The Equality and Human Rights Commission (EHRC) has recently announced sectoral inquiries into the construction and financial service sector. Although the predominant focus in the construction industry will be race and the financial sector will be gender, the remit in both may extend depending on the evidence the Inquiry collects.
The recent press release from the EHRC provides some insight into the areas under investigation. In this article we have summarised the key issues, along with some suggestions on how employers should prepare.
Employers should take action since these Inquiries have wide ranging powers, including asking employers to give oral evidence or produce documentation. At the end of the process the Inquiry will produce best practice recommendations for employers to follow. If they find evidence of discrimination they can launch a formal investigation, although this seems unlikely.
There is likely to be media interest both during and at the conclusion of the Inquiry - and the mere fact of the ECHR's press release and the statistics it uses may well be relied upon by claimants to suggest a backdrop of inappropriate conduct. But, statistics can be a blunt tool and only tell part of the story. Employers should take the initiative and be able to explain clearly the steps taken on diversity matters. Diversity has been viewed as integral to business success with resources invested in this area for a number of years, particularly so in the financial services sector. Yet this investment does not appear to have translated universally into positive results across the board. Some statistics indicate that the financial services sector has the largest gender pay gap with far fewer women in senior roles. The construction industry acknowledges that there is a need to bring more women and ethnic minorities into the workforce. The recently appointed Chief Executive of ConstructionSkills explained in an interview with Building Magazine that "Diversity in the workforce is probably the key medium-to-long-term issue for the industry."
Issues Under Examination In The Financial Services Sector
- Gender And Racial Impact Of Redundancies
"The Inquiries will examine whether redundancies are disproportionately affecting women and ethnic minorities."
- Public Sector Procurement And Diversity
"They will also look at whether more diverse companies are more successful as they can deliver better services and are more likely to benefit from public sector contracts." - Largest Pay Gap And Glass Ceiling Issues
"The financial services industry has the largest pay gap between men and women in the private sector at 41.5%, with far fewer women in senior roles than in other sectors." - High Levels Of Sexual Harassment
"The Inquiry will examine the underlying causes as well as reports of a high level of sexual harassment." - Female Executive Participation
"I know many employers have benefitted from the business opportunities created when their staff includes talented women. US research shows that Fortune 500 companies with more women on the Board achieve on average far higher return on equity than those with minimal female representation." - Flexible Working
"Unfortunately current evidence suggest that in financial services the aspiration of talented female employees often gives way to frustration as they come up against he barriers of outdated work practices. Genuinely flexible working – working smarter, often through informally agreed changes to the organisation of work, not rigid, inflexible patterns provides business opportunities to deal with turbulent times." - Sharing Best Practice
"We plan to make a difference in both these sectors by using practical evidence of the benefits of good practice to help all companies learn from the best."
The scope of the financial services sector inquiry covers a number of sensitive areas for employers. In order to avoid damaging headlines, employers should take steps to prepare for the Inquiry. We have listed some suggestions below.
Preparing For The Inquiry – Financial Services
- Statistics identifying gender breakdown in various roles including the gender breakdown of any recent redundancies needs to be prepared and, crucially, analysed and acted upon.
- Evidence to demonstrate that the company is trying to increase the amount of women in senior roles would be beneficial.
- If an equal pay audit has not been undertaken consideration should be given about this and consideration of any other steps which have been taken to identify the company's gender pay gap across different levels of the organisation and any measures which the company has in place to address this.
- Collating information on sexual harassment cases and identifying if there are any risks, issues or trends which the company can identify and put measures in place to prevent, including training and policy awareness.
- The gender breakdown of flexible working requests and the impact that flexibility has on attrition and turnover, particularly at higher levels of the workforce.
- Procurement issues and diversity – looking at the information the company provides as part of the tender process for public sector work and developing this.
- Reviewing the diversity information from sources such as the staff survey and any action planning which has taken place from this. Because this is confidential and up to date this sort of information would be very helpful.
Construction Industry
Whilst the press release says rather less about the scope of the construction industry inquiry, it is clear that race relations and migrant workers are the main areas of concern for the EHRC. In line with the Equality Bill's focus on procurement, the EHRC also plan to examine and explain the business benefits of equality in the context of winning public sector work. Areas identified within the press release include:-
- Recruitment And Monitoring In The Construction
Industry
"Only two-and-a-half per cent of workers in the construction industry are from ethnic minorities, compared to eight per cent of the workforce as a whole." ...."If employers get their recruitment practices right they are far more likely to won lucrative public sector contracts. - Race Discrimination And Procurement Practices
"The Inquiry will focus on race discrimination but issues such as procurement practices" - Treatment Of Migrant Workers
"....and the treatment of migrant workers may form part of the inquiry recommendations." - Gender Discrimination
The scope of the Inquiry may also extend to cover other areas such as gender discrimination as further evidence emerges.
So what can employers do to prepare in the construction industry? Some of the analysis gathering measures are similar to the financial services sector, with our additional suggestions below.
Preparing For The Inquiry – The Construction Industry
- Reviewing ethnic monitoring arrangements currently in place both in terms of direct employees and arrangements operated by entities contracted to supply labour only sub-contractors.
- Collating statistics identifying levels of migrant workers and a list of grievances or complaints raised by migrant workers.
- Pulling together information to demonstrate that the company are adhering to the key aspects of the ECHR (previously the CRE's) Statutory Code of Practice on Racial Equality in Employment. http://www.equalityhumanrights.com/en/publicationsandresources/Documents/Race/Code%20of%20practice%20on%20racial%20equality%20in%20employment.pdf.
- Collating information on racial harassment complaints (if any) and identifying if there are any risks, issues or trends which the company can discern and put measures in place to prevent, including training and policy awareness.
Val Dougan
Dundas & Wilson CS LLP
val.dougan@dundas-wilson.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
