Women on Boards?

MA-Thesis / Master von Katharina Radloff

Introduction:

Even though European equality law has had a considerable impact on the law of the Member States concerning women’s rights to employment, it is still often the case that women experience a ‘glass ceiling’, which hinders their access to leadership positions in private companies. As identified by the UN Report on Women, women are on most boards of large companies, but their number still remains considerably low when compared to men. Although the Report acknowledges that in general opportunities of women with regard to employment have increased, the representation of women in leading positions is still too low. This ‘is especially notable in the largest corporations, which remain male- dominated. Of the 500 largest corporations in the world, only 13 have a female chief executive officer’. In the European Union, women hold only 11 percent of top company positions and the average proportion of women serving as chairman of the board of top companies was only 3 per cent in 2009. Among the European Union Member States, the highest percentage of women in boards can be found in Norway, which as the first country in the world introduced a women’ s quota of 40 percent for board members in 2004 by law. When quotas were proposed in 2002, the proportion of women in boards was only 6.8 percent, whereas it is now 34 percent. The success of the Norwegian example led to a political debate about female representation in leading positions throughout the Union. In September 2010, the Spanish government introduced a gender quota of 40 per cent for both, men and women to be achieved by 2015. France introduced a women’s quota for corporate boards in 2011 and other governments such as those of the Netherlands and Italy are positive about introducing similar quotas via legislation.

The reasons for the glass ceiling women still experience are manifold and involve old stereotypes, which are deeply rooted in society. It is this invisible barrier that justifies positive action measures in the first place: to remove deeply rooted social practices that interfere with the process of substantial equality in society in order to create conditions that give individuals equal access to employment. However, it would be too simplistic to argue that in equality law it is all about treating people equally. Rather, it is best resumed in the Aristotelian maxim: equality is about treating equal cases equally and unequal cases unequally. In the case of gender equality, due to the invisible barrier women still face when compared to men in employment matters they are one group facing disadvantages in this regard. In order to overcome the disadvantages positive action measures may be justified in order to achieve substantive and not only formal equality between the genders. The European law on equality between men and women is nevertheless well developed and complex. As having said, the equal treatment in employment is a fundamental right, which is secured through the Charter of Fundamental Rights of the European Union. Positive action measures aiming at achieving substantive equality between men and women are therefore highly controversial since they always imply the discriminatory treatment of the more advantageous group- in this case, men. The aim of this thesis is to examine the development of the European legislation and case law on gender equality with regard to employment and to analyse the fundamental character of the equal treatment principle in order to critically assess whether a supranational positive action measure would constitute a justifiable derogation from the fundamental equal treatment principle.

Before examining and analysing European Union legislation and case law on gender equality in employment it is important to define the relevant concepts. Gender equality has been interpreted by the ECJ as prohibiting discrimination on grounds of gender reassignment. In its traditional understanding equality means to refrain from discriminatory behaviour, while equality in its modern, substantive sense requires an examination of social reality in order to counteract against past discriminatory behaviour. Therefore, the ECJ recognizes that despite the dynamic nature of the Union legislation that allowed for a development of equal treatment from a functionalist economic concept to a more social, human rights- related concept, there are still gender gaps in employment matters in particular persistent problems of reduced participation of women in the workforce.

For this reason the European Union legislation allows for positive action measures to be taken in order to combat these gender gaps and ensure full equality between women and men. Art. 3 of Directive 2006/54 allows for Member States to ‘maintain or adopt measures within the meaning of Art. 141 (4) of the Treaty with a view to ensuring full equality in practice between men and women in working life’.

Thus, in the context of this Directive, Member States may adopt measures to treat one sex differently than the other- if this is done in order to promote equality, the differential treatment is compatible with the principle of equality. In a study of the European Commission on International perspectives on positive action measures of 2009, positive action is defined as:

‘consisting of proportionate measures undertaken with the purpose of achieving full and effective equality in practice for members of groups that are socially or economically disadvantaged, or otherwise face the consequences of past or present discrimination or disadvantage’.

In other words, the concept of positive action embraces all measures which aim to counter the effects of past discrimination, to eliminate existing discrimination and to promote equality of opportunity between women and men, particularly in relation to types or levels of jobs where members of one sex are significantly under- represented.

