SDA amendments: an EOR Guide
Michael Rubenstein summarises the key changes introduced by the new Employment Equality (Sex Discrimination) Regulations 2005, which came into force on 1 October 2005.
The Employment Equality (Sex Discrimination) Regulations 2005*, amending the Sex Discrimination Act so as to implement the revised Equal Treatment Directive 2002/73 , came into force on 1 October 2005.
With the exception of some changes to the prohibition of discrimination on grounds of pregnancy and to the Equal Pay Act arising out of the decision of the Court of Appeal in Alabaster v Barclays Bank plc (No.2) (EOR 142), the Regulations are drafted in the same language as that proposed in the consultative draft . We summarise the key changes below.
Indirect discrimination
In the 1975 Act, in section 1(2), for paragraph (b) (definition of indirect discrimination) substitute -
"(b) he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but -
(i) which puts or would put women at a particular disadvantage when compared with men,
(ii) which puts her at that disadvantage, and
(iii) which he cannot show to be a proportionate means of achieving a legitimate aim.
The definition of indirect sex discrimination has now been brought into line with the definitions as regards race, religion or belief and sexual orientation.
There are two main changes. First, the sex discrimination definition previously measured the adverse impact of a provision, criterion or practice by whether "it would be to the detriment of a considerably larger proportion of women than of men". The new test is whether the provision, criterion or practice "puts or would put women at a particular disadvantage when compared with men". The government's response to the consultation† explains: "This provision recognises that it is not always possible or necessary to use detailed statistical calculations to show particular disadvantage. However, employment tribunals will still need to consider whether a provision, criterion or practice causes disadvantage to a particular group of people and to the individual complainant. Statistics could be helpful in establishing evidence of particular disadvantage; however, such evidence could also come from experts or other witnesses."
Second, the test of justification has now been made consistent with the definitions for the other discrimination strands. The previous test of whether the employer can show that the provision, criterion or practice is "justifiable irrespective of the sex of the person to whom it is applied", has been replaced by a burden on the employer to show that the provision, criterion or practice is "a proportionate means of achieving a legitimate aim". The Equal Opportunties Commission (EOC) and the TUC raised the argument that this test is weaker than that set out in the Directive, which requires the employer to show that the means of achieving the aim are "appropriate and necessary", rather than "proportionate". This is a similar debate to that raised when the Framework Employment and Race Directives were implemented in 2003.
The government's response is that the European Court of Justice (ECJ) "has used the terms 'proportionate' and 'appropriate and necessary' interchangeably, explaining that proportionality requires that the means used to achieve an aim must not exceed the limits of what is appropriate and necessary to achieve it … The government believes that if the Directive's formulation was simply copied out, there is a risk that this would be interpreted as a very strict requirement (eg that the legitimate aim pursued was essential to the employer's business) in accordance with the usual English law approach to the concept of necessity. But, as the ECJ case law demonstrates, the term 'appropriate and necessary' in the European context does not set out an absolute test but, rather, one of proportionality involving balancing between the discriminatory effects of a measure and the importance of the aim pursued."
The former definition of indirect sex discrimination will continue to apply to cases of discrimination outside the area of employment and vocational training.
Harassment and sexual harassment
4A. - (1) For the purposes of this Act, a person subjects a woman to harassment if -
(a) on the ground of her sex, he engages in unwanted conduct that has the purpose or effect -
(i) of violating her dignity, or
(ii) of creating an intimidating, hostile, degrading, humiliating or offensive environment for her,
(b) he engages in any form of unwanted verbal, non-verbal or physical conduct of a sexual nature that has the purpose or effect -
(i) of violating her dignity, or
(ii) of creating an intimidating, hostile, degrading, humiliating or offensive environment for her, or
(c) on the ground of her rejection of or submission to unwanted conduct of a kind mentioned in paragraph (a) or (b), he treats her less favourably than he would treat her had she not rejected, or submitted to, the conduct.
(2) Conduct shall be regarded as having the effect mentioned in sub-paragraph (i) or (ii) of subsection (1)(a) or (b) only if, having regard to all the circumstances, including in particular the perception of the woman, it should reasonably be considered as having that effect.
