The Government is setting a new equality agenda. Berwin Leighton Paisner's Lisa Mayhew and Catherine Turner (both pictured below) examine the impact of its initiatives

In December 2010, the Government published its equality strategy – Building a fairer Britain – which is founded on the principles of equal treatment and equal opportunity. Interestingly, the strategy envisages tackling all inequalities including those not currently protected by legislation, eg, class inequalities. To achieve this, the strategy recognises the need to move from legislation-based solutions and the strand-based approach, focusing instead on the individual.

But how has the Government equipped itself and employers to deal with the barriers to equality? This article looks at the top five initiatives aimed at tackling inequalities and their practical impact on employers.

The initiatives flow from recent legislation, principally the 
Equality Act 2010, and other highly-publicised resources, 
such as Lord Davies' recent report 
on tackling inequalities in 
female representation on 
corporate boards.

The equality agenda is framed by an evolving patchwork of initiatives which seeks to change people's attitudes and behaviour. In our view, a common thread has emerged whereby initiatives are being looked at collectively and not just in isolation (whether top down, from board level to shop floor, or public to private-led). It is a combination of these initiatives, and not necessarily the same combination for each inequality, that will produce the most effective results.

Equal pay

The current regime is one of voluntary disclosure – favoured by the previous and current governments and endorsed in the Equality and Human Rights Commission's (EHRC) recommendations on voluntary gender reporting in the private sector from 2010.

However, the Act recognises that voluntary disclosure may not work and has a power (as yet latent) to require companies with over 250 employees to publish average gender pay figures. Similarly, the strategy refers to carrying out an annual review and considering the need for a mandatory scheme where this proves necessary.

With the threat of mandatory disclosure in years to come, how do employers prepare themselves? Equal pay is a stone that some employers do not want upturned. The issue is not about providing employers who voluntarily disclose with a moratorium (as suggested by the EHRC), but the fear of creating discloseable documentation as part of the ground work on assessing the 'lay of the land' which will help an employee bring an equal pay claim.

While there are ways of trying to ensure that documentation remains legally privileged, employers are tackling equal pay through other initiatives, eg, moving towards less subjective bonus criteria, removing multiple pay scales and reviewing bonus figures to ensure there are no equal pay issues. These tools help to ensure a level playing field going forward while leaving the stone unturned.

Positive action

As a means of promoting progression and integration, the Act introduced positive action in recruitment and promotion. Employers can now lawfully discriminate (on the grounds of any one of the protected characteristics – that is, broadly, sex, race, age, disability, sexual orientation, religion and philosophical belief) in the recruitment process in favour of the candidate with a protected characteristic which is under-represented in the workforce, provided that the two candidates are equally qualified.

Our impression is that many employers are reluctant to use this provision as it opens them up to challenge by the unsuccessful candidate on whether they were, indeed, equally qualified. Guidance from the Government Equalities Office (GEO) refers to candidates of 'equal merit' as opposed to candidates who are equally qualified and suggests that the question that employers need to ask themselves is whether candidates can do the job to the same standard.

Even if we assume that employers will seek to rely on this provision, there are myriad other potential headaches:

● How do employers show there is under-representation? The GEO guidance states that the question is whether the employer reasonably thinks there is a disadvantage or under-representation of a certain group and that while some information will be needed to show why the employer believes that to be the case, "it does not need to be sophisticated statistical data or research". This is good news, as it is likely to be difficult to obtain statistical evidence on certain protected characteristics, eg, age (where there is a degree of subjectivity in deciding on the 
age or range of ages that are
under-represented).

● Employers should not forget that they have to consider whether positive action is a proportionate means of achieving the aim of correcting the under-representation or disadvantage. Are there other means of addressing the imbalance? Should an employer try these other means first, for example, offering training or mentoring? It is strongly arguable that an employer will 
have to show that it has tried these other means before moving to positive action.

● If there is more than one under-represented characteristic, do employers choose which protected characteristic they are giving priority to in the interview process? If one candidate is a 55-year-old man and the other a 25-year-old woman and the employer reasonably believes that there is an under-representation of both women and older workers, can they legitimately decide to try to address the gender imbalance? Is this not discriminatory in itself?

