Government legislates to preserve EU-based discrimination law – what does this mean for employers?

The Retained EU Law (Revocation and Reform) Act ends the supremacy of EU law on 31 December 2023 and removes all directly effective EU rights. The Act also gives the Court of Appeal and Supreme Court extended powers to disregard EU-based caselaw. This covers both decisions of the European Court of Justice (ECJ) and domestic decisions that have been influenced by ECJ cases.

Last week saw a flurry of draft regulations from the government. We have previously written about the government’s consultation response and draft regulations relating to holiday entitlement and pay, and record keeping and TUPE consultation requirements.

Without any prior consultation, the government has also published draft regulations which will amend the Equality Act in order to reproduce various discrimination protections that are based on EU law. These apply from 1 January 2024.

The government has stated that these amendments to the Equality Act will allow the law in the areas covered to continue as before and improve clarity of the law. The stated reason for the changes is to ensure that existing rights based on EU law will not be removed. However, some of the changes look like new law in practice, because they involve ECJ decisions that had not actually been applied by the UK appeal courts.

We explain below the amendments and the practical impact for employers.

Indirect discrimination – no need for a shared protected characteristic

The test for indirect discrimination under the Equality Act requires a claimant to share the same protected characteristic as the group placed at the particular disadvantage. For example, a woman with childcare responsibilities who is refused part-time work can claim indirect discrimination on the basis that women disproportionately bear the burden of childcare and are therefore disadvantaged as a group compared to men by a requirement to work full time. A man cannot make this claim in the same circumstances.

There is an ECJ decision which held that an indirect discrimination claim could also be brought by a person who does not share the protected characteristic which results in the group disadvantage. In that case, an electricity supplier fixed its electricity meters at a less accessible height in a particular district which was predominantly populated by Roma people, compared to other districts where meters were more accessible. A shop owner, who was not Roma, successfully argued that she had been indirectly discriminated against because she was also disadvantaged by the supplier’s meter practice.

This ECJ decision does not fit with the existing test in the Equality Act and had not been applied in practice by the UK appeal courts. The higher courts could have decided not to apply this decision after 31 December this year. However, in perhaps the most material change being introduced by these regulations, the Equality Act is now being amended so that an individual can make a claim for indirect discrimination if they can show there is a group disadvantage related to a protected characteristic and they suffer the same disadvantage - even if they do not share the same protected characteristic as the group.

This amendment could have significant consequences for employers as it widens the scope of indirect discrimination claims. For example, if a man with childcare responsibilities is refused part-time work, it seems that he may be now able to make a claim based on the fact that the requirement to work full time disadvantages women with childcare responsibilities, and he suffers the same disadvantage.

We have seen this change referred to as “indirect associative discrimination”, but this is not the same thing. This applies where someone is disadvantaged due to their association with someone with a protected characteristic. For example, the carer for a disabled parent who is disadvantaged by a requirement to work full time in an office. This requirement would disadvantage carers of disabled people generally, but it does not meet the indirect discrimination test because the disadvantaged group does not share a protected characteristic. The government has not amended the Equality Act to cover this situation, and we are not aware of any plans to do so.

Equal pay – single source test

The rules on equal pay in the Equality Act currently require a claimant to compare themselves with someone who is employed by the same employer or by an associated employer.

The EU Treaty which governs equal pay allows comparisons to be made in broader circumstances. There is no need for the workers to have the same employer. Instead, the test is that the workers' terms and conditions must be attributable to a “single source”, meaning a single body who is responsible for the unequal terms and has the ability to rectify any inequality. This single source test has been used by the UK courts because rights under EU treaties had to be directly applied in the UK (which will no longer be the case from 1 January).

The amendments add the single source test into the Equality Act, allowing claimants to continue to compare themselves to employees working for a different employer (including where their terms are government by the same collective agreement). This confirms the current position under UK law and so is unlikely to have any significant practical implications.

Disability discrimination - the definition of disability

The Equality Act’s definition of disability requires an effect on the person’s ability to carry out “normal day-to-day activities”.

The ECJ has ruled that the concept of disability must include people with impairments which may hinder full and effective participation in “professional life”. The Employment Appeal Tribunal has applied this broader definition of disability in a number of cases to find that even infrequent work-related activities (such as applying for a job or sitting a professional exam), and activities that are not common to the majority of jobs but are common across various forms of employment (such as night work or lifting heavy items), can constitute normal day-to-day activities.

The amendments add this broader definition of disability to the Equality Act, so that normal day-to-day activity includes a person’s ability to “participate fully and effectively in work life” on an equal basis with others. This is not a significant practical change for employers as UK caselaw had already taken this approach.

Changes to maternity-related provisions

The regulations contain a number of changes aimed at preserving existing protection for women who are pregnant, breastfeeding or who take maternity leave.

Special treatment afforded to women in connection with pregnancy, childbirth or maternity

The Equality Act currently permits special treatment in connection with “pregnancy or childbirth”. This means that a man cannot bring a claim of direct sex discrimination on these grounds. The Equal Treatment Directive is wider and refers to “pregnancy or maternity”.