It must be furthermore said that the proposed European legislation to impose a women’s quota for boardrooms is so far only an idea, announced by Viviane Reding, the EU’s fundamental rights Commissioner and Vice- president of the Commission. So far, the gender quota serves as an ultimo in order to encourage companies to increase the representation of women in leading positions. Only if this will not be the case by the end of 2011, it should be considered whether a proposal would be issued to impose a gender quota by Union legislation. In this regard, this thesis can only deal with the question if the implementation of such a quota by supranational legislation would be a justifiable derogation from the equal treatment principle rather than to analyse the concrete effects of such a quota. It is moreover doubtable whether the Member States would support such a proposal. For this reason the author does not claim to provide definitive answers. This study intends to identify the state of EU law concerning positive action by providing a comprehensive analysis of the case law. The bulk of the study than elaborates on positive action models of three different Member States to explain whether a common European standard would be desirable, feasible and realizable.

Problem Statement:

The aim of the present thesis will be to examine legislation and cases regarding gender equality in the European Union, with special focus on positive action measures concerning female representation in boardrooms. The main questions this thesis seeks to answer are:

a) To what extent are positive action measures allowed in European Labour Law? Are there any limitations with regard to positive action measures on a national/ supranational level?

b) Would the announced EU legislation to impose women’s quotas by law be a justifiable derogation from the principle of equal treatment?

c) How can the EU find a balance to allow for positive action measures without radically departing from its fundamental equal treatment principle?

Method:

The analyses in this thesis and the conclusions drawn upon will be mainly based upon the examination of the European Union’s legal framework and the development of its legislation and case law during the past decades concerning gender discrimination and positive action measures. Despite the fact that European equality law has had a strong impact on the national legal systems of the Member States, important differences in the national systems remain when it comes to the acceptance of positive action measures.

The first part of the thesis will give an insight about the law of the Union concerning equal treatment of men and women and how the law has developed over time. The second part will then identify important case law in order to show the state of the law and the approach taken by the ECJ when ruling on positive action measures. In order to illustrate the impact of the EU on national gender equality laws and to present the difficulties of implementing a supranational legislation on women’s quotas throughout the Union, the third part of this thesis will include a comparative study mapping briefly the diffusion of gender quotas in Europe, as well as present statistical data to show female representation in higher management positions in different EU Member States. It will be elaborated how the quota system for women on boards works in Norway and how other Member States such as France and Germany reacted and drew inspirations from Norway to develop their own national positive action measures to raise female representation in boards. The quota systems of Norway and France will be compared with the case law presented before to analyse whether these national systems are in line with the EU’s fundamental equal treatment principle. Finally, in the fourth part it will be examined whether a common European framework on quota’s for women on boards will be possible and necessary, or whether this topic will better be regulated by the Member States themselves. Finally, a conclusion will be given summarising the arguments made and answering the research questions.

Table of Contents:

Text Sample:

Chapter 2.8, Extending the Scope for Lawful Positive Action: Briheche (2004):

The most recent decision on positive action, Briheche, concerned a French measure (Law No 2001- 397) that exempted mothers with more than 3 children, divorced women, legally separated women, unmarried women and widows with at least one dependent child from the age limit that normally applied for obtaining public- sector employment posts. Serge Briheche, a 48- year old widower with one dependent child applied to a post in the French administrative but his application was rejected on the ground that he did not fulfil the age requirement of being younger than 45 years. He appealed against his rejection, claiming that he as a widow with one dependent child should also be allowed to profit from the age exception laid down in Law No 2001- 397. Predictably, the Court held that the measure at issue is contrary to Article 3 (1) of Directive 76/207 because it constituted discrimination on the grounds of sex. A justification under Article2 (4) was not possible in this case because the measure automatically and unconditionally gave priority to female applicants belonging to certain categories, and invariably exclude male candidates who are in the same situation. Moreover, the ECJ considered that a measure such as the French law at issue is not proportionate to the aim pursued, and is therefore also not allowed under the provision of Article141 (4) EC.

Again, the ECJ did not take up the chance to further clarify on the relationship between Article2 (4) of Directive 76/207 and Article 141 (4) EC. However, the ECJ left some room for interpretation, indicating that Article 141 (4) EC may be more permissive than Article 2 (4): ‘Positive action which is not allowed under Article 2 (4) of the Directive could perhaps be allowed under Article 141 (4)’.

