In this round-up of recent employment law news, we report on the EU’s rejection of mandatory quotas for women on boards, and the UK government’s recent announcement regarding changes to family related leave and flexible working.

Key changes to family leave

The Government has recently published its response to its Consultation on Modern Workplaces, setting out a number of changes to be made to family-related leave between 2013 and 2015.

  • Flexible maternity leave - The Government has announced the introduction of a new system of flexible parental leave, to take effect from 2015.  Under the new regime, parents will be able to share up to 50 weeks of maternity leave (and up to 37 weeks of maternity pay).  Parents will have the choice as to how to structure the leave, provided that it is taken in minimum blocks of one week.  Accordingly, employers could see requests for both parents to take a joint period of 6 months’ leave, or requests for a more varied pattern, such as a ‘month about’ approach.  However, employees must agree the proposed pattern of leave with their employer.  If the proposed pattern cannot be agreed, the leave would default to a single block of continuous leave.  Businesses should, in due course, consider how requests will be processed and reviewed.
  • Increase in parental leave - with effect from March 2013, the entitlement to unpaid parental leave will increase from 3 to 4 months and, from 2015, this will apply to each child under 18 (rather than each child under 5).
  • New right for all employees to request flexible working - the Government has announced a new right for all employees to request flexible working.  The changes are to be implemented by April 2013 and, following consultation, are expected to come into force in 2014.  Currently, the right to request flexible working patterns only applies to parents with a child under 17 (or under 18 if the child is disabled).  However, the right would apply to all employees with 26 weeks’ service and all businesses, regardless of their size.  The current statutory procedure for employers to consider flexible working requests will be replaced with a requirement for employers to deal with requests in a ‘reasonable manner’ and within a ‘reasonable period’.  An ACAS statutory Code of Practice will be published to provide guidance, including on the interpretation of ‘reasonable’.

EU proposals: female representation on boards

Justice Commissioner Viviane Reding’s recent policy concerning increasing female representation on boards had originally contained a proposal for the introduction of mandatory quotas.  However, in light of objections from several member states, including the UK, and following speculation that compulsory quotas might not be enforceable, the quota element has now been dropped.  The draft directive now contains an obligation on member states to ensure that listed companies put procedures in place in respect of the non-executive appointment process in order to seek to achieve 40% female representation by January 2020.

Following consideration by the European Parliament and the European Council, a vote will take place.  If adopted, member states will be given 2 years to implement the relevant provisions at a national level.   The proposals, if implemented, would apply to companies incorporated in the EU and listed on a European stock exchange, which would be required to have procedures in place to seek to meet the objective by 1 January 2020 at the latest (or by 1 January 2018 for listed companies over which public authorities exercise a dominant influence).  Small and medium sized enterprises (SMEs) would be exempt (i.e. those with fewer than 250 employees and an annual worldwide turnover of €50m or less). 

Summary of Proposed Measures

  • Non-executive appointment criteria - in circumstances in which “members of the under-represented sex” hold less than 40% of the non-executive director positions on the board, companies will be required to make appointments on the basis of a comparative analysis of the qualifications of each candidate, by applying pre-established, clear, gender-neutral and unambiguous criteria.
  • Positive action (preference rule) - if there are equally qualified candidates of both sexes for an appointment, priority must be given to the candidate of the under-represented sex, unless an objective assessment taking into account all relevant criteria tilts the balance in favour of the other candidate. 
  • Commitment to gender balance for executive board - companies must undertake an individual commitment to gender representation in respect of the executive board and to report publically on steps being taken to achieve this, but no minimum objective would apply to executive roles.
  • Progress reporting - companies will have to report annually on their progress towards the 40% objective and on their individual commitments on executive representation, providing reasons if they are not on track to achieve these targets.
  • Potential exemptions - listed companies may be able to justify non-compliance with the 40% objective if women make up less than 10% of the overall workforce.  In addition, the objective may be deemed to have been met if at least one third of the company’s board are women.

Member states will be required to set out sanctions for breach, but will have flexibility to adopt sanctions it considers to be appropriate, provided they are effective, proportionate and dissuasive, which could include a fine or the annulment of the appointment.   The main obligation is to put procedures in place to try to achieve 40% representation, but there is no specific obligation to get to 40%.  Accordingly, it appears that employers covered by the directive would only be subject to sanctions if they missed the objective and had not taken sufficient steps to try to achieve it.