Valerie Dougan: Under existing law, will all-women shortlists fly?

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Could all female shortlists be the solution to meet the 25% target of women on boards by 2015? A report published recently by Charlotte Sweeney, reviewing the effectiveness of the Voluntary Code for Executive Search Firms (the Sweeney Report) includes the recommendation that guidance should be produced on the legality of women-only shortlists for board appointments.

According to the Sweeney Report, in the course of the next year FTSE 100 companies will need to make a further 51 female board level appointments to meet the 25% target. The Voluntary Code as it is currently drafted asks executive search companies to ensure that 30% of the candidates in their longlist are female. But of course there is no obligation to carry this target into the shortlist – where individuals are interviewed by the client. That said, there is certainly some appetite for change. The report cites one agency as saying “clients do ask for all female shortlists and we have done it in the past. Approximately 40% of the companies we work for have asked them.”

Notwithstanding this appetite, the report also raises crucial questions about the legality of using all women shortlists to increase the numbers of women in the boardroom, which is not at all straightforward. As a result the Sweeney Report calls on the Equality and Human Rights Commission (EHRC) to produce guidance on the legality of all women shortlists, a move that has since been supported by the Business Secretary Vince Cable.

And without wishing to second guess the views of the EHRC, I suspect that they will have some difficulty in recommending all-women shortlists. Although the new positive action provisions in s.159 of the Equality Act 2010 do enable an employer to use gender as the tipping point in a selection process, strict caveats must be adhered to. The candidates are required to be “as qualified” as each other, there must be no policy of preferential treatment, and the policy itself must be proportionate.

It is no surprise, then, that employment lawyers have been rather hesitant about recommending that clients rely on the positive action provisions within s.159.  How do you objectively assess whether two candidates are “as qualified” as each other? The concern will be that this type of blanket exclusion of men from a shortlist will be difficult to justify from a proportionality perspective, and may amount to a policy of preferential treatment. The view from Europe is along similar lines, with the CJEU placing limitations on positive action, by ruling that employers should take each candidates own personal circumstances into account – which would obviously not happen under a shortlisting arrangement. Any guidance should therefore provide clarity around options for companies and executive search firms alike, who will want to avoid a claim from a male candidate who failed to make it to the shortlist.

This would not be the first time that men have challenged positive action provisions. In 1996, the EOC, the predecessor to the EHRC supported the case of two male candidates who challenged the Labour Party’s decision to impose all-women shortlists on political candidates. The tribunal in that case ruled that the Labour Party’s policy was in breach of the Sex Discrimination Act 1975, prompting a change in the law and the introduction of the Sex Discrimination (Election Candidates) Act 2002.

Back then the positive action provisions in the Sex Discrimination Act were much more limited than the current s.159 of the Equality Act 2010, but it is interesting that a specific act of Parliament was required, before the all-women shortlist could proceed. Given the current government’s desire to achieve success in boardroom diversity without resorting to legislative intervention, I suspect that the course of action we saw in the realm of politics would not be a viable option here. The EHRC’s response to the Sweeney report is therefore awaited with interest.

Valerie Dougan is a Professional Support Lawyer at national law firm Dundas & Wilson

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