Potential for significant liberalization of EU positive action provisions was then brought about by Advocate General Maduro, when he further elaborated on this indication made by the Court, stating that ‘It cannot be ruled out that positive measures which do not fall within the scope of Directive 76/207 could be authorised under this provision [Article 141 (4) EC]’.

He emphasized possibilities to expand the scope for positive action measures, provided that such measures remain compatible with the general equal treatment principle. He clearly distinguished between the provisions of Article2 (4) of the Directive and Article 141 (4) EC, stating that the first provision may serve to justify positive action aiming at reducing inequalities, whereas the latter provision extends the scope for positive action measures aiming at compensating for past or existing inequalities suffered by a social group. Nevertheless, he clarified in his opinion that even though Article 141(4) EC might be intended to provide the Member States with a broader discretion in adopting measures of positive discrimination, such an interpretation must, however, always remain within the boundaries authorised by the Union’s principle of equality.

In his view, Article 141 (4) EC should be interpreted by the Court more in detail, because it extends the possibilities for lawful positive action measures. He criticized the Court’s approach of restricting the possibilities for compensatory positive action measures under Article 141 (4) EC, claiming that the equal treatment application of the current societal rules favours the members of the over- represented group rather than promoting real equality.

2.9 Chapter Findings:

It is remarkable that in Briheche the Court explicitly recognizes that Article141 (4) EC may be wider in scope than Article 2 (4) of Directive 76/207. This gives some hope for future, less restrictive interpretations of the provisions by the Court. What is needed, however, is a higher degree of consistency in the development of the law. Still today, the scope of quotas to enhance equality between men and women remains rather unclear. In sum, it can be said that the line of reasoning the ECJ approaches remains restrictive and positive action measures are still regarded in a negative way, meaning as a derogation of the equal treatment principle rather than as a component of it. Despite some suggestions from Advocate General’s opinions proposing the radical argument that EU equality law should not be seen to construct positive action as exceptional, further decisions have more straightforwardly stuck to the Marshall formula. Taken together, the cases analysed above show that subject to the condition of equal qualifications being satisfied, positive action measures in the allocation of jobs whereby women are given preference are lawful, if there is: a) a sufficient underrepresentation of women, b) no absolute, unconditional priority is afforded to any candidate, but an objective assessment of the personal situation of every candidate is undertaken, allowing for some form of flexibility, and c) the measure is proportionate to the aim pursued.

It is only a matter of time when the first case about national quotas will appear on the Court’s agenda. So far, there are no definite signs how the Court will approach such a case- in the light of the current state of the law, it is rather unlikely that the Court will declare such a quota as being compatible with the equal treatment principle, since ‘any automatic grant of rights or privileges, depending directly on one’s belonging or not to a given group, is illegal as contrary to the principle of equality.’ Preferential treatment that results from the belonging to a group must not be given automatically. Therefore, every system must allow for some form of flexibility.

The case law evidence considerable disagreement when positive action measures are justified in principle, which makes it almost impossible to foretell the future evolution of the law or the outcome of individual cases. So far, there is no identifiable European framework within which Member States can develop positive action regimes that would capture the dynamics and needs to combat inequality and disadvantage in the access to employment. For the future, there is a need for a clear and precise revealing of the limits within which Member States are allowed to act when permitting preferential treatment schemes. However, considering the variety of positive action regimes within the Union and the controversial nature of positive action measures in general, it is hard to imagine that a common European consensus can be established. Another solution could be to for the EU to open up its restrictive approach and to broaden the scope for lawful positive action measures for the Member States. As having said, European equality law had a considerable impact on the law of the Member States concerning women’s rights to employment. Today, the experience in different Member States concerning positive action schemes might well then helpfully feed back into the evolution of EU law. Harmonising the rules for women on boards within the EU could work without necessarily regulation at EU level. Many countries already drew their own inspirations from the experiences in Norway, where the women’s quota for boardroom members was firstly introduced. Spain for example introduced a similar quota in 2007, and France in 2011. Italy and the Netherlands are contemplating similar measures, and all over Europe, the discussion about women’s underrepresentation in boards is still ongoing.