Women at the Top

Women at the Top

Eileen A. Pluijm, LLM and Priscilla C.X. de Leede, LLM are lawyers at Russell Advocaten in Amsterdam, the Netherlands. They advise national and international entrepreneurs and organisations in disputes concerning personnel, employee participation and contracts.

Contact information: eileen.pluijm@russell.nl and priscilla.deleede@russell.nl
t: +31 20 – 301 55 55
www.russell.law

Despite measures in Dutch legislation to stimulate more gender equality in workforce, equality between men and women at the top is difficult to achieve. One reason might be that labour participation of women as part-time employees is extremely high in the Netherlands.

In 2019, the percentage of women on management boards of Dutch listed companies was 8.5%. On supervisory boards, the share of women was 26.8%.[1] This is a contrast to other European countries with high percentages of women in management boards, such as Iceland (45.9%) and France (45,2%).[2] Thus, there still seems to be a long way to go before gender equality in leadership positions will be reached. We will discuss the recent EU and Dutch regulations to stimulate women to work at the top and make a recommendation as to how more equality between men and woman at the top can be achieved.

EU regulations

At a European level, for example the United Nations Women Convention and the EU Directive on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation considers equality between men and women as a fundamental principle of Community law.

In addition, the European Commission (EC) aims at giving women a better chance to find a top position in companies. A ‘Union of Equality’ is one of the major priorities of the EU. Already in 2012, the EC approved a legislative proposal for a directive that obliges EU countries to introduce a minimum target of 40% women on the boards of listed companies.

In March 2020, the EC presented its strategy for 2020-2025 for equality between women and men. The strategy commits to ensure that the EC will include an equality perspective in all EU policy areas and tries to bridge the gap between women and men. Key actions of the strategy are ensuring equal pay in the labour market and achieving gender-balance in decision-making and politics. In order to let women lead in business, the EC will therefore push for the adoption of the 2012 proposal for gender balance on corporate boards.

Women on Dutch boards

Legal target

From 2013 up to 1 January 2020, a legal target was set for a balanced distribution of seats between

women and men on boards of large companies.[3] Accordingly, at least 30% women and 30% men should have a seat on management boards and supervisory boards.

The target had a ‘comply or explain’ approach. If a company did not comply with the legal target, it had to explain in the annual report why a balanced gender representation was not achieved and what steps would be taken to reach the target in the future.[4] The law did not prescribe any sanctions if a company did not meet the target.

Binding quota

Six years after the introduction of the legal target, more than 90% of the companies had failed to achieve a balanced distribution of seats.[5] Consequently, in December 2019, it was concluded that the Dutch government should introduce a binding women’s quota. The corresponding legislative proposal is expected to be submitted to the Lower House at the end of 2020. The binding quota is expected to enter into force in 2021.

The legislative proposal includes two obligations:

1. Women’s quota for the supervisory board of listed companies
   As long as the composition of the supervisory board is not balanced, i.e. at least 1/3 is male and 1/3 is female, no new supervisory board member may be appointed who does not contribute to a balanced composition of this board. The appointment shall then be null. Thus, if a supervisory board has less than 30% women and a position becomes vacant, it cannot be filled by a man. Until a suitable woman is found, the chair must remain empty. However, the nullity of an appointment does not affect the legal validity of board decisions.
2. Appropriate and ambitious target for large companies
   Large companies must set their own appropriate and ambitious target for gender equality in leadership positions (including the sub-top). In addition to reporting in the management report, the company must report the progress to the Dutch Social and Economic Council.[6]

Dutch equal treatment legislation

Corporate Governance Code

The Dutch Corporate Governance Code 2016 prescribes that Dutch listed companies are to establish a diversity policy for the composition of the management board, supervisory board and executive committee. Compliance with the Code is also based on the ‘comply or explain’ principle. Case law is offering more and more room to enforce this compliance, amongst others in order to achieve more diversity in companies.

Equal Treatment Acts

The Dutch General Equal Treatment Act[7] prescribes that employers are not allowed to discriminate between women and men in equal work. This prohibition is further elaborated in the Equal Treatment for Men and Woman Act[8] and the Dutch Civil Code.[9]

The Dutch Civil Code[10] also prohibits discrimination on the basis of difference in working time. This is of particular importance in the Netherlands where an incredibly high number of women is working part time: 73.8% compared to 23% of the working men. This number is twice as high as in the rest of the EU, where an average of 30.8% of the female workforce works part time. Since most part-time workers are women, unequal treatment of part-time workers in many cases also means indirect discrimination based on gender.

Preferential policy

Dutch case law shows that several Dutch companies have set up a preferential policy to reduce the disadvantage of women among their employees. For example, certain vacancies are open exclusively for women. The Netherlands Institute for Human Rights considers that a measure which only benefits women can be justified in exceptional situations.

Representative body

Under Dutch law, every employer with at least 50 employees is obliged to establish a works council. The works council has the right to render advice regarding the appointment of a director.[11] Therefore, it might be good to create awareness within works councils to stimulate diversity in management.

Other measures

There is also a variety of regulations to stimulate gender equality in the workforce. The following regulations take aim at working patterns for a more balanced distribution of care tasks:

• Leave arrangements
  The partner of a new mother is entitled to paternity leave (i.e. one week of paid leave and five weeks of additional leave during which the partner is entitled to benefits).Furthermore, both male and female employees are entitled to unpaid parental leave for each child under eight. In case of adoption or taking in a foster child, both male and female employees are entitled to adoption/foster leave.
• Flexible working
  The Dutch Flexible Working Act[12] entitles employees to request an amendment of their working time, working hours, or work location.
• Childcare allowance
  Another measure to stimulate women's labour participation is increasing the affordability of childcare by providing an income-related allowance to parents who are both working, and single working parents.

Conclusion and recommendation

Striving for more women at the top is a hot topic. Both at European level and in the Netherlands the necessary steps have already been taken. However, we should be aware of the still existing inequality between women and men. In the Netherlands, the current legal target based on the ‘comply or explain’ approach does not seem to be reached. To achieve more gender equality at the top, a binding women’s quota should be set and a framework should be created within which preferential policies for women in top jobs would be permissible. Furthermore, it might be useful to focus on creating awareness within works councils to stimulate diversity. Do you want to reach the top?