One (possibly unforeseen) advantage of invoking this provision is that it is likely to be helpful if an employee, who later brings a discrimination claim on the grounds of a particular protected characteristic, was appointed through positive 
action in an attempt to improve the under-representation of people in the workplace with that protected characteristic.

An employer could point in its defence not just to its equal opportunities policy, but to the fact that it has exercised its right to take positive action. Having said that, this has to be balanced against the risk of a claim brought by an unsuccessful candidate.

Even if employers are willing to risk the downsides of invoking the provision, positive action is clearly a more effective tool for some types of discrimination than others (the risks of defending positive action are greater when addressing the under-representation of people of a certain age or with a disability).

Women on boards

In February 2011, Lord Davies published his report on female representation on boards which ruled out, at this stage, statutory quotas on the percentage of women members on boards, preferring instead a number of practical recommendations.

The main thrust from the report is that FTSE 100 companies should aim for a minimum of 25% female representation on boards by 2015, with FTSE 350 companies setting their own targets for female board representation by 2013 and 2015. Lord Davies' recommendation is not as ambitious as that of the 30% Club (a relatively new organisation backed by UK chairmen and led by a group of senior business women) who are aiming for 30% female representation by 2015 on the boards of all UK companies. What the 30% Club and Lord Davies have in common is the desire to avoid mandatory quotas.

The 25% goal might seem like a tall order in light of the fact that, according to the report, women account for only 12.5% of directors of FTSE 100 companies and only 7.8% of FTSE 250 companies (2010 figures). Nevertheless, it is a far cry from the action taken in other countries. The experience from Norway suggests voluntary quotas did not work and that the culture did not change until mandatory quotas were introduced. Given the lack of any statutory quotas, could positive action (even with its pitfalls) be used to increase the representation of women on corporate boards?

Positive action and current initiatives regarding female representation on boards are voluntary actions and are tools for an employer to use if they so choose. Given that these initiatives are based on choice, it may be other initiatives which seek to actively address obstacles will prove more effective, eg, addressing childcare issues; improving ambitions and expectations not just of women but of other groups where there is an under-representation of a certain protected characteristic; and ensuring flexibility for workers 
who have disabled partners.

Flexible working

One potential obstacle to gender equality is childcare. The Additional Paternity Leave Regulations 2010 are designed to ensure a more level playing field in childcare provisions providing the right to up to six months' paternity leave which can be taken by fathers when the mother returns to work.

In practice, the regulations are only going to be of relevance to those who are not entitled to enhanced maternity pay and would not, therefore, lose out if the father was not entitled to enhanced paternity pay in his workplace.

To be effective, employers would need to offer enhanced paternity pay. The current legislative regime may be sufficient to tackle this in that employers who offer enhanced maternity pay may be at risk of a potential discrimination claim by male employees who are not offered enhanced paternity pay.

Flexible working is not just about childcare and can assist those who are carers either for disabled children or ill or disabled partners/family members. Flexible working operates in combination with the prohibition of associative and perceived discrimination under the Act. While flexible working can prevent associative disability discrimination, it may also improve the number of older workers in the workplace where flexible working allows them to still care for an ill partner/family member.

Public sector equality duty

The Act provides that public authorities must, in the exercise of their duties, have due regard to the need to eliminate discrimination prohibited by the Act and advance equality of opportunities between those with and those without a protected characteristic.

It will be interesting to see how public authorities will work with the private sector to tackle inequality through the back door and what new tools will be given to employers to help them tackle inequalities.

In the financial sector, the Financial Services Authority (FSA) has already spoken to a number of financial institutions and has published its business plan setting out its priorities for 2011-12, which makes reference to equality and diversity. Supervisors are currently being trained so that they can effectively engage with firms.

One practical impact of this is that there could be a cross-fertilisation of initiatives. Some banks have a wealth of diversity initiatives which they have engaged and which could be adopted, through the assistance of the FSA, in other financial organisations.

It will be interesting to observe how the FSA proposes tackling the diversity agenda going forward.

Lisa Mayhew is a partner and Catherine Turner a senior associate at Berwin Leighton Paisner.

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