Aishwarya Lakshmi
Introduction:
“Gender equality is more than a goal in itself. It is a precondition for meeting the challenge of reducing poverty, promoting sustainable development and building good governance” said Kofi Annan.
The perception of ‘masculine’ and ‘feminine traits, with the former being associated with assertiveness, leadership, physical strength and dominance and the latter with emotional, supportive, nurturing and submissive characteristics, has been used to justify sex differentiated roles. [Parsons, T. and Bales R. F., Family Socialization and Interaction Process, Glencoe: Free Press, (1955).] Such gender-based discrimination is especially prevalent in the corporate culture in terms or recruitment, remuneration and reward.
Several internationally acclaimed human rights instruments including the UDHR and ICCPR guarantee two basic human right of the right to equality. This article doctrinally analyses the guarantee of the right to equality to women in the Indian corporate arena. The article discusses about how difficult it is for women to break the ‘glass ceiling’, about the representational equality in the corporate decision making process and also about how equal remuneration and recruitment is not satisfactory. It finally attempts to suggest additional policy measures that may be implemented in order to further secure right to equality in a wholesome manner.
Women in Business – Overcoming the Glass Ceiling:
The term ‘glass ceiling’ was first coined in March 1984 by Gay Bryant, the former editor of Working Women magazine. According to Bryant, after reaching a certain height in the corporate ladder, women get stuck, some stay in that level, some start their own venture and some go back to raise their families.
Cotter et al defined four distinctive characteristics to be met to conclude that a glass ceiling exists. A glace ceiling inequality represents:
A gender or racial difference that is not explained by other job-relevant characteristics of the employee.
A gender of racial difference that is greater at high levels of an outcome than at lower levels of an outcome.
A gender or racial inequality in the chances of advancement into higher levels, not merely the proportions of each gender or race currently at those higher levels.
A gender or racial inequality that increases over the course of a career.
In corporate world, the percentage of women and men 60% and 40% or may be 70% and 30% but when it grow to the higher level like CEO and board of directors it become approximately 85% male and 15% female or may be less than this. Stereotypical reasons contribute to the existence of glass ceiling and women in business ought to strive really hard to break the barrier and flourish. Of course, more and more women are joining the boards creating a ripple effect and getting more women leaders to workplace, yet they face a number of barriers in reaching leadership both structurally, as well as internally within organizations; and an uneven playing field is among the top challenges.
It is important that companies create a conducive climate for working women, make policies that help them to strike a balance between work and family, have open communication policies, identify talent at a young age to groom them for managerial positions and include mentoring and leadership as a part of its work culture, thereby taking steps to shatter the glass ceiling.
The position of a Women Director in the Boardroom – A tussle between the Letter and Spirit of the Law:
Every listed company and, every other public company having a paid–up share capital of 100 crore rupees or more; or turnover of 300 crore rupees or more is mandated as per the Companies Act, 2013 to appoint a woman director on the Board of directors [Proviso to Section 149(1) read with Rule 3 of The Companies (Appointment and Qualification of directors) Rules, 2014.] In case of any intermittent vacancy of woman director the same has to be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy whichever is later. [Rule 3 of The Companies (Appointment and Qualification of directors) Rules, 2014.] This new insertion in the 2013 Act was brought as a step to further women empowerment, reduce gender discrimination and to ensure board diversity. A diverse board garners different perspectives to the same problem thus enabling a vivid and versatile decision making process.
After the mandate, companies such as Reliance Industries, appointed Nita Ambani, wife of Chairman Mukesh Ambani as a director in order to comply with this rule. Companies such as Apollo Hospitals, Asian paints also have their women family members on their board to further the compliance of the law in its letter.
In furtherance of the Kotak Committee report on Corporate Governance, SEBI mandated that there should be at least one woman independent director in the top 500 listed entities by market capitalization by April 1, 2019. Also, it added that there should be at least one woman director in the top 1,000 listed entities, by April 1, 2020.
However, even as in the end of March 2020 many companies were yet to induct women independent directors to the board. Various reasons for non-appointment including non availability of potential candidates, lack of proven track record etc. are cited. There are still some more companies yet to appoint Women Independent Director. Kiran Mazumdar Shaw, the chairperson of Biocon rightly pointed out that “There may be an unfavorable bias against women in promotion because the people taking decision are mostly men.”
The general compliance is only in terms of the letter of the law and not with the spirit of the law. Rather than merely showing a lip-sync attitude, companies ought to ensure that the wisdom of the legislation is fruitful in application.
Equal Remuneration and Equal Recruitment Opportunity – Still a distant dream?
India passed the Equal Remuneration Act way back in 1976, which prohibits discrimination in remuneration on grounds of sex. Brought forward to further the Directive Principles of State Policy as envisaged in Article 39 of the Constitution of India, this Act applies to the whole of India and has an overriding effect. The doctrine of “equal pay for equal work” has assumed the status of a fundamental right. In the case of Mackinnon Mackenzie Co. Ltd. v. Audrey d’Costa and Others, AIR 1987 SC 1281, the Supreme Court while extending the provisions of the Act to confidential female stenographers in order to receive equal remuneration as their male counterparts, interpreted the provisions of the Equal Remuneration Act and laid down categorically that doing ‘same work or similar nature of work’ was the key factor to be considered in the application of the Act and also that the financial ability of the employer is not a consideration for the implementation of the Act.
But in practice, a recent International Labor Organization (ILO) global survey found India's gender pay gap for formal workers in urban areas at 23 per cent. It ranked India 28th out of 30 countries. Similarly, the World Economic Forum's, or WEF's, Global Gender Gap Index, which surveyed 144 countries, ranked India at 108, far below the global average and behind neighbors Bangladesh and China.
