Supreme Court clarifies the scope of indirect discrimination

Posted by Matthew Smith on
After several years of litigation and different conclusions reached by the EAT and Court of Appeal, the Supreme Court has now clarified the scope of indirect discrimination. In Essop and others v Home Office (UK Border Agency) the Supreme Court ruled that where indirect discrimination is alleged, there is no need for the claimant to show the reason why a provision, criterion or practice causes  disadvantage for an affected group and individual. It is sufficient to show that there is a disadvantage.

Background

Mr Essop had worked as an immigration officer since 1995 and was the lead claimant in a group of 49 employees. In order to be promoted to certain civil service grades, the Home Office required employees to pass a Core Skills Assessment ("CSA") regardless of the particular role. Having passed the CSA, employees would then be required to pass a Specific Skills Assessment relevant to the particular post. If they failed the CSA, those candidates were not eligible for promotion. In 2010, the Home Office commissioned a report from occupational psychologists which showed that the CSA pass rate for black and minority ethnic ("BME") candidates was 40.3% of the pass rate for white candidates. The pass rate for candidates aged 35 or older was 37.4% of the pass rate for those below that age. Nobody knew why the proportion of BME and older candidates failing the CSA was significantly higher than for white or younger candidates.

Mr Essop and his colleagues brought claims of indirect discrimination based on the protected characteristics of race and age.

Under section 19 of the Equality Act 2010, an employer indirectly discriminates against an employee where they apply to the employee a provision, criterion or practice ("PCP") and the PCP puts both the people who share the employee's protected characteristic, and the individual employee, at a particular disadvantage compared to others who do not share the protected characteristic. An employer is able to justify the PCP if it is a proportionate means of achieving a legitimate aim.

Mr Essop argued that the requirement to pass the CSA as a pre-requisite to promotion was a PCP and that there was a significant statistical difference in the pass rates between older, BME employees and younger, non-BME employees. Mr Essop himself did not pass the CSA. His protected characteristics were age and race.

The proceedings

The parties agreed that a preliminary hearing was required at the Employment Tribunal to determine whether Mr Essop and the other employees were required to prove what the reason for the lower pass rate was. The employees argued that they did not need to prove the reason but the Home Office argued that they did.

The Employment Tribunal held that the Home Office report established that there was the necessary "group disadvantage" for older, BME employees. However, it was not enough that Mr Essop was part of the group that had failed the CSA. To show that he had suffered a personal disadvantage Mr Essop also needed to show why he had failed the CSA. If an employee did not show a causal link between the disadvantage suffered by the group and the disadvantage suffered by the individual, it would result in an employer having to justify a PCP in circumstances where a particular individual might not have suffered any adverse impact. The Employment Tribunal held that Mr Essop and the other claimants had to establish the reason why they failed the CSA in order to determine whether they suffered the same disadvantage as the group.  

The employees appealed successfully to the Employment Appeal Tribunal ("EAT"). It was enough to show that the group had suffered, or would suffer the particular disadvantage of a greater risk of failing the CSA and that each individual had in fact suffered the disadvantage of failure.  

The Home Office appealed to the Court of Appeal which overturned the EAT's decision. The Court of Appeal held that the employees had to show why the requirement to pass the CSA put the group at a disadvantage and that individually, they had failed the test for the same reason. For instance, there would be no causal link between the PCP and the individual's disadvantage if the individual did not turn up at the right time and place to take the test.  

The employees appealed to the Supreme Court.

Supreme Court decision

The issue to be determined was whether or not section 19 of the Equality Act 2010 requires that the reason for group disadvantage be established and that the reason for the individual's disadvantage be the same. The Supreme Court held that the Equality Act 2010 (and preceding legislation) did not include a requirement to explain why a PCP places a group at a disadvantage- it was enough that it did. Consequently, Mr Essop did not have to prove the reason why the PCP put the group sharing the protected characteristic at a particular disadvantage. However, there had to be a causal link between the PCP and the disadvantage suffered by the group and the individual. This addresses the situation in which an individual sharing the protected characteristic of the group fails the CSA but does so because, for example, they attended on the wrong day or in the wrong place.

