Obligations of balanced representation between women and men in the management positions of large companies
4 min read
The Rixain Law of December 24, 2021 introduces an obligation of balanced representation between women and men in the management positions of large companies.
Article 14 of the Rixain Law, the first provisions of which entered into force on March 1, 2022, contains a carrot-and-stick approach towards balanced representation between women and men in management roles of large companies.
On the one hand, it introduces an obligation to calculate and publish representation gap data, and on the other hand, financial penalties may be imposed on companies failing to achieve these quantified objectives.
Obligations limited to large companies
These new obligations concern French companies employing at least 1,000 employees for three consecutive accounting years.
For the sake of clarity, the French Ministry of Labour took care to specify in a Q&A that economic and social units ("Unités économiques et sociales") grouping several legally distinct entities are not included.
An obligation to calculate and publish any representation gaps
Article 14 of the Rixain Law establishes an obligation to calculate and publish gaps in representation between men and women, with the idea of "making current inequalities visible to better correct them with binding objectives".
Since March 1, 2022, the companies concerned must publish possible gaps in representation between women and men each year regarding:
- Senior executives or executives entrusted with responsibilities whose importance implies a high degree of independence in the organization, who are empowered to make decisions in a largely autonomous manner, and who receive a remuneration at the highest levels of the remuneration scales offered in the company; and
- The governing bodies or any "body set up within the company, by any act or any corporate practice, for the purpose of regularly assisting the bodies responsible for the general management in the performance of their duties" – this is mainly the case of the management, executive and strategic committees, including when their scope of action covers the group or a business unit.
Calculation of representation gaps should not be carried out globally but together by set, according to the time spent by each woman and man during the reference period (i.e. the accounting year) as a senior executive or member of a governing body. This means that within the company, two representation gaps will exist, one calculated within the senior executives and the other calculated within all the governing bodies.
As a transitional measure, for the year 2022, this publication was to be made on the company's website no later than September 1. From 2023 onwards, this must be carried out, at the latest, by March 1 each year. In the absence of a website, representation gaps may be brought to employees’ attention by any means.
Representation gaps must also be included in the economic, social and environmental database made available to the works council ("comité social et économique") and be communicated to the French Ministry of Labour (through the following link: https://egapro.travail.gouv.fr/) and be made public on the website of the Ministry by March 1, 2023 for the first year. Most of the major French listed companies (CAC40) have already published their results on their websites.
The representation objectives to be achieved
As of March 1, 2026, the proportion of persons of each sex within each group (senior executives and management bodies) may not be less than 30% in the companies concerned.
It should be noted that it will not be possible to compensate for an under-representation within one set by an over-representation within the other set. However, within all the governing bodies, compliance with the objective will be calculated globally. It will therefore be necessary to count all women and men who are members of these bodies and to verify that the 30% objective is respected overall (it is therefore not important that it is not met in some of these bodies).
If the 30% objective is not achieved, the company will have to define corrective measures through a collective bargaining agreement within the framework of negotiations on professional equality and quality of life at work, or failing that, through a unilateral decision of the employer following consultation with the relevant works council.
As of March 1, 2029, the quantified objective will be raised to 40%.
If this new objective is not achieved, the company will have a period of two years to comply, specifying that, after one year, it will have to publish progress objectives and corrective measures adopted to achieve compliance.
If at the end of this two-year compliance period, the company's results are still below the 40% objective, the company may be subject to a financial penalty equal to a maximum of 1% of the total payroll for the calendar year preceding the expiry of the two-year period.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2022 White & Case LLP