Also, the test for paying equal remuneration is ‘same work or work of similar nature’. Hence recruiters do not even appoint women candidates for certain posts, either due to a conscious and explicit bias or unconscious and implicit bias, considering several factors like starting a family, maternity, inability to accustom to modern business methods like wine and dine with clients due to family restrictions etc.
Having a law that is crystal clear about the entire recruitment process, stating with precision the nitty-gritty to be covered by the human resource department is impossible. However, ethical business standards should involve practices like having gender neutral job descriptions, adopting blind resume reviews, testing job performance beforehand, institutionalizing gender diversity in the workplace etc. Investors and stakeholders should be keen on the gender neutrality of recruitment policies of the corporation in order to drive the decision of the board.
‘Voluntary Guidelines’ – Do they create any accountability of Investors for Human Rights abuses?
In order to give effect to the UNGP, India brought forward the National Voluntary Guidelines on Social, Environmental & Economic Responsibilities of Business (“NVGs”) in the year 2011, which were recently amended in 2018 and called as the National Guidelines on Responsible Business Conduct, 2018 (“NGRBC”). It provides 9 guiding principles to govern investor actions in India. Both NVG and NGRBC adopt a soft-law approach by encouraging and incentivizing business entities to align themselves with these Guidelines.
The 2018 NGRBC are designed to be used by all businesses, irrespective of their ownership, size, sector, structure or location. They further provide that businesses investing or operating in India, including foreign multi‐national corporations, are expected to follow these guidelines. It also envisages a voluntary reporting framework which is based on certain indicators. The principal purpose of this reporting framework is to serve as an internal tool for businesses wishing to align themselves with the 2018 NGRBC.
Principle 4 requires businesses to respect the interests of and be responsive to all its stakeholders, including that of the vulnerable and marginalized.
Principle 5 of the NGRBC requires businesses to respect and promote human rights. It suggests that businesses should put in place policies, processes, and structures that demonstrate respect for human rights. Such processes must include the responsibility to conduct human rights due diligence in order “to identify, prevent, mitigate and account for how they address adverse human rights impacts”. This principle also encompasses the need to ensure that the responsibility for addressing human rights impacts is assigned to the appropriate level and function within the business. Further, this Principle urges business to be especially responsive to those persons who are most vulnerable to, or at risk of, such adverse human rights impacts. Additionally, it requires businesses to promote the awareness and realization of human rights across its value chain.
Considering that the terminology used is only to ‘respect’ and ‘be responsive’ and further given the fact that these are mere voluntary guidelines, there is neither any legal binding framework in India to regulate human right abuses by large corporations nor any accountability of investors. Being a developing country more susceptible to human rights abuses by big investors from developed countries, India should act speedily.
India’s National Action Plan to implement UNGP on Business and Human Rights – What is the lookout for a corporate woman?
Spread across 31 foundational and operational principles, the UNGPs are broadly based on three pillars:
Pillar I ‐ The State Duty to Protect Human Rights.
Pillar II ‐ The Corporate Responsibility to Respect Human Rights.
Pillar III ‐ Access to Remedy.
The objective of the UNGPs is to enhance standards and practices with regard to business and human rights to achieve tangible results for affected individuals and communities, and thereby contribute to a socially sustainable globalization. While the UNGPs do not create new legal obligations, they clarify and elaborate on the implications of relevant provisions of existing international human rights standards. In June 2014, the UNHRC vide A/HRC/26/L.1. called upon its member States to develop a National Action Plan to promote the effective implementation of the UNGPs.
In the light of the United Nations Guiding Principles on Business and Human Rights, the Ministry of Corporate Affairs under the aegis of the Indian Government has released the Zero Draft of the National Action Plan for implementing the UNGP. For India, the preparation of the NAP will require a dialogue and engagement with all Ministries and Departments of Government of India, State Governments and relevant stakeholders. This Zero Draft kick starts the process of preparation of the NAP.
The Working Committee constituted after stakeholder discussions will identify key priority areas for the Government for effective implementation of the principles envisaged under the UNGPs and accordingly set objectives to be achieved in a time bound manner.
One of the crucial considerations for the Working Committee is to balance the human rights of women with the financial motive of business entities. The National Action Plan ought to include objectives that would further non-discrimination, equality and security. For this, the consideration of the following key points is essential –
The requirement of companies to ensure compliance with the statutory requirements under corporate governance and board composition in letter and in spirit.
The requirement of companies to ensure strict adherence to the principle of non-discrimination in recruitment and remuneration, the failure of which has to be given a serious consequence.
Making Human Rights Due Diligence Report a mandatory component of the Annual Report and circulated among all the shareholders. The Human Rights Due Diligence Report shall inter alia include the existing human rights law applicable to the business, the compliance thereof, alleged violations (if any), consequent defense or redress thereof and also about human rights impact assessment before taking up any new project.
Conclusion:
Women face both adverse and favorable situations in their quest for equal rights in the corporate world. The existing legal regime, though commendable is deficient to meet the pressing issues faced by corporate women. As much as amendments in law are required to extend a helping hand to these struggling women, it is also the duty of an ethical management to ensure that the human rights of women are protected. Employer perceptions of fairness and equity are important, and clear and transparent policies can make employees feel confident that decisions affecting their career advancement are being made based on merit. If the expectations of the corporate women are introduced by way of statutory amendments and by the national action plan it will lead to the practical application of the human rights that has thus far remained merely on paper.
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