In reaching its conclusion the Supreme Court held that the concept of indirect discrimination has the following salient features:

  • None of the various definitions of indirect discrimination include an express requirement for an explanation of the reasons why a particular PCP puts one group at a disadvantage when compared with others. It is enough that it does. Usually, the reason will be obvious but sometimes it will not.
  • There is a contrast between the definitions of direct and indirect discrimination. Direct discrimination expressly requires a causal link between the less favourable treatment and the protected characteristic. Indirect discrimination does not. Rather, indirect discrimination requires a causal link between the PCP and the particular disadvantage suffered by the group and the individual. This is because the prohibition of direct discrimination aims to achieve equality of treatment whereas the prohibition of indirect discrimination aims to achieve equality of results.
  • The reasons why one group may find it harder to comply with a PCP "are many and various". These "context factors" could be genetic, such as height, or social and do not necessarily put every member of the group sharing the protected characteristic at a disadvantage. The reason for the disadvantage may not in itself be unlawful or under the control of the employer.
  • There is no requirement that the PCP puts every member of the group sharing the particular protected characteristic at a disadvantage. The fact that some BME or older candidates passed the CSA was irrelevant. The group disadvantage was evident by the fact that the proportion of those who passed was smaller than the proportion of white or younger candidates.
  • It is common for the disparate impact or particular disadvantage to be established on the basis of statistical evidence but such evidence can only show a correlation with certain outcomes – this is not the same as a causal link.
  • It is always open to an employer to justify a PCP.    

All these salient features regarding the definition of indirect discrimination were present in Mr Essop's case and the Supreme Court unanimously allowed the appeal. It held that there was no requirement to establish the reason why the PCP puts or would put the affected group sharing protected characteristics at a particular disadvantage. What is necessary is a causal connection between the PCP and the disadvantage suffered both by the group and the individual. The case was remitted to the Employment Tribunal to determine this. 

Another case on the scope of indirect discrimination, Naeem v Secretary of State for Justice was also heard by the Supreme Court at the same time.

Mr Naeem began working as a chaplain in the Prison Service in October 2004. Before 2002, Muslim chaplains were engaged on a sessional basis rather than employed on a salaried basis because there were too few Muslim prisoners to justify this. Pay progression was determined by length of service and by April 2011, the average basic pay for a Christian chaplain was £33,811 and for a Muslim chaplain £31,847.

Mr Naeem brought a claim for indirect discrimination on the basis that the pay scheme indirectly discriminated against Muslim or Asian chaplains because they tended to have shorter periods of employment than Christian chaplains.

The Employment Tribunal held that the pay scheme was indirectly discriminatory in relation to both race and religion. However, the pay scheme was objectively justified as a means of achieving a legitimate aim, that is, to reward and retain chaplains who had built up experience and knowledge over time. Both parties appealed and the EAT allowed the Secretary of State's appeal. It held that the pay scheme was not indirectly discriminatory at all because chaplains employed before 2002 should be excluded from the comparison between the two groups. Although not required to do so, the EAT considered the issue of justification and said that, if there had been indirect discrimination, this would not have been objectively justified. The pay scheme could have been modified to avoid the disadvantage suffered.

Mr Naeem appealed unsuccessfully to the Court of Appeal. It held that it was not enough to show that the length of service criterion had a disparate impact on Muslim chaplains. It was also necessary to show that the reason for that disparate impact was something peculiar to the protected characteristic in question. The reason for the pay disparity was the more recent start dates and this did not relate specifically to Muslims.

On appeal, the Supreme Court held that, as with Essop, there was a prima facie case of indirect discrimination. However, in Mr Naeem's case, the Employment Tribunal had found as a matter of fact that the pay scheme was objectively justified and the Supreme Court could not interfere with that decision and dismissed Mr Naeem's appeal.

Comment

Unlike direct discrimination, where discrimination occurs because of a protected characteristic, indirect discrimination relates to acts which are, on the face of it, neutral and which are not intended to disadvantage a group of people with a particular protected characteristic. The complexity of the scope of indirect discrimination is clear from the Essop and Naeem litigation and the different decisions reached at the various appeals. However, the summary of the salient features of indirect discrimination set out by the Supreme Court is helpful.     

In removing the Court of Appeal's requirement that the reason why a provision, criterion or practice causes disadvantage for an affected group and individual must be established, a potential additional evidential burden facing claimants has now been removed. The focus will now be on whether the PCP was a cause of the disadvantage, not why it was. In practice, these two things may be both apparent and closely linked but it's clear now that only the causal link is needed for a successful claim.

Regarding the issue of objective justification, employers should carefully monitor their policies and practices to see how they impact on various groups. If there is a disparate impact, employers should carefully consider whether there is another way to achieve the desired result (i.e. their legitimate aim) which either does not have a disparate impact or which minimises that impact (i.e. is a proportionate means of achieving the aim). This is because it will always be hard for an employer to justify a potentially discriminatory provision, criterion or practice if there is another way to achieve the same outcome without any (or a lesser) discriminatory impact.

About the Author

Matthew heads the firm's Education Sector and also has extensive experience of both contentious and non-contentious employment work, in particular Employment Tribunal cases.

Matthew Smith
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