From 1 October 2005, harassment no longer has to be proved as detrimental treatment on grounds of sex. Instead, conduct which falls within the new definition will be unlawful. This brings sexual and sex-based harassment in line with the other strands of discrimination law, and provides an important new remedy.
The clear intention of the EU Directive is that the new right not to be subjected to harassment is meant to be freestanding. That is to say, a comparison with the treatment of a similarly situated man is not required. Nor, conversely, should it be a defence for an employer to say that a man was, or would be, treated in the same way. This is clearly the case under the new Regulations where there is "unwanted verbal, non-verbal or physical conduct of a sexual nature". The threshold issues there are whether the conduct was of a "sexual nature" and whether it was "unwanted".
EOR readers may recall that we have questioned whether the wording of the Regulations adheres to the Directive's aim, both in the context of the amendments to the Sex Discrimination Act and in respect of the draft age Regulations where similar wording is used. The point at issue is whether there is any difference between the language used in the Directive - prohibiting unwanted conduct "related to" sex - and the language used in the Regulations, which requires the claimant to show that the unwanted conduct is "on grounds of" sex. Our argument was that whereas whether conduct was "related to" sex poses an objective test focusing on the nexus between the conduct and the claimant's sex, the very words "on grounds of sex" require a comparison with how a person of the opposite sex was treated. They are the same words, of course, that are already found in s.1 of the Sex Discrimination Act and which have led to House of Lords' authority that the treatment of a woman cannot be regarded as "on grounds of sex" if a man was treated the same. In their submissions on the consultation, the TUC and EOC made a similar point.
Despite this, the government has decided to retain the wording proposed, requiring someone claiming sex-based harassment to show that this was "on grounds of sex". According to the government response: "The Directive uses both 'related to' and 'on grounds of'. In our view, there is no material difference between the two formulations.The Regulations do not require a comparison with how a person of the opposite sex was or would have been treated, so gender-specific abuse could be included within this definition if it satisfied the other criteria."
Whether this is the way tribunals and courts interpret the new Regulations remains to be seen.
Discrimination on the ground of pregnancy or maternity leave
3A. - (1) In any circumstances relevant for the purposes of a provision to which this subsection applies, a person discriminates against a woman if -
(a) at a time in a protected period, and on the ground of the woman's pregnancy, the person treats her less favourably than he would treat her had she not become pregnant; or
(b) on the ground that the woman is exercising or seeking to exercise, or has exercised or sought to exercise, a statutory right to maternity leave, the person treats her less favourably than he would treat her if she were neither exercising nor seeking to exercise, and had neither exercised nor sought to exercise, such a right.
(2) In any circumstances relevant for the
purposes
of a provision to which this subsection applies, a person discriminates against
a woman if, on the ground that section 72(1) of the Employment Rights Act 1996
(compulsory maternity leave) has to be complied with in respect of the woman,
he treats her less favourably than he would treat her if that provision did not
have to be complied with in respect of her.
(3) For the purposes of subsection (1) -
(a) in relation to a woman, a protected period begins each time she becomes pregnant, and the protected period associated with any particular pregnancy of hers ends in accordance with the following rules -
(i) if she is entitled to ordinary but not additional maternity leave in connection with the pregnancy, the protected period ends at the end of her period of ordinary maternity leave connected with the pregnancy or, if earlier, when she returns to work after the end of her pregnancy;
(ii) if she is entitled to ordinary and additional maternity leave in connection with the pregnancy, the protected period ends at the end of her period of additional maternity leave connected with the pregnancy or, if earlier, when she returns to work after the end of her pregnancy;
(iii) if she is not entitled to ordinary maternity leave in respect of the pregnancy, the protected period ends at the end of the two weeks beginning with the end of the pregnancy;
(b) where a person's treatment of a woman is on grounds of illness suffered by the woman as a consequence of a pregnancy of hers, that treatment is to be taken to be on the ground of the pregnancy;
(c) a "statutory right to maternity leave" means a right conferred by section 71(1) or 73(1) of the Employment Rights Act 1996 (ordinary and additional maternity leave).
This provision sets out an express sex discrimination right for a woman not to be less favourably treated on grounds of pregnancy, or on grounds that she is exercising her right to maternity leave, than she would have been treated had she not become pregnant or was not exercising her right to maternity leave. The consultation emphasises, however, that "we are not creating any new rights or duties but it will be clearer that discrimination on the grounds of pregnancy or maternity leave is sex discrimination."
