Sex suits could bite banks in Europe

This week has seen two sex discrimination cases involving a French and German bank in the City of London. Lawyers say similar cases could become more common in Paris and Frankfurt.

In one, Arianna McGregor-Mezzotero, a banker at BNP Paribas, received around 500,000 in compensation after a tribunal upheld her claim for sex discrimination following an 80% cut in her bonus while she was pregnant. In the other, Beth Baird, a former banker at Dresdner Kleinwort Wasserstein, launched a 500,000 claim against her the bank for sacking her whilst on maternity leave, allegedly because she wanted a large family.

Such cases are nothing unusual in the City of London, where the mere words 'sex discrimination' are enough to send banks stampeding in the direction of employment lawyers. In Frankfurt and Paris by comparison, sex discrimination cases are rare. But Baird and McGregor-Mezzotero's grievances could be a forewarning of things to come.

Germany: Playing catch-up

The UK has a long history of fighting discrimination. The Equal Pay Act of 1970 and the Sex Discrimination Act of 1976 placed the issue on the statute books over two decades ago.

Domestic legislation has been strengthened by a series of anti-discrimination directives from the European Union. In 2002 the EU issued a directive on defining the constituents of gender-based discrimination. In the UK there have been a rash of subsequent cases, at least ten of which, and probably a lot more, have involved investment banks.

By contrast, Germany and France make such litigation more difficult: for employees, not employers. 'Our existing discrimination laws are very limited,' says Hans Pieter Loew, an employment partner at Lovells in Frankfurt, 'There is a statutory obligation not to treat men and women differently on the basis of gender, but the entire burden of proof falls upon the employee and it has been hard to demonstrate this is the case.'

In the absence of a legal recourse, gender discrimination issues in Germany have typically fallen to works councils to resolve, says Loew.

This will not be the case for much longer. Germany is set to adopt the EU directive on gender equality later this year, and Loew says it could have a revolutionary effect. The EU directive shifts the balance in favour of employees: once a claim has been made, it is up to employers to disprove it.

Loew says banks are already seeking advice: 'We are absolutely warning our investment banking clients to be aware of this new legislation. It will make a tremendous difference; they will need to ensure policies are in place to make sure bonuses are absolutely objective.'

Paris: Giving employees a hand

France passed a directive requiring that male and female workers are paid equally for the same job in 1975 and has already adopted the EU gender discrimination directive. But gender discrimination claims are rare. Clare Toumieux, an employment lawyer at Flichy & Associés in Paris, says discrimination claims in France typically centre on the speed of promotion for equally qualified employees, instead of pay differentials on the basis of sex.

The French government strengthened its anti-discrimination efforts last month, with a law sanctioning the creation of a new supervisory body to fight discrimination and promote equality (Haute Autorité de Lutte Contre les Discriminations et pour l'Egalité - 'HALDE').

Diane Bacquet-Herbaux, an employment lawyer at Freshfields in Paris, says people trying to bring discrimination claims in France have been stymied by problems proving discrimination exists. This should alter following the creation of HALDE, which will help collect evidence of discrimination in the workplace and elsewhere.

Philippe Thomas, an employment lawyer at Lovells in Paris, said the new body will prompt a more proactive approach to discrimination: 'The wave of litigation we have seen in the City of London may now be coming to Paris,' Thomas says. 'We know there are a lot of pay differences between the sexes in France, but so far there have not been many cases.'

As in the UK, he warns bonuses are likely to be flashpoint for disputes.

Some banks are ready... or not

Some banks are already prepared for the anticipated anti-discrimination drive. US banks already treat continental Europe with similar caution to the ultra-litigious US. 'We apply the same diversity standards across all business areas,' says an MD at a US bank in France.

Some European banks have followed their example. HypoVereinsbank and Deutsche Bank in Frankfurt, for example, already have so-called 'diversity coordinators,' charged with ferreting out discrimination. Dresdner Kleinwort Wasserstein does not have a diversity officer but does have a 'clear equal opportunities policy' according to a spokesperson.

'We don't have to do any homework regarding this legislation,' says Patrick Fischer, a spokesman in the Frankfurt office of Deutsche Bank, whose German diversity team was formed in 2001. 'We already operate in countries where similar laws exist and we are well prepared.'

Nevertheless, others appear to be lagging behind. For example, BNP Paribas and Société Générale are both bereft of diversity experts. 'Discrimination cases are less common than in England,' explains a spokesperson at BNP Paribas in Paris. Unfortunately, this may not remain the case for long.