The south London town of Croydon is just another sprawling nondescript suburb. But on Aug. 31, it will become the center of the biggest and potentially most important sex-discrimination suit Europe has ever witnessed. That's when London-based Stephanie Villalba, 42, who ran Merrill Lynch & Co.'s (MER ) private client business in Europe, will resume testimony before an employment tribunal. Villalba is suing Merrill for sex discrimination, unequal pay, and unfair dismissal. The multilingual Harvard graduate was dismissed in July, 2003, for "poor performance." Villalba asserts she was "bullied, belittled, undermined, and underpaid." Her suit claims record damages of $13.5 million.
Merrill says Villalba's claims are "completely at odds with the evidence of other female colleagues." The firm also asserts that gender discrimination was not an issue: Villalba was replaced by another woman, who, the brokerage says, "has been very successful." But Villalba isn't the only woman working for Merrill in Britain who's complaining loudly about sexual discrimination or harassment. In July the bank paid out close to $900,000 in an out-of-court settlement to former in-house lawyer Elizabeth Weston after a Merrill executive allegedly made lewd comments about her breasts and sex life at a Christmas party in London. Merrill denies wrongdoing in the Weston case.
Europeans -- and Americans -- who think sex-discrimination and harassment suits are a purely U.S. phenomenon had better think again. Villalba's is just the latest in a slew of high-profile claims against British employers. In the year ending Apr. 30, there were 14,284 sex-discrimination claims filed at Britain's Employment Tribunals Service, judicial bodies which resolve employment-related disputes, compared with 24,362 filed in the U.S. at the Equal Employment Opportunities Commission last year. Since most British cases are withdrawn or settled before getting to a tribunal, many lawyers say the numbers of complaints are in fact much higher. "For every case that makes it into the newspaper, there are hundreds which don't," says Joanna Wade, a partner at Palmer Wade, a London law firm specializing in employment-discrimination cases.
Companies on the Continent so far have been largely unaffected. But their reprieve could soon come to an end. A new European Union rule taking effect in October, 2005, for the first time defines sexual harassment as a form of discrimination. It also requires EU countries to establish judicial or administrative bodies to enforce equal treatment in the workplace and to remove any caps on awards in such cases. Employers are encouraged to take measures to prevent discrimination. These changes build on a 1997 rule that required EU countries by 2001 to shift the burden of proof in sex-discrimination cases from employees -- where it lies in the U.S. -- to employers. "This will have an enormous impact on employment practices," says James A. Passamano, a former top official at the EEOC and an adjunct professor of European law at South Texas College of Law in Houston.
"YOU OLD BAGS"
Europeans only have to look across the Channel to see what's next. Britain was the first in the EU to eliminate the cap on awards in discrimination claims in 1993. Then, in 2001, it shifted the burden of proof to the employer. "These claims are hitting Britain fast and furious, and European companies are naive if they think it won't happen to them," says Gina M. Higgins, managing director at Marsh Inc. (NMC ), a global risk and insurance services firm in New York ."In the next few years, we're going to see the floodgates open in Europe."
For now, the cases grabbing the headlines are those involving the major investment banks and law firms in the City, London's financial district. The majority of women behind these claims tend to be highfliers whose six-figure settlements reflect their sizable salaries. In April, senior women lawyers Sian Heard and Sian Fellows won $1.7 million after an employment tribunal ruled that a glass ceiling at London law firm Sinclair Roche & Temperley had stunted their careers. In testimony describing the male culture of the firm, which is appealing the decision, the women claimed a senior executive told some female employees that they should be fired "to get in better-looking recruits rather than you old bags." The case has been sent back to an employment appeals tribunal to be reheard.
One reason London's financial firms seem to have a disproportionate number of cases against them is that women bankers, insurers, traders, and analysts earn an average of 43% less than their male colleagues, according to Britain's Equal Opportunity Commission. British women working full-time earn an average of 21% less than men, compared with the average pay gap of 16% across the European Union, according to Eurostat.
