Government Proposal 60/2024 vp. to the Parliament of Finland on the amendment of section 6 of the Limited Liability Companies Act and section 2 of the Chambers of Commerce Act (TAS/571/2024, issued on 18 September 2024)
The Ombudsman for Equality was heard by the Employment and Equality Committee of the Parliament of Finland on 19 September 2024 in relation to the Government Proposal for the implementation of the EU Directive on improving the gender balance among directors of listed companies and related measures.
A discriminatory selection process should be regulated by the Act on Equality between Women and Men (‘Equality Act’)
The Ombudsman for Equality notes that the decision to implement the Directive according to the minimum level and the decision to not enact the required amendments to the Equality Act to ensure the unbiased selection of board members will further decrease the effectiveness of the Proposal and the real opportunities to intervene with discriminatory practices. The Proposal also does not meet all the requirements of the Directive on sufficient penalties for violations of the Directive’s requirements.
A new provision should be added to the Equality Act on discrimination in the selection of board members. A special provision in addition to section 7 is necessary because the general prohibition of discrimination in section 7 does not in itself give rise to a right for compensation under section 11. The Act does not therefore meet the Directive’s requirement of penalties which are effective, proportionate and dissuasive.
Real opportunities for promoting equality remain limited
The selected minimum level of national implementation and the use of Member States’ options to the fullest extent possible mean that the real opportunities of the regulation for promoting equality remain highly limited.
In the Ombudsman for Equality’s view, the selected scope is too narrow because it excludes the majority of companies from the Directive’s scope.
On the use of the Member States’ options to the fullest possible extent, the Ombudsman for Equality reminds that the European Parliament did not support the option to derogate as it deemed the option as a means to circumvent achieving the objectives of the Directive.
Board member selection in the scope of non-discrimination legislation
The Ombudsman for Equality notes that the Proposal does not specify what means a person of the under-represented gender who suspects discrimination has to receive information from the company, if the company refuses to provide information, nor what judicial means candidates have access to if, after receiving the information, they consider that they have been discriminated against in the selection.
There must be a real opportunity pursuant to the Directive to contest the recruitment process in situations when a person wants to contest the decision not to select them.
However, the Proposal does not discuss the requirement of the Directive to enable bringing the matter before a court or another competent authority, even though the Directive requires that the person suspecting discrimination has access to adequate administrative or judicial procedures.
The Proposal also does not lay down the penalties required by the Directive to listed companies that violate the prohibition of discrimination when selecting board members.
24.09.2024
