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Supreme Court clarifies indirect discrimination test

11 April 2017

The Supreme Court has given a clear explanation of how the test for indirect discrimination works, looking in particular at whether it is necessary to know why a group is disadvantaged by an employer’s policy.

Background

Indirect discrimination arises where an employer’s provision, criterion or practice (“PCP”) puts people sharing a protected characteristic at a particular disadvantage. In other words, it occurs where the employer treats everyone the same but this disadvantages a protected group. Where this happens, the employer can justify the treatment if it has legitimate reasons for the PCP and has acted proportionately.

In many cases, it is obvious why one group is disadvantaged. For example, if an employer has a requirement that all employees must be at least six feet tall, this will disadvantage women as a group because women tend to be shorter than men. Similarly, a rule that no employees can wear head coverings will tend to disadvantage Muslims, due to the fact that many Muslim women wear headscarves or veils.

But what happens where there is no obvious explanation for why an employer’s PCP disadvantages a particular group? That was the issue in two cases which have been considered together by the Supreme Court.

Essop and others v Home Office

The issue in the first case was the test used for promotion in the Home Office, known as the Core Skills Assessment (“CSA”). All candidates were required to sit the same CSA test, but the pass rate for both Black and Minority Ethnic (“BME”) candidates and for candidates aged 35 or older was much lower than the pass rate for white candidates and for younger candidates. There was no explanation for why BME and older candidates failed the CSA more often. In order to make a claim for indirect race and age discrimination, was it necessary for Mr Essop and others to prove the reason for the lower pass rate? Or was the simple fact of the lower pass rate enough?

Naeem v Secretary of State for Justice

The second case concerned pay scales for chaplains in the Prison Service. These scales increased with length of service, so everyone was treated the same. However, Muslim chaplains were only able to be engaged as salaried employees from 2002 onwards. Mr Naeem claimed that the length of service pay scale was indirectly discriminatory against Muslim chaplains, who had lower average basic pay than Christian chaplains. He said this was due to the fact that Muslim chaplains could not be employed before 2002. The question here was whether it was necessary to show that the reason for the lower pay was related to the fact Mr Naeem was a Muslim.

The Supreme Court’s decision

The Supreme Court decided that it was not necessary to be able to explain why a PCP disadvantages a particular group in order to show indirect discrimination.

In Mr Essop’s case, this meant that it did not matter why BME and older candidates were disadvantaged by the CSA test by having a lower pass rate. The fact of the disadvantage was enough to show indirect discrimination. It was then up to the employer to justify its use of the CSA.

In Mr Naeem’s case, this meant that there was no need to show a direct link between being a Muslim and the reason why the length of service pay scale put Muslims at a disadvantage. The Supreme Court thought this was a more obvious case than Essop, as there was actually some connection between being a Muslim and shorter length of service, due to the inability to be employed as a Muslim chaplain before 2002. Again, the employer then needed to justify its pay scale to avoid a finding of unlawful indirect discrimination.

The Supreme Court’s judgment also set out a number of useful reminders about the test for indirect discrimination:

  • Indirect discrimination is all about achieving a level playing field and dealing with hidden barriers, which are not easy to anticipate or to spot. There may be many different reasons why one group may find it harder to comply with a PCP than others.
  • There is no requirement for a PCP to put every member of the group at a disadvantage. For example, some women may be tall enough to meet an employer’s height requirement, but it will still be indirect discrimination if more women than men are disadvantaged.
  • An individual claimant still has to show that there is a causal link between the PCP and their own disadvantage, which is the same as the disadvantage caused to the group. For example, in Mr Essop’s case, his claim would not succeed if he failed the CSA because he simply did not prepare or did not turn up at the right time.
  • The pool for considering the impact of the PCP should generally be all workers who are affected by that PCP, whether positively or negatively. In Mr Naeem’s case, all chaplains were covered by the incremental pay scale. So, all chaplains should be considered when assessing disadvantage, rather than just those employed from 2002 onwards.
  • It is always open to the respondent to show that a PCP is justified, and there will be no finding of unlawful discrimination unless the justification fails.

Implications

Indirect discrimination has been a legal concept in the UK since the 1970s, so it may seem surprising that key aspects of the test are still being challenged in the courts. As the Supreme Court noted in its judgment: “Ideally, discrimination ought to be an easy concept, although proving it may be harder. But we do not live in an ideal world and the concepts are not easy, as these two cases illustrate all too well.”

If the purpose of indirect discrimination is to level the playing field and remove hidden barriers for different groups, then this decision makes some sense. It should not matter why a particular practice causes a disadvantage. The fact of the disadvantage is what is important, and that practice needs to be justified or removed if it places a barrier in the way of a protected group.

This decision is not particularly helpful for employers as it makes it somewhat easier for individuals to make an indirect discrimination claim. The news is not, however, all bad. The judgment emphasises that it is always open to an employer to show that a PCP is justified, noting: “The requirement to justify a PCP should not be seen as placing an unreasonable burden upon respondents. Nor should it be seen as casting some sort of shadow or stigma upon them. There is no shame in it. There may well be very good reasons for the PCP in question.” Although Mr Naeem was able to show indirect discrimination, the Supreme Court was not willing to overturn the original Employment Tribunal’s finding that the pay scale was justified in the circumstances - so ultimately his claim did not succeed.

It is also worth noting the Supreme Court’s comments that a “wise employer” will monitor how its policies and practices impact on various groups, and try to modify them if they do have a disparate impact. This type of monitoring is particularly important for key employment decisions such as recruitment, pay reviews, promotions and disciplinaries. A robust equal opportunities policy that is backed up by monitoring and manager training will always be a prudent approach.

Find out more about our equal opportunities training for managers.

Essop and others v Home Office; Naeem v Secretary of State for Justicejudgment available here

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