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“Positive discrimination” and the forthcoming EOWA reforms

10 August 2011


“Positive discrimination” and the forthcoming EOWA reforms

Amber Wood, Associate

Despite ongoing debate over how women can break through the infamous “glass ceiling”, it is no secret that women remain severely under-represented at the executive level within Australian organisations.

This is reflected in the Australian Census of Women in Leadership, conducted by Macquarie University in 2010, which found that within ASX 200 companies, only 8.4% of those companies featured women on their Board of Directors.

Discussion regarding the appointment of women to Australia’s top jobs is timely given the government’s announcement in March of forthcoming reforms to the current Equal Opportunity for Women in the Workplace Act 1999 (“Act”), and the ASX’s amendments to its Corporate Governance Principles and Recommendations (the “Principles”) released in June 2010.

In light of these changes, there has been growing concern from senior management with respect to how these separate requirements can be fulfilled without committing what is sometimes known as “positive discrimination”, that is, hiring women on the basis of their gender and not on their merits or suitability for a particular role. These concerns arise from a general misunderstanding as to the substance of the reforms, which do not specify any quotas or percentages of women employees to be appointed to boards or organisations. None of the reforms suggest that gender should override merit in recruiting the right candidate for your organisation.

EOWA reforms

The existing Act will be renamed the Workplace Gender Equality Act and will be introduced later this year. The substantial changes will mainly affect businesses with 100 or more employees and include the following:

  • organisations must report on the gender composition of their organisation and their Board, employment conditions, and whether they have flexible work practices for men and women;
  • instead of reporting on workplace equity plans, organisations must report on tangible outcomes achieved regarding equality within their workplaces;
  • pay equity will be enshrined in the objects of the Act and organisations will be required to report against these objects; and
  • reports on the organisation’s compliance will be accessible to employees and shareholders.

To ensure compliance, the agency (which will be renamed the “Workplace Gender Equality Agency”) will be given new powers to conduct organisational reviews and perform “spot-checks”.

Non-compliant organisations will be named in Parliament and will be ineligible to receive government funded grants or industry assistance and will be unable to tender for government contracts.

ASX reforms

The ASX Principles apply to those companies publicly listed on the Australian Stock Exchange, but are not mandatory. However, where an organisation does not comply with the Principles, the organisation must disclose the reasons for its non- compliance.

The substance of the changes include:

  • disclosure of the proportion of females employed at organisational, executive and Board levels in all annual reports; and
  • the introduction of a publicly- available diversity policy which should include a requirement for the Board to establish “measurable objectives” for achieving gender diversity and how this should be annually assessed.

Compliance with EOWA/ ASX requirements and “positive discrimination”

While none of the changes prescribe any specified number of women who must be employed with an organisation or appointed to its Board, it is easy to see how the requirement to create “measurable objectives” to achieve gender diversity could be inappropriately implemented by management, leading to potential discrimination complaints.

Measures intended to ensure equality across an organisation which discriminates against any particular group may be discriminatory, and organisations should proceed on a case-by-case basis, having regard to both the relevant state and federal anti-discrimination legislation.

Federal legislation

At federal level, organisations looking to implement gender diversity measures are largely protected by section 7D of the Sex Discrimination Act 1984 (“SDA”), which states that special measures taken “for the purpose of achieving substantive equality” (including between men and women), will not be interpreted as discrimination.

In relation to individual recruitment decisions, however, management should remain mindful of the broad obligations within section 14 of the SDA which precludes discrimination on the basis of sex in relation to virtually all aspects of employment including recruitment, demotion and terms and conditions of employment.

State legislation

The Anti-Discrimination Act 1977 (NSW) (“ADA”) applies at state level in NSW. Section 25 of the ADA largely reflects section 14 of the SDA. However, there is no blanket provision similar to section 7D of the SDA which allows for exceptions regarding achieving substantive equality. Instead, organisations wishing to implement specific measures benefitting one sex over another must first apply to the President of the Anti-Discrimination Board under sections 126 and 126A of the ADA or risk possible discrimination claims.

In Victoria, the recently enacted Equal Opportunity Act 2010, does not contain a uniform provision similar to section 7D of the SDA, but it does allow exceptions to discriminatory behaviour under section 26 in circumstances where a person’s sex is a “genuine  occupational requirement”, where a particular physical characteristic other than strength or stamina is necessary for a role. In contrast, section 105 of Queensland ‘s Anti-Discrimination Act 1991 provides an exemption which allows a person to “do an act to promote equal opportunity for a group of people with an attribute”, providing that the act in question is not inconsistent with the legislation. The exemption is only available until the equal opportunity purpose has been achieved.

As part of its broader service offering, PCS regularly assists clients in auditing and effecting change within corporate culture. We would be happy to partner with you to identify areas for improvement in gender equality within your organisation. 

Commentary on positive discrimination from Jenny Morris, Executive Women’s Business

As CEO of the Orijen Group, Jenny Morris is focussed on actively addressing the changing landscape for corporates through the Executive Women’s Business Pipeline Programme, creating a confidential and professional environment for women to mentor and support each other to help transition to more senior roles and board opportunities.

THE BUSINESS CASE

Research from a large range of institutions consistently shows a direct link between corporate performance and gender diversity. Companies with the highest number of women in senior management have a higher return on investment (as much as 36%) than those with the lowest level of female representation.

Successful companies already recognise that the price of ignoring gender diversity is high: lost potential, opportunities and credibility. Yet, more than 30 years after women began entering the workforce, women are still under-represented in leadership positions and we still labour under the assumption that affirmative action is discriminative; that diversity is still a gender and not a sustainability issue.

The EOWA reforms are welcome, but if we are to achieve sustainable change we need to have conversations that emphasise both diversity and inclusion.

Inclusion is the idea of encompassing all groups, whether defined by gender, ethnicity, culture, age or some other demographic grouping.

Diversity goes beyond inclusion to actively promote and pursue a workforce that represents all segments of society.

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