ESG in Italy: Legal equality promotion measures

In order to achieve the majority of the global Sustainable Development Goals (SDGs) of the 2030 Agenda, it is essential to fulfill the fifth goal “gender equality”. It is precisely for this reason that the issue of enacting legal measures to promote legal, actual and everyday equality between women and men, especially in the world of work, is of current importance at EU level and in Italy in particular.

More specifically, in addition to extending the legal definition of direct and indirect discrimination, Law No. 162/2021 on the provisions for equal treatment of women and men in the world of work also introduced the “gender equality certification”.

 

This is a certification of the measures taken by individual employers to promote equality between female and male employees. In this context, the reference practice UNI 125:2022 was published, which provides for specific key performance indicators (KPIs) that must be met in order to obtain the certificate issued by a certification body. The reference practice is divided into 6 areas: Culture & Strategy, Governance, HR Processes, Career Opportunities, Equal Pay and Parenthood Protection & Work-Life Balance. For each topic area, specific, differently weighted KPIs are provided in the form of measures that the company must implement. The certification is awarded if the company meets at least 60 % of the KPIs. It is important here that the company implements a suitable management system that also enables appropriate periodic monitoring, as it is a fundamental prerequisite for maintaining certification that the company’s equality situation (and thus the percentage of KPIs achieved) continuously improves.

As an economic incentive for companies that have received the certification, an exemption from the payment of all social security contributions payable by the employer is provided for up to a maximum of 1 % of the contributions due and up to a maximum amount of EUR 50,000.00 per year and company.

The gender equality certification also plays an important role in public tenders and contract awards. In accordance with the new Italian Public Procurement Code, public contracting authorities must include the presentation of the “gender equality certification” in the list of “award criteria” in their tenders and give preference to certified companies when awarding points. It is also provided that the presentation of the certification will lead to a 20 % reduction (cumulative with other reductions provided for by law) in the provisional deposit that companies wishing to participate in a public tender must pay.

Even though preparations are already underway for the creation of a standard for an analogous European certification, the “gender equality certification” in this form currently only exists in Italy. Nonetheless, the certification is certainly a useful tool for implementing positive policies and procedures to promote inclusion and equality within the company. In this context, it should also be noted that many of the KPIs provided for in the reference practice UNI 125:2022 are also the subject of sustainability reporting within the meaning of the Corporate Sustainability Reporting Directive (“CSRD”).

Parallel to the above-mentioned legal provisions, which reward companies that strive to promote gender equality, new anti-discrimination regulations in the form of prohibitions and sanctions have been introduced in Italy.

The above-mentioned Law no. 162/2021, for example, has significantly expanded the definitions of direct and indirect discrimination contained in the Italian Equality Code. The circle of potentially “discriminable” persons who must be protected has been extended and now also includes applicants during the selection procedure. The amendments also stipulate that indirect discrimination occurs when a rule or practice, including of an organizational nature or affecting working hours, puts applicants in the selection procedure or employees of one gender at a particular disadvantage compared to applicants/employees of the other gender or is potentially capable of putting them at a disadvantage (with the exception of conditions that are essential for the performance of the job). Finally, it was introduced that any determination or change in working conditions or working hours that puts or could potentially put an employee in one of three situations explicitly defined by law (disadvantage compared to the majority of other employees, restriction of opportunities to participate in working life or in the company's decisions or restriction of access to professional development) on the basis of their gender, age or personal or family care needs constitutes discrimination.

In this context, Italian case law has recently been increasingly concerned with cases of indirect discrimination, which can occur in a wide variety of ways in the world of work. These often concern forms of working time organization that are likely to indirectly discriminate against certain groups of employees. A number of rulings published in recent months have confirmed that working time arrangements that put employees with young children at a particular disadvantage led to indirect discrimination to the detriment of working parents, and in particular working mothers, and therefore to indirect gender discrimination. The only exceptions to this are cases in which the employer can prove that the indiscriminate application of such a working time regulation to all employees, regardless of whether they are parents or not, is indispensable for the fulfillment of specific and proven needs of the company.

Of particular interest in the area of case law is, for example, the recent conviction of a well-known Italian airline to pay damages to excluded pregnant applicants who claimed gender discrimination in court. In its decision, the court took into account the birth statistics published by the National Statistics Office, which showed that there is currently 1 birth/year per 30 women of childbearing age in Italy. Since it was established that none of the 412 women employed by the airline were pregnant after being hired, the court found that the selection process in this case was discriminatory and ordered the employer to pay damages.

In this context, it is also worth mentioning the lighter burden of proof for the plaintiff under Article 40 of the Italian Equality Code, which can often lead to increased risks for companies in court proceedings. If the plaintiff presents factual evidence, including statistical data, for example on recruitment, remuneration, assignment of tasks and qualifications, career development and dismissal, which is capable of precisely and conclusively substantiating the presumption of the existence of agreements or conduct constituting gender discrimination, the burden of proving the absence of discrimination lies with the defendant. As a precautionary measure to reduce the risk of litigation, companies should therefore implement clear and objective policies for all “sensitive” processes (including selection procedures) and always make decisions on the basis of documented and objective factors. In this context, it is also useful to regularly monitor and report on the distribution of employees with a “risk factor” in the company organization chart.

However, it is not only the legal and defense costs during a lawsuit and the corresponding expenses in the event of a defeat that are considerable costs if discrimination is established in court: companies that engage in discriminatory acts are also excluded from receiving the “equality certification” and therefore cannot benefit from the contribution relief and benefits described above.

All in all, there is still a lot to do, but one thing is certain: companies must ensure the effective implementation of gender equality policies with appropriate processes and monitoring in order to protect the company itself and at the same time fulfill their social responsibility as an employer.