The wording of the Regulations has been altered from that contained in the consultative draft so as to incorporate the concept of a "protected period". This is defined, in accordance with case law of the ECJ, as beginning each time a woman becomes pregnant. It ends either at the end of the maternity leave period to which the woman is entitled or when she returns to work after the end of her pregnancy, whichever is earlier. In the case of a woman who is not entitled to ordinary maternity leave, the protected period ends at the end of the two weeks beginning with the end of the pregnancy.
The new provisions transpose the requirement in the Directive that: "Less favourable treatment of a woman related to pregnancy or maternity leave within the meaning of Directive 92/85/EEC shall constitute discrimination within the meaning of this Directive."
New s.3A(3)(b) is particularly interesting. This provides that "where a person's treatment of a woman is on grounds of illness suffered by the woman as a consequence of a pregnancy of hers, that treatment is to be taken to be on the ground of the pregnancy." This makes clear that detrimental treatment, including dismissal, because of absence stemming from a pregnancy-related illness will be deemed to be unlawful sex discrimination. However, this provision is linked to s.3A(1)(a) and is thus restricted to treatment that takes place during the relevant protected period. It does not mean that it will be sex discrimination for an employer to take account of the continuing consequences of pregnancy-related or maternity-related illnesses after the woman has returned to work.
Amendments to Equal Pay Act 1970: pregnancy and maternity leave
(1) The 1970 Act is amended as follows.
(2) In section 1(2) (meaning of "equality clause"), after paragraph (c) insert -
"(d) where -
(i) any term of the woman's contract regulating maternity-related pay provides for any of her maternity-related pay to be calculated by reference to her pay at a particular time,
(ii) after that time (but before the end of the statutory maternity leave period) her pay is increased, or would have increased had she not been on statutory maternity leave, and
(iii) the maternity-related pay is neither what her pay would have been had she not been on statutory maternity leave nor the difference between what her pay would have been had she not been on statutory maternity leave and any statutory maternity pay to which she is entitled, if (apart from the equality clause) the terms of the woman's contract do not provide for the increase to be taken into account for the purpose of calculating the maternity-related pay, the term mentioned in sub-paragraph (i) above shall be treated as so modified as to provide for the increase to be taken into account for that purpose;
(e) if (apart from the equality clause) the terms of the woman's contract as to -
(i) pay (including pay by way of bonus) in respect of times before she begins to be on statutory maternity leave,
(ii) pay by way of bonus in respect of times when she is absent from work in consequence of the prohibition in section 72(1) of the Employment Rights Act 1996 (compulsory maternity leave), or
(iii) pay by way of bonus in respect of times after she returns to work following her having been on statutory maternity leave,
do not provide for such pay to be paid when it would be paid but for her having time off on statutory maternity leave, the woman's contract shall be treated as including a term providing for such pay to be paid when ordinarily it would be paid;
(f) if (apart from the equality clause) the terms of the woman's contract regulating her pay after returning to work following her having been on statutory maternity leave provide for any of that pay to be calculated without taking into account any amount by which her pay would have increased had she not been on statutory maternity leave, the woman's contract shall be treated as including a term providing for the increase to be taken into account in calculating that pay."
(4) In section 1, after subsection (5) insert -
"(5A) For the purposes of subsection (2)(d) to (f) above -
(a) "maternity-related pay", in relation to a woman, means pay (including pay by way of bonus) to which she is entitled as a result of being pregnant or in respect of times when she is on statutory maternity leave, except that it does not include any statutory maternity pay to which she is entitled;
(b) "statutory maternity leave period", in relation to a woman, means the period during which she is on statutory maternity leave;
(c) an increase in an amount is taken into account in a calculation if in the calculation the amount as increased is substituted for the unincreased amount."
The consultative draft was issued before the Court of Appeal's decision in the Alabaster case, in which it was held that comparators are not required for pregnancy and maternity leave claims. As the government explains, the Regulations now "reflect both the Alabaster principles (that a woman is entitled to a pay rise which she would otherwise have received before the end of her maternity leave, and that there is no need for a male comparator in equal pay cases where the claim is to do with pregnancy or maternity leave). The Court of Appeal judgment did not distinguish between ordinary maternity leave and additional maternity leave."
