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EQUALITY FOCUS

(In)Equality in finance sector workers pay and bonuses
The Equality and Human Rights Commission (EHRC) has published the results of its inquiry into sex discrimination and the gender pay gap in the Financial Services sector. Interestingly the financial sector has one of the highest pay gaps within the UK with the gross salary of a full time woman being 55% lower than the equivalent full time man. When performance related pay was compared, it was found that women tend to earn 80% less than men and in 86% of cases women received a lower starting salary than men who joined in the same period. These startling figures are highlighted by the fact that outside of the financial services sphere the pay gap tends to be much lower at 28%.

The EHRC has recommended firms set gender equality as a business objective, increase pay transparency and increase support for staff with caring responsibilities. To achieve the aim of narrowing the pay gap, an overall improvement in the understanding and awareness of equal pay issues is also called for. It is noteworthy that there is a uniquely young age profile within the financial services industry which could also give rise to other discrimination issues.

The EHRC is also encouraging the Government to strengthen the pay secrecy clause in the Equality Bill which currently only allows women to bring a claim of victimisation if they are disciplined, dismissed or subjected to any other reprimand for discussing pay with colleagues. The EHRC preference is an outright ban on preventing employees discussing their pay.

Further information
For further information please click here to see the report from the Financial Services Inquiry.

NEWS

Home Secretary announces tighter restrictions on skilled workers from outside Europe
The Home Secretary, Alan Johnson, has announced plans to restrict the number of jobs in Britain going to skilled workers from outside the EU. The Home Secretary has stated that this "will ensure that businesses can recruit the skilled workers that the economy needs, but not at the expense of British workers, nor as a cheaper alternative to investing in the skills of the existing workforce".

The main changes are as follows:

• Currently, British employers must advertise jobs via Jobcentre Plus for two weeks before they can recruit from outside Europe. This period will be extended to four weeks.
• The qualification period for skilled foreign workers to be employed by a multinational company before they can be transferred to that company's UK branch will be increased from six months to 12 months.
• The income threshold for a foreign national to become eligible to come to the UK as a skilled worker will be increased from £17,000 to £20,000.

These measures are a result of 16 recommendations made by the Migration Advisory Committee, (the body tasked with providing independent migration advice to the Government) and are designed to provide more opportunities for British workers as well as workers from within the EU. The Government will now work with business groups to develop a plan for implementing the recommendations.

Bonus clampdown
Gordon Brown has pledged a clamp down on excessive remuneration for bankers. In an interview with the Financial Times, Gordon Brown stated that pay and bonuses should be based on long-term success and not short-term speculative gains. He said that banks should "claw back" bankers' rewards if their performance suffered in subsequent years. However, Mr Brown stated that he did not support a mandatory cap on bankers' bonuses as he believes that it would be difficult to enforce.

Mr Brown plans to discuss the bonus issue with other world leaders at the G20 summit later this month. He warned that the UK could not take action in relation to bankers' remuneration on its own. He also said that he hoped they would be able to agree a "global compact for growth which would include co-ordinated steps to withdraw stimulus packages and government support for banks". Other European leaders have also commented that measures should be taken to avoid excessive risk-taking by large banks in the future.

Comment
Gordon Brown's comments are interesting in light of the news that three former Dresdner Kleinwort managers are suing the bank's parent company, Commerzbank, following its refusal to pay them bonuses and severance payments in light of the losses suffered by Dresdner Kleinwort over the past year. This latest case follows a case last month in which four former managers successfully sued Commerzbank. The judge decided that contract law had to be followed and Commerzbank had no basis to withhold the payments.

RECENT CASES

Age Discrimination and Genuine Occupational Requirement
Wolf v Stadt Franfurt am Main
The Advocate General has issued an opinion that a German law restricting applications to join the fire service to those under 30 years old could be justified as a legitimate employment policy under the EC Equal Treatment Framework Directive. The Advocate General also considered that the discriminatory policy could be defended as a genuine occupational requirement.

In the Advocate General's view, the discrimination could be justified due to the need to establish a balanced age range within the workforce so as to maintain an operational service. Evidence from the German government showed that the physical demands of the work involved meant that very few fire-fighters over the age of 50 were still active in frontline service. This meant that it was reasonable to have the age limit in place to ensure that there was a continuous supply of younger fire-fighters to replace those who had moved to lighter duties. The Advocate General reached the view that it was a genuine occupational requirement that new recruits be under 30 because the high level of physical ability required for the job naturally diminishes with age.

Comment
This case will now be considered by the European Court of Justice and it will be interesting to see if the Court agrees with the Advocate General. It may be that the Court finds that the link between the characteristics of age and physical fitness is not so direct to find that age is a reliable indicator of physical fitness, particularly as the evidence put forward by the German government did not show that applicants between the ages of 30 and 50 did not meet the physical capability requirement. The difficulty with these applicants was that they could not continue to meet the requirement for as long as younger applicants. We will keep an eye on this case and provide an update as soon as the European Court reaches a decision.