From 1 August 2011, all Victorian employers will have a positive duty to eliminate discrimination, sexual harassment and victimisation under the Equal Opportunity Act 2010 (Vic) [1] (the EO Act 2010). All employers will be required to take ‘reasonable and proportionate measures to eliminate discrimination, sexual harassment or victimisation as far as possible.’ [2]
In determining whether measures are ‘reasonable and proportionate’, factors such as the size of the organisation, its resources and the practicability and cost of the measures will be taken into account. [3] This has significant implications, particularly for large organisations, as taking ‘reasonable and proportionate’ measures may include undertaking an assessment of the organisation’s compliance with the Act, developing a compliance strategy and conducting regular monitoring. [4] As a consequence, audits will be increasingly used to examine how well an organisation is travelling in terms of EO compliance.
Currently, employers are required not to discriminate against employees and job applicants. [5] Employers are also vicariously liable for the discriminatory actions of their employees acting in the course of their employment. If a complaint is made, an employer will have to show that they took reasonable precautions, such as having adequate policies, to prevent the employee contravening the Act. [6]
Under the EO Act 2010, however, there will be a positive duty for all Victorian employers to take ‘reasonable and proportionate measures’ regardless of whether a complaint has been made. Furthermore, if an organisation does not take these measures, they may be the subject of an investigation or a public inquiry. [7]
The regulatory landscape is changing. There is increased focus on what employers are doing to build equitable workplaces. Now is an opportune time to consider what else your workplace can do to put its organisational values into action, and actively promote diversity and inclusiveness.
New ASX Diversity Requirements
Diversity is a contributing factor to economic competitiveness for companies.
In particular, research has shown that increased gender diversity on boards and in senior management is associated with better financial performance and improved workforce participation at all levels. This also positively impacts on the economy generally. The promotion of gender diversity within an organisation broadens the pool for recruitment of high quality employees and enhances employee retention. It also encourages greater innovation and an improved corporate image and reputation, and minimises the risk of ‘group think’ in how decisions are made. Increasingly, stakeholders and shareholders expect organisations to be open and transparent about their internal workings, particularly in relation to ‘ethical’ matters such as their environmental and social impact policies. Reporting on the diversity profile of the company facilitates greater transparency and accountability about the company’s approach and objectives.
On 30 June 2010, after previously releasing an Exposure Draft in April 2010, the ASX released its final amendments to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. These amendments include a number of recommendations in regard to promoting diversity, particularly gender diversity on boards and within senior management. The Principles apply to all ASX listed companies and require companies to comply on an ‘if not, why not’ basis. [8]
The recommendations include:
- Companies should establish a diversity policy. ‘Diversity’ includes gender, age, ethnicity and cultural background. The policy should include measurable objectives for achieving gender diversity.
- Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy.
- Companies should also disclose in their annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board. [9]
The amendments will commence operation on 1 January 2011. The change in the reporting requirements will therefore apply to a company’s first financial year commencing on or after this date. The ASX Corporate Governance Council encourages companies to transition from the 1st July 2010.
Now that ASX listed companies must report on ‘measurable objectives for gender diversity’, what might such objectives look like? One fundamental measure is to note the proportion of women employed by (or who are consultants to) the company, have senior executive positions at the company, or are on the board.
Companies should consider how best the reporting might be achieved to reflect accurately the participation of women in the workplace and the roles in which they are employed: for instance, whether a total number of full-time equivalent staff is appropriate, as opposed to clear categorisation of the number of full-time, part-time and contracted individuals, and, whether the participation is in management, leadership or supporting roles.
Annual reports vary considerably and it is a question for the company as to how detailed the diversity report might be. While the focus of the Corporate Governance Principles and Recommendations is on women in leadership positions, some companies include in their annual reports more detailed explanation of their ‘corporate social responsibility’ initiatives. With respect to diversity, companies might address:
- Flexible work practices;
- Supports for women returning from maternity leave, such as breastfeeding rooms;
- Awards and other external recognition of the company’s efforts, such as recognition as an employer of choice for women; and
- Supports for people from diverse cultural and linguistic backgrounds, people with an illness or impairment, people with carer’s responsibilities and so on.
For some companies, the introduction of the Corporate Governance Principles and Recommendations will mean they are drafting a diversity policy for the first time. Companies may find it useful to consider the following approaches, when formulating a diversity policy:
- Commitment to diversity and articulation of the corporate benefits arising from employee and board diversity and the importance of benefiting from all available talent. Having a commitment to diversity should create an environment conducive to the appointment of well qualified employees, senior management and board candidates. This will assist in establishing appropriate diversity and thus maximise the achievement of corporate goals. For example, the needs of a company may point to the need for directors with particular and broad-ranging skills and experience which may be more easily met from a balanced gender intake.
- Commitment to and identification of ways to promote a corporate culture which embraces the benefits of diversity when determining the composition of employees, senior management and the board – including recruitment of employees and directors from a diverse pool of qualified candidates.
- Identification of factors that should be taken into account in the selection processes and whether professional intermediaries should be used to identify or assess candidates.
- Identification of programs that assist in the development of a broader pool of skilled and experienced board candidates. These could include initiatives focused on skills development such as executive mentoring programs or more targeted practices relating to career advancement such as those that develop skills and experience which prepare employees for senior management and board positions.
- Articulation of a corporate culture which not only supports workplace diversity but also recognises that employees at all levels of the company may have domestic responsibilities.
- Transparency of board processes, review and appointments.
[1] Equal Opportunity Act 2010 (Vic) s15.
[2] Equal Opportunity Act 2010 (Vic) s15(2).
[3] Equal Opportunity Act 2010 (Vic) s15(6).
[4] Equal Opportunity Act 2010 (Vic) s15.
[5] Equal Opportunity Act 1995 (Vic) Part 3, Division 1.
[6] Equal Opportunity Act 1995 (Vic) s102-103.
[7] Equal Opportunity Act 2010 (Vic) s15(4).
[8] Australian Securities Exchange ‘Changes to Corporate Governance Principles and Recommendations’ (Media Release, 30 June 2010) at http://www.optimiss.com/asxdiversity.pdf.
[9] Australian Securities Exchange (2010) Marked-Up Amendments dated 30 June 2010 to the Second Edition August 2007 of the Corporate Governance Principles and Recommendations 9-11.
