Indirect discrimination: a welcome ruling from the Supreme Court

Author: Darren Newman

Darren Newman

Consultant editor Darren Newman explains the importance of the Supreme Court's recent decision in two joined indirect discrimination cases.

The world of employment law breathed a collective sigh of relief when Baroness Hale announced the decision of the Supreme Court in the two joined cases of Essop and others v Home Office and Naeem v Secretary of State for Justice. In both cases the Court of Appeal had taken a very restricted view of what indirect discrimination means, which would have considerably limited its scope. The judgment of Baroness Hale has put the law back on an even keel.

In Naeem, the employee was an imam working as a prison chaplain. He complained that a pay scale that was based on length of service indirectly discriminated against Muslims. This was because the prison service had started to recruit Muslim chaplains only in 2002, with the result that, on average, they were likely to have shorter service - and a lower rate of pay - than their Christian counterparts. The Court of Appeal held that there was no indirect discrimination because the reason for the difference in average pay - length of service - was nothing to do with religion. In Essop, civil servants were required to pass a test in order to qualify for promotion, and an impact assessment revealed that black and minority ethnic (BME) employees were significantly less likely to pass the test than white employees, although there was no evidence as to why that was. Here the Court of Appeal said that, in order to establish indirect discrimination, the claimants had to show that they failed the test for the same reason that BME staff were generally more likely to fail. So in both cases what the Court of Appeal required was something more than a provision, criterion or practice that caused a particular disadvantage: there also had to be some examination of the reason why the disadvantage arose.

However, as the Supreme Court has pointed out, there is nothing in the Equality Act 2010 that requires a tribunal to consider the reason why a provision, criterion or practice causes a particular disadvantage - it is enough that it does. In looking for a "reason why", the Court of Appeal was in danger of muddling direct and indirect discrimination. Direct discrimination is about equality of treatment and the test is why one individual has been treated less favourably than another. Indirect discrimination arises when the treatment is already equal - but the impact of that treatment is not. It aims at achieving a level playing field by eliminating practices that cause an unjustified disadvantage to particular groups. The Court allowed the appeal in Essop and sent the case back to the employment tribunal for it to consider the remaining issues. However, it dismissed the appeal in Naeem. Although the Court of Appeal had applied the wrong test in terms of indirect discrimination, the Supreme Court restored the original finding of the tribunal that the pay scale was a proportionate means of achieving a legitimate aim.

This seems apt because the effect of the Supreme Court's decision is to place fresh emphasis on the issue of justification. An employer cannot necessarily predict the impact of a provision, criterion or practice. As Baroness Hale says, indirect discrimination "is dealing with hidden barriers which are not easy to anticipate or spot". But there will be no indirect discrimination if the provision, criterion or practice is a proportionate means of achieving a legitimate aim. Baroness Hale detects a reluctance in some cases to get to the point of considering justification, as if there is some stigma to be attached to an employer if a case goes that far, and this might in part lie behind the rather contorted reasoning of the Court of Appeal in these two cases. Baroness Hale stresses that there is no shame in applying a provision, criterion or practice that requires justification. There may be very good reasons why it needs to be applied even if it does result in a significant disadvantage for people sharing a protected characteristic. It is surely far better for cases to be decided on whether or not a provision, criterion or practice is a proportionate means of achieving a legitimate aim, than on questions of the obscure underlying causes of a statistical impact.

Not all indirect discrimination issues have been resolved by this decision. Part of what lay behind the approach of the Court of Appeal in Essop was the prospect of a claimant riding the "coattails" of the disadvantaged group. Suppose an individual failed the test to qualify for promotion because of choosing not to prepare for the exam. Could that individual claim indirect discrimination even though the cause of his or her failure had nothing to do with the reason (whatever it might be) why BME staff are less likely to pass? Baroness Hale suggests that the individual could not. In those circumstances, she says, the employee is not disadvantaged by the provision, criterion or practice but by his or her own failure to prepare. That individual could also be said not to be in the same position as the wider group and the material difference between his or her circumstances and theirs means that no proper comparison can be made. However, she also acknowledges a third approach, which is to look to the issue of justification. If the test to qualify for promotion is a proportionate means of achieving a legitimate aim, no one will be able to show indirect discrimination, whatever the cause of his or her disadvantage. Baroness Hale does not mention the European Court of Justice (ECJ) decision in CHEZ Razpredelenie Bulgaria AD v Komisia za Zashtita ot Diskriminatsia [2015] IRLR 746 ECJ, but that case gives clear support to this third approach. Dealing with the placement of electricity meters in areas with large Romany populations, the ECJ ruled that, if a measure amounted to unlawful indirect discrimination, anyone adversely affected by it could bring a claim, even if he or she did not share the same protected characteristic as the disadvantaged group. It is difficult to reconcile that with any limitation on an individual riding on the coattails of a group disadvantage, but this is clearly an issue that will have to be resolved in another case.

Despite the unanswered questions, Baroness Hale's judgment will be the new starting point in any case looking at indirect discrimination. This is a very welcome decision, which effectively presses the reset button on a subject that had become far too complex and unwieldy.

perspective@xperthr.co.uk