimal.

WGEA requirements

The EOWA reforms (to the extent announced) may be summarised as follows:

  • EOWA will be renamed the Workplace Gender Equality Agency (WGEA).
  • Pay equity and caring responsibility held by men and women will be specifically recognised in the WGEA’s enabling legislation.
  • Employers (via their CEO) and employee representatives will be required to report online against gender inequality indicators including pay and flexible working arrangements. These reports are to be available to employees and shareholders.
  • The WGEA will be able to conduct workplace reviews to ensure reports are accurate.
  • Non-compliant organisations can be ‘named and shamed’ in Parliament and publicly.
  • WGEA will support and advise on an industry basis in respect of the achievement of gender equality.
  • Businesses will need a WGEA certificate of compliance in order to access government funding and be awarded government work.

There is no express requirement for the appointment of a certain percentage or equal numbers of women and men at all levels in an organisation in the EOWA reforms summarised above.

These requirements will apply to all Australian employers with over 100 employees from sometime in 2013.

ASX Principles

The relevant ASX Principles may be summarised as follows:

  • Companies should provide greater transparency around the selection of directors by reporting on skills matrices used for board composition, succession planning, diversity of directors, candidate identification and selection process.
  • Companies should have a policy (available on the company website and covered in its annual report) regarding gender, age, ethnicity and cultural background diversity which should include a requirement for the board to establish measurable objectives for achieving gender diversity and their annual assessment.
  • Suggestions for the content of a diversity policy include articulation of the benefits of diversity, ways to promote a culture supportive of diversity, identification of relevant factors for selection processes and recognition of employee (male and female) domestic responsibilities.
  • Companies should disclose in each annual report the proportion of women employees in the organisation, women in senior executive positions and women on the board.
  • Company remuneration committees should consider remuneration by gender.

Again, the ASX Principles do not contain any quotas or require equal numbers of men and women in an organisation either in total, in senior executive positions or on the board.

These requirements apply to companies listed on the ASX and are subject to explanation for non-compliance (‘if not, why not’).

Merit versus special measures

Further, while measures designed to achieve board, executive and general employee gender diversity can, if appropriately structured and implemented, be compliant with discrimination legislation, Federal and state/territory discrimination legislation differs and a case-by-case analysis is required if positive discrimination is thought to be necessary (such as the recruitment of employees based on their gender rather than merit alone), because such action may constitute unlawful discrimination on the basis of sex, marital status, pregnancy or potential pregnancy or carer status or responsibilities if no exemption is specifically obtained.

There are ways other than positive discrimination for an organisation to foster diversity:

  • have selection criteria that do not indirectly disadvantage people from certain groups, for example, a requirement for prior experience as a CEO may disadvantage women and could be substituted for specific skill requirements
  • advertise in a way that reaches a broad category of potential candidates, and
  • making public an organisation’s commitment to diversity.

Evidence of compliance

The EOWA reforms will require periodic reporting in respect of certain employment conditions. These include the number of women and men at different levels within an organisation. But the reporting of equal numbers or an increasing number of women at some or all roles will not satisfy the reporting requirement. Other issues such as pay and the adoption of flexible working arrangements will also need to be covered in the reports.

Similarly, the ASX Principles require reporting in respect of policy and annual objectives regarding gender, age, ethnicity and cultural diversity within an organisation and so will not be satisfied in respect of any level of employee or directors by the fact of equal representation at the relevant level.

Compliance burden The EOWA reforms focus on employment conditions within the workplace for women and men with caring responsibilities. They may be seen as a subset of the ASX Principles except that the EOWA reforms apply to all employers of over 100 employees.

EOWA already operates a workplace equal opportunity program, the EOWA reforms are merely an amendment of the existing scheme. Further, the EOWA reforms, in some circumstances at least, are supportive of existing requirements, for example:

  • minimum pay levels contained in legislation and legislative instruments
  • the National Employment Standard regarding flexible work practices
  • anti-discrimination legislation
  • policy and measurable objectives that may be set under the ASX Principles, and
  • the specific regard required by the ASX principles of remuneration by gender and recognition of domestic responsibilities.

In addition, the EOWA/WGEA will work on an industry basis to assist organisations to achieve appropriate employment conditions.

On these bases, it is suggested that the cost to business of compliance with the EOWA reforms, especially publicly listed Australian businesses, will not be significant. Research conducted in the United Kingdom has shown that diversity within a workplace may enhance profitability so the EOWA reforms may constitute an investment bearing return if they result in the attraction and retention of an efficient and effective workforce.