The amendments clarify that special treatment on grounds of “maternity” would also not amount to direct sex discrimination. This is unlikely to have a significant practical impact for employers, as the old wording arguably covered maternity leave anyway. The provision for special treatment is limited, and employees who are pregnant or on maternity leave should only be treated more favourably to the extent that it is reasonably necessary to remove any disadvantage suffered.

Direct discrimination on grounds of breastfeeding

Under the Equality Act it is direct sex discrimination to treat a woman less favourably because she is breastfeeding – but this provision does not currently apply to discrimination at work.

The ECJ has held that employees should be able to bring a work-related direct sex discrimination claim for less favourable treatment because of breastfeeding. This case has been applied in the UK at Employment Tribunal level, but not by the appeal courts.

The amendments remove the exclusion of workplace discrimination, so making it clear that it is direct sex discrimination to treat an employee less favourably because she is breastfeeding. This arguably broadens UK law because the ECJ decision on this point had not been widely applied in practice. Nevertheless, this is unlikely to have a significant impact for employers because they already need to be mindful of their existing obligations in this area, including the risk of indirect discrimination claims and health and safety requirements to provide suitable facilities.

Protection from unfavourable treatment after employees return from maternity leave

The Equality Act currently limits pregnancy and maternity discrimination to unfavourable treatment during the “protected period”, which is usually from the start of pregnancy to the end of maternity leave. ECJ caselaw has held that treatment after the end of the protected period will be also discrimination if it is because of pregnancy or pregnancy-related absence during the protected period.

The amendments expressly include unfavourable treatment after the protected period, in relation to either pregnancy or pregnancy-related illness during that period. This has limited practical impact because employers should always be mindful of treating any employees unfavourably because of previous pregnancy related absences. Even if this is not pregnancy or maternity discrimination falling within the specific Equality Act definition, it may well amount to sex discrimination.

Extension of protection for individuals who are not entitled to statutory maternity leave

As referred to above, “the protected period” depends on whether a woman has the right to maternity leave. If they are not eligible for maternity leave, the protected period is limited to two weeks from the end of the pregnancy. There is UK caselaw based on ECJ decisions which says that women who have occupational maternity schemes should be protected from discrimination.
The amendments add new wording to the Equality Act to ensure that individuals in “work cases” who have “equivalent” or “substantially similar” maternity rights under a statutory or contractual scheme are afforded the same protections as those who are eligible for statutory maternity leave. It is quite rare for employees to have rights under an occupational scheme instead of being entitled to statutory leave, but LLP members, partners in partnerships and barristers will often have equivalent leave provided in their organisation’s contractual documents, which would fall within the scope of the amended provision.

Recruitment - discriminatory public statements

The Equality Act prohibits discrimination by an employer when deciding to whom an offer of employment should be made (similar provisions apply to other categories of work). It does not prohibit discrimination occurring outside an active recruitment process and there must be an identifiable victim for a claim to be brought.

The ECJ has previously ruled that employers may be liable for discriminatory statements made outside of an active recruitment process about not wanting to employ people with certain protected characteristics, even where there is no identifiable victim. The ECJ also held that, where a discriminatory statement is made by a third party, this may be treated as having been made by the employer in certain circumstances.

The amendments introduce detailed new provisions on discriminatory statements:

• such public statements are unlawful if they would be direct discrimination if they were made in connection with a recruitment decision;
• an employer can be vicariously liable for statements made by somebody who is not an employee or agent, if there are reasonable grounds for the public to believe that they are capable of influencing the making of a recruitment decision by the employer; and
• there is no need for a claimant to be a “victim” and personally affected by the statement nor for the employer to be actively involved in a recruitment process.

Although based on an ECJ decision, in practice this change widens current UK law because it had not been applied by the appeal courts. It makes it even more important not to issue (or authorise) any statements during recruitment which could suggest groups with protected characteristics would be excluded. The changes increase the risk of employers facing claims or enforcement action by the Equality and Human Rights Commission in this area, particularly given that a claimant does not need to have been affected by the statement themselves.

Are more changes expected?

It seems likely that these are the only planned changes to the Equality Act. It remains unclear whether there will be more changes to other areas of employment law.

Aside from equality cases, there are other ECJ employment decisions which do not fit with the drafting of UK law and have not as yet been implemented by the appeal courts. These include the decision that employers should use a “rolling” 90 day period to decide if collective redundancy consultation is required. Other key areas where ECJ decisions have influenced the law include the definition of working time, and whether contracts can be split after a TUPE transfer. The higher courts will be free to depart from these decisions for claims involving events after 31 December. There is also an argument that even Employment Tribunals should no longer rely on these decisions if that involves using the principle of interpretation under EU law.

As with holiday rights and equality law, the government risks criticism that it is downgrading workers’ rights if it does not legislate to ensure that these and other decisions are added into domestic legislation. The Brexit deal also included a commitment not to weaken or reduce labour standards in a way that affects trade or investment. Possibly the contentious issues of holiday and discrimination rights have been identified as a particular priority, and further legislation may be seen by some as a missed opportunity to deregulate after Brexit. It remains to be seen whether there will be further regulations before the end of the year.

The government’s draft regulations are available here.