Diversity Laws: A Global Overview

June 2011

Contacts

Introduction

by Richard J. Charney,  Madeleine L.S. Loewenberg, Karen Ainslie, Claire Darbourne, Paul Griffin, Katrin Scheicht, Leanne Nickels

Complying with human rights legislation has become particularly important for multinational corporations. In a world where business transactions often transcend national boundaries, due diligence concerning human rights initiatives requires multinational companies to comply with legal pronouncements and social expectations to help avoid liability for human rights violations.

This bulletin describes the initiatives taken in five jurisdictions to ensure the protection of human rights and the promotion of diversity and equality of treatment for workers, whether as employees or independent contractors. The jurisdictions under consideration are Germany, Great Britain, Australia, South Africa and Canada.

Overview

Each of the five jurisdictions has enacted human rights legislation that protects workers, whether as employees or independent contractors, depending on the jurisdiction, from harassment and discrimination while performing services and applying to provide services. Workers are not uniformly described across all five jurisdictions. In Canada’s largest province, Ontario, a worker can be an employee, an independent or dependent contractor or a contract worker. The critical element in the relationship is the exchange of payment for services rendered. By contrast, in South Africa and Great Britain protections against harassment and discrimination are not dependent on the provision of payment in exchange for service. For example, in South Africa protective legislation is applicable only to employees (and not independent or dependent contractors or contract workers) who provide work and who receive, or are entitled to receive, remuneration while assisting in conducting the business of an employer.

The human rights legislation of Germany, Great Britain and South Africa is enacted federally and applicable to all workers, regardless of where in the jurisdiction work is performed. In Australia, legislation is enacted at both the state and federal levels. In Canada, legislation is enacted in each province and territory as well as federally. As a result, in Canada a worker is subject to the human rights legislation in the province or territory in which he or she is employed.

Employees working in “federal works and undertakings” are subject to federally enacted human rights legislation regardless of the location of the services being provided. However, in Australia a worker is subject to the law that is enacted at both the state and the federal levels.

The grounds under which a worker is protected by human rights legislation vary. For example, the Canadian Human Rights Act protects against harassment and discrimination on the following grounds:

race, national or ethnic origin, colour, religion, age, sex (including pregnancy and childbirth), sexual orientation, marital status, family status, disability and conviction for which a pardon has been granted

The situation is similar in South Africa and Germany where protections are provided to employees on comparable, although not identical, grounds and in Great Britain where substantially similar protections are granted on the majority of the grounds listed above. Similar legislation exists in Australia.

Obviously, based on the foregoing, local counsel should always be consulted about the scope of the protections provided to workers in a particular jurisdiction.

In addition to the basic protections outlined, the following outlines some of the significant, and in some cases recently enacted, provisions concerning diversity, equality and human rights in each of the five jurisdictions.

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Germany

German law provides special employment protections for severely disabled persons. Companies employing 60 or more employees must ensure at least 5% of their workforce is comprised of severely disabled persons. Companies with 20 to 39 employees must employ at least one severely disabled employee. Companies with 40 to 59 employees must employ at least two severely disabled employees. If a company fails to comply with this obligation, it may be subject to compensation payments ranging from €105 to €260 for each month that it failed to comply.

The German Corporate Governance Code (GCGC) applies only to exchange-listed companies; however, it contains nationally and internationally recognised standards and provides a model of good corporate governance for companies of any size. The GCGC suggests that diversity, and particularly the inclusion of women, should be considered when a company seeks members for its board of directors, supervisory board or executive roles.

In Germany, applications for employment generally contain personal information, including a date of birth and a photograph. In an effort to increase protection against discrimination, some companies in Germany are testing an anonymous application process; however, anonymity is not currently required. Also, legislation enacting a quota system for female job applicants is currently being considered.

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Australia

In 2010, the Australian government enacted legislation requiring employers to consider requests for flexible working arrangements from parents and persons with responsibility for a child under school age, under 18 years of age, or with a disability. The requests must be made in writing and must relate to the need to care for the child.

On 1 January 2011, a national paid parental leave scheme came into effect. The leave provisions provide eligible working mothers and other primary caregivers of children born or adopted after 1 January 2011, with up to 18 weeks paid parental leave at the national minimum wage (currently A$569.90 per week). The entitlement is available to full-time, part-time and casual employees earning less than A$150,000 per year. It is also available to contractors and the self employed. All recipients will receive the full weekly rate regardless of their earnings prior to the birth or adoption of the child.

Significant amendments to the Equal Opportunity for Women in the Workplace Act were announced on 9 March 2011, not the least of which was changing the legislation’s title to Workplace Gender and Equality Act (WGEA). The WGEA enhances the obligation on businesses with 100 or more employees to establish workplace gender equity plans and submit reports on the participation of women and men in their workplaces. Companies reporting for the first time will also be required to report on the actual gender composition of their organisations and their boards, on their employment conditions and whether they have flexible work practices for men and women.