Territorial Extent
(1) Section 10 of the 1975 Act (meaning of employment at an establishment in Great Britain) is amended as follows.
(2) For subsection (1) substitute -
"(1) For the purposes of this Part and section 1 of the Equal Pay Act 1970 ("the relevant purposes"), employment is to be regarded as being at an establishment in Great Britain if -
(a) the employee does his work wholly or partly in Great Britain, or
(b) the employee does his work wholly outside Great Britain and subsection (1A) applies.
(1A) This subsection applies if -
(a) the employer has a place of business at an establishment in Great Britain,
(b) the work is for the purposes of the business carried on at that establishment, and
(c) the employee is ordinarily resident in Great Britain -
(i) at the time when he applies for or is offered the employment, or
(ii) at any time during the course of the employment."
The territorial scope of the Sex Discrimination Act has now been extended to cover, in certain circumstances, people who work wholly outside Great Britain. This brings the statute into line with the other discrimination strands.
The new test covers employees who work for
British organisations wholly outside Great Britain where the work is for an
organisation in Great Britain, and where the employee is ordinarily resident in
Great Britain, either when she applies for the job or at some time during her
employment. This would apply, for example, to British women seeking a job
involving a posting abroad.
The same amendment has been made to the Equal Pay Act. This will allow transnational comparisons. The government explains: "In relation to claims concerning pay, where a claimant attempts a comparison between workers in different countries, the claimants' work must be either work rated as equivalent, work of equal value or like work of a broadly similar nature, as now. It will remain possible for an employer to point to material differences other than sex to justify any pay differentials and prevent inappropriate cross-country comparisons. If there were genuinely no connection with the difference in sex then these defences will prevail."
This territorial extension is not required by the revised Equal Treatment Directive and the CBI is said to have "expressed strong disagreement with this provision and requested it be removed. The CBI and some other stakeholders were particularly concerned with the implications for pay - in particular, the opportunities to undertake cross comparisons of pay, especially between people working for the same employer in different European countries."
Unusually, the DTI has rejected the CBI's blandishments. Instead, the government response says: "The government recognises that the Directive is silent on the need to amend our domestic legislation in respect of territoriality. However, it provided us with the opportunity to extend the scope in the SDA and EPA ensuring consistency with the other equality strands. It is true, that the Article 13 Race and Employment Directives were also silent on this issue, but the opportunity to introduce similar provisions was taken. We will therefore retain the regulations as proposed. We are confident that employers will be able to mitigate the number of claims by being more transparent in explaining how an individual's pay is formulated."
Pay discrimination
In Amending the Sex Discrimination Act , we pointed out that a controversial omission from the proposed legislation was any mention of pay discrimination, given that Article 3(1)(c) of the amended Directive stipulates that it applies to "employment and working conditions, including dismissals, as well as pay as provided for in Directive 75/117/EEC".
The government has addressed this issue in its response to the consultation, albeit in the section "where the Directive does not require us to take legislative action". It notes that many stakeholders, including the EOC and TUC, suggested that the introduction of the reference to pay requires amendment of the Equal Pay Act to allow hypothetical comparators where sex discrimination cannot be established by other means. Alternatively, it was suggested that the Sex Discrimination Act could be amended to permit a claimant to proceed either under the Equal Pay Act by reference to an actual comparator or the Sex Discrimination Act in reference to a real or hypothetical comparator.
However, the government has concluded "that hypothetical comparators may not be used in equal pay cases because although the amended Equal Treatment Directive mentions pay, it does not amend the Equal Pay Directive. The Equal Pay Directive 75/117/EC is wholly consistent with our EPA, which requires a person who is bringing a complaint under the equal pay legislation to identify an actual current or past worker with whom a valid comparison can be made. The ECJ has held that 'comparisons are confined to parallels which may be drawn on the basis of concrete appraisals of the work actually performed by employees of different sex within the same establishment or service'. Our view is that case law still applies, and therefore actual comparators are still required in equal pay cases. It is also the case that employers have resisted strongly any proposals to allow hypothetical comparators."