Take Liz Pullen, 46, a regional manager for French waste management company Onyx Environmental Group PLC. Following a restructuring, she learned that two male colleagues were given a severance package more than twice the size of the one offered her. She took Onyx to a British employment tribunal. There she found out the men made $107,000 a year, while she made $80,000. "I couldn't believe it," she fumes. "I always assumed as we were doing the same job that my pay was in line with theirs." The tribunal ruled in her favor and she's anticipating a substantial settlement. An Onyx spokesman says the company advocates equal opportunity for all and is "considering the tribunal decision."
Another big issue for British women is the lack of child-friendly policies. In July, 12 British Airways (BAB ) flight attendants filed claims alleging the airline penalized them for working part-time after they had children. The airline denies it engaged in sexual discrimination, and a decision is expected in the autumn.
Some critics in Britain say the removal of the cap on compensation has led too many women to sue at the smallest sign of trouble. "The number of cases is soaring and the amounts, frankly, are just silly," says one British employment lawyer. It's a charge others dispute. "If a woman takes up a case without evidence to back it up, she runs the risk of having to pay damages upwards of $20,000," says Caroline Slocock, chief executive of Britain's Equal Opportunities Commission.
"ASSAULT AND BATTERY"
Across the channel, it's hard for women even to initiate litigation. For a person to sue for sexual harassment in France, he or she would have to prove that it resulted in some form of professional or emotional damage, says Marie-Hélène Fournier-Gobert, an employment lawyer at Barthélémy et Associés in Paris. "An isolated attempt to kiss someone or a sexist comment would not be considered sexual harassment," she says. Americans find such distinctions disturbing. "The French definition of sexual harassment is what we Americans would call assault and battery," says Michael Rubenstein, co-editor of the Equal Opportunities Review in London, who wrote the European Commission's code of practice on measures to combat sexual harassment at work.
One of the biggest sexual-discrimination awards in France went to a man. After allegedly groping two female colleagues on a business trip, a male employee of an Internet security company lost his job. He then sued his employer for unfair dismissal and won $616,000 in 2003. Compare that to Florence Buscail, who took IBM France to court for sexual discrimination that same year. The technician, who claimed she had been passed over for promotion and was being paid 30% less than her male colleagues, was awarded $37,000. IBM France declined comment.
It's a similar situation in Germany, even though legislation banning sexual harassment in the workplace has been on the books since 1994. "There is little awareness of the law," says Kathrin Zippel, an assistant professor at Northeastern University in Boston who is writing a book on sexual harassment in the EU. "Some 80% of the few hundred sexual-harassment cases that have been filed in German labor courts have been filed by men." These are the very men who have been accused of sexual harassment and punished by their employers. Their cases are usually about claiming back pay or getting reinstated. Most German women take their employers to court only after losing their job, Zippel says. "Women don't trust their employers, the male-dominated unions, or the courts to be sympathetic to their claims," she adds.
It's easy to see why. Of the paltry number of cases brought by women in Germany, few have been successful -- and for those that were, the awards rarely justified the hassle of filing a claim. According to Zippel, a woman whose breasts were groped by her boss in front of a witness in 1995 won $616. In 2000 a woman whose boss grabbed her between the legs and fondled her breasts got $3,700.
Some Continental companies are making efforts to diminish sex discrimination. Patrick Thiebart, an employment lawyer with Paris-based law firm Caubet Chouchana Meyer, says companies worried about the implications of the new EU directive "are increasingly asking us to review their employment practices and help put specific procedures in place to prevent harassment." German engineering giant Siemens (SI ) has had a program in place for the last four years that focuses on the advancement of all groups and nationalities, especially women. Now, 17% of the managers and "qualified experts" are women, an improvement over recent years. "We're doing this because there's a business case for it. When you have a problem to solve and only look at it through the eyes of a group of German white males, you'll probably solve the problem. But the chances are better if you have a group with different backgrounds," says Peter Ramm, director of international social policy in Siemens' corporate personnel department.
Still, long-ingrained attitudes are hard to shift. European companies, for the most part, look at the rise in sex-discrimination litigation with baffled bemusement. Says one London-based lawyer with a major international law firm: "When I talk to my colleagues in Europe about sex discrimination, their eyes glaze over." If a wave of lawsuits hits them next year, they'll wake up fast.
By Kerry Capell, with Laura Cohn in London, Rachel Tiplady in Paris, and Jack Ewing in Frankfurt