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Indirect Discrimination – has anything changed after Essop & Naeem?

Tuesday, May 16, 2017

Earlier in the year, we looked at some of the important cases due for decisions in 2017. The Supreme Court recently handed down its decision in 2 of the cases we mentioned in that blog, Essop and Naeem. Both cases concern indirect discrimination. Time for a round up and a look at whether this brings any practical consequences for employers (or for employees who feel they have been disadvantaged at work). 

The Factual Backgrounds

The Supreme Court heard the cases together although they arose from separate employment tribunal claims, with different factual backgrounds. In Essop, the case concerned employees of the Home Office who were required to pass a Core Skills Assessment to be promoted to higher civil service grades. A report published in 2010 showed that older candidates and those from Black and Minority Ethnic (BAME) backgrounds achieved lower pass rates than younger candidates and white candidates, although no reason could be identified for this.

Naeem concerned the pay scheme applied to prison service chaplains. As a Muslim chaplain, who had first been employed on a sessional basis before becoming a full time employee in 2004, Mr Naeem had accrued less service than a Christian chaplain for the purposes of an incremental pay scheme which incorporated pay rises received over time. Prior to 2002, Muslim chaplains had been employed on a sessional basis because there was a lower demand for their services.

The points of law in issue

To succeed in a claim of indirect discrimination, the employee needs to show that their employer has in place a 'provision, criterion or practice' ('PCP') which applies to all employees, but which puts people with a 'protected characteristic' at a particular disadvantage when compared with other employees, and puts, or would put, the individual bringing the claim at that disadvantage. 

The 'protected characteristics' are: age, disability, gender reassignment, race, religion or belief, sex, sexual orientation, marriage and civil partnership, and pregnancy and maternity.

It is open to an employer to show that the PCP is a proportionate means of achieving a legitimate aim.

The Supreme Court examined the following points of law:

  • Must an employee prove the reason for the disadvantage?

In Essop, the Home Office argued that s19(2)b of the Equality Act 2010 not only required an employee to show that they had been disadvantaged, but also that the disadvantage was caused by the protected characteristic. The Supreme Court rejected this. There is no need for a causal link between the protected characteristic and the disadvantage - or for Mr Essop and his fellow employees to show which aspects of the test were causing them to fail. It was enough that a disproportionately high number of older candidates and BAME candidates failed the assessment. Equally, in Naeem, the Court of Appeal had been wrong to require the reason for the treatment to relate to the protected characteristic.

  • Must all members of the group be disadvantaged?

The Supreme Court dismissed arguments that all members of the group - so, in Mr Essop's case, all older or BAME candidates - had to be disadvantaged. It was irrelevant that some members of that group could pass the assessment.

  • What is the correct 'comparator' in indirect discrimination cases?

Raising what was essentially a 'floodgates' argument, the Home Office suggested in Essop  that an undeserving claimant - for example someone who had failed to show up at the correct assessment centre or who had failed to finish the test - would benefit if the PCP was found to be indirectly discriminatory. The Supreme Court dismissed this, reiterating that the correct comparator would always be someone who was the same in every respect to the claimant apart from the protected characteristic. In Naeem, the Supreme Court confirmed that the correct comparator group was all prison chaplains, not simply those who had been employed since 2002 when Muslim chaplains were employed in the same way as Christian chaplains.

  • What is a proportionate means of achieving a legitimate aim?

In Naeem, the Supreme Court agreed that the pay structure put Muslim chaplains at a disadvantage, but then went on to agree that it was a proportionate means of achieving a legitimate aim - that of ironing out disadvantage overall in the pay structure, and creating a single pay structure. The Employment Tribunal had found that it would take 6 years for a new employee to reach the top of the pay scale, and that although this was a disadvantage to the claimant, it was 'no more than is necessary to achieve the objective'. The Supreme Court confirmed that the Employment Tribunal's findings of fact could not be overturned. In the circumstances, Mr Naeem's appeal was dismissed.

Indirect discrimination going forward

The Supreme Court's decision serves as a clear reiteration of the principles involved in indirect discrimination cases. In Mr Essop's case (and those of his fellow claimants), the matter will now go back to the Employment Tribunal for determination based on the Supreme Court's decision. There will, of course, be the opportunity for the Home Office to argue that the Core Skills Assessment is a proportionate means of achieving a legitimate aim.

In the judgment, Lady Hale remarks that the "…whole trend of equality legislation since it began in the 1970s has been to reinforce the protection given to the principle of equal treatment…" and the clarification in both cases that the claimants in indirect discrimination claims do not have to establish a reason linking the protected characteristic and the disadvantage, only that there has been a disadvantage from the PCP, supports this.

In Naeem, the reason for the disadvantage was known - the sessional employment of Muslim chaplains. However, the Prison Service was working hard to introduce a much fairer pay structure and the disadvantage suffered by Mr Naeem was ultimately justified. This should bring comfort to conscientious employers who take the time to keep their practices, policies and procedures under review, considering the reasons for having them in place and scrutinising for any disadvantage.

You can read the Supreme Court's decision in full here. If the decisions raise any concerns or questions relating to your organisation, please get in touch!

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