Another significant change includes introducing specific provisions into the Fair Work Act, 2009 that prevent employers and principals, among others, from taking adverse action against employees and subcontractors, among others, because they have a workplace right. A workplace right includes:

  • an entitlement to the benefit of, or a role or responsibility under, a workplace law or workplace instrument or order
  • an ability to initiate, or participate in, a process or proceeding under a workplace law or workplace instrument, or
  • an ability to make a complaint or inquiry:
    - to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument, or
    - if that person is an employee, in relation to his or her employment.

Adverse action is taken by an employer or a principal where the employee is dismissed, the employee is injured during the course of employment, the employee’s position is altered to his or her prejudice, or the employee is discriminated against vis-à-vis other employees.

These provisions substantially increase the protections available to workers in Australia

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Great Britain

Recent developments in discrimination law in Great Britain (comprising England, Wales and Scotland) have continued the extension of protections provided to employees since the enactment of the Equal Pay Act in 1970. These protections have been elaborated upon through a combination of European Union directives and initiatives implemented by the legislature of Great Britain.

The Equality Act 2010 (Equality Act), which came into force on 1 October 2010, has broadened the liability of employers in respect of acts of harassment committed by third parties. Previously, an employer could only be held liable for the sexual harassment of its employees by third parties in certain circumstances. The Equality Act has extended the third-party harassment provisions to apply across all the protected characteristics covered by the harassment provisions, including race, age, disability and sexual orientation.

Prior to April 2011, dismissal by reason of retirement at the age of 65 provided an exception to the law on age discrimination as long as the correct statutory procedure was followed. As of April 2011, employers may no longer require employees to retire at age 65 as was the case under the old regime. Employers can continue to operate a fixed retirement age only if this can be objectively justified; otherwise, the employer may be subject to a claim of age discrimination.

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South Africa

The Employment Equity Act, 1998 requires designated employers to implement affirmative action measures for people from designated groups in order to achieve employment equity. A designated employer is an employer that employs 50 or more employees or an employer that employs fewer than 50 employees but has a total annual turnover equal to or above prescribed annual turnover thresholds. Designated groups are black people, women and people with disabilities. “Black people” is a generic term that means Africans, Coloureds (a legal term of art for people of mixed race) and Indians.

Affirmative action measures are “measures designed to ensure that suitably qualified people from designated groups have equal employment opportunities and are equitably represented in all occupational categories and levels in the workforce of a designated employer.” These measures require employers to implement measures to eliminate employment barriers, to further diversity in the workplace, and to strive to achieve an equitable representation of suitably qualified people from designated groups in all occupational categories and levels in the workforce. The measures adopted by employers to increase diversity in the workplace must not be arbitrary or capricious. Recent court decisions have indicated that employers may be exposed to discrimination claims by those who can demonstrate that the measures to ensure employment equity were spurious

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Canada

The provinces of Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec, Prince Edward Island and the federal jurisdiction have enacted pay equity legislation designed to remedy gender discrimination in respect of the pay received by men and women in the workplace. The legislation does not guarantee equal pay for equal work (i.e. paying men and women the same wage rate for the same work); rather, it ensures that employers are providing equal pay for work of equal or comparable value.

To achieve pay equity, an employer must conduct job evaluations that compare the skill, effort, responsibility and working conditions inherent in various jobs. The employer must then compare male- and female-dominated jobs that have similar job evaluations. If wage differentials exist between those jobs, the employer must implement measures to remedy this difference.

The Employment Equity Act applies to most federally regulated employers, including federally regulated private employers with 100 or more employees and members of the public service. This legislation requires employers to take positive steps to correct the under-representation of women, people with disabilities, Aboriginal persons and visible minorities in the workplace. To do so, employers are required to evaluate whether the aforementioned groups are under-represented and to then implement policies and practices that encourage the hiring, promotion, training, retention and accommodation of those individuals. It is akin to affirmative action, although that phrase is not used in the legislation.

The Federal Contractors Program requires provincially regulated companies with greater than 100 employees that seek to provide goods and services in excess of Can$200,000 to the federal government, to have an employment equity program in place.

In addition, the Canadian Charter of Rights and Freedoms protects against discrimination on the grounds of race, national or ethnic origin, colour, religion, gender, age, sexual orientation and mental and physical disability by the Government of Canada, each provincial and territorial government, and government agencies. These protections allow an applicant to seek a remedy against a government or a government agency based on a discriminatory practice, in addition to any complaint that the individual could make pursuant to human rights legislation in the jurisdiction where services are provided.

At present, the province of Ontario is engaging in a consultation process concerning proposed amendments to the Accessibility for Ontarians with Disabilities Act, 2005. The amendments would create an accessibility standard applicable to all businesses operating in Canada’s largest province. The standard would require employers to evaluate barriers faced by persons with disabilities in the workplace and to work to eliminate those barriers.

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Conclusion

Global initiatives protecting and promoting diversity, equality and human rights are as varied as the individuals to whom they apply. These initiatives are typically promulgated by legislative enactment, although it is apparent that diversity recommendations promoted by organisations with influence over economic relationships can place significant pressure on the conduct of corporations.

Companies seeking to expand their operations into new, unfamiliar jurisdictions would be wise to obtain information about the issues raised in this bulletin. To do otherwise could result in economic sanctions, non-pecuniary orders to comply with statutes and the loss of goodwill in foreign jurisdictions.

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