Industrial Tribunals Northern Ireland Decisions

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Cite as: [2010] NIIT 03935_01IT, [2010] NIIT 3935_1IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 3935/01

CLAIMANT: Robert David Johnston

RESPONDENT: BT Plc

Certificate of Correction

Under the heading “Appearances” of the decision issued on 26 February 2010, the respondent was recorded as being “represented by Mr D Dunlop, Barrister–at-Law instructed by Carson McDowell Solicitors”. This should read, ”Mr D Dunlop, Barrister–at-Law instructed by Napier & Sons Solicitors.”

Chairman:_______________________________________________

Date: __________________________________________

THE INDUSTRIAL TRIBUNALS

CASE REF: 3935/01

CLAIMANT: Robert David Johnston

RESPONDENTS: BT Plc

DECISION

The unanimous decision of the tribunal is that the claimant’s claims are not well-founded. Accordingly, those claims are dismissed.

Constitution of Tribunal:

Chairman: Mr P Buggy

Members: Ms Kennedy

Mr McKenna

Appearances:

The claimant was represented by Mr M Potter, Barrister-at-Law, instructed by the Equality Commission.

The respondents were represented by Mr D Dunlop, Barrister-at-Law, instructed by Carson McDowell Solicitors.

REASONS

1. At all material times, the claimant was employed by BT Plc (in this Decision, referred to as “BT”).

2. In these proceedings the claimant claims that BT has unlawfully subjected him to certain treatment which was indirectly racially discriminatory treatment. In connection with those claims, he seeks to compare the treatment which he received with the treatment which BT accorded to certain BT employees in Great Britain. BT contended, and contends, that the GB employees are not appropriate comparators for the purposes of these proceedings.

3. The issue of whether or not the claimant was entitled to compare himself with GB employees was the subject of a Pre-Hearing Review, which was conducted by a chairman sitting alone. The Chairman decided that the non-Northern Ireland locations of the claimant’s chosen comparators was not a barrier to the claimant using those employees as such comparators. BT appealed against that determination.

4. The Chairman stated a case on the question of whether or not his determination in respect of the relevant preliminary issue had been legally correct or incorrect. The Court of Appeal declined to answer the question which was posed in the case stated, because the Court concluded that it was inappropriate, in the circumstances of this case, to isolate the relevant preliminary issue from the overall factual and legal context of this case generally. Accordingly, the case has been remitted to us, for decision in respect of all of the factual and legal issues which have to be resolved in this case.

5. The claimant’s claims are made under the Race Relations (Northern Ireland) Order 1997 (“the 1997 Order”).

6. The claimant’s claims in these proceedings are claims in respect of what BT failed to do during his period of employment with BT. (The claimant retired in December 2002).

7. Accordingly, the claimant’s causes of action all pre-date 19 July 2003. The latter date is significant, because that was the date on which the Race Relations Order (Amendment) Regulations (Northern Ireland) 2003 came into effect. (The 2003 Regulations made extensive amendments to the substantive provisions of the 1997 Order).

8. In the context of these proceedings, the relevant legislation is the 1997 Order prior to the coming into operation of the 2003 amendments. In this Decision, any references below to the 1997 Order are references to that Order prior to the coming into operation of the substantive amendments effected by the 2003 Order.

Some key legislative provisions (discrimination law)

9. Article 6(2) of the 1997 Order made it unlawful for a person, in the case of a person employed by him at an establishment in Northern Ireland, to discriminate against that employee:

“(a) in the terms of employment which he affords him; or

(b) in the way he affords him access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford him access to them; or

10. For the purposes of Article 6(2), an employer “discriminates” if he discriminates within the meaning of Article 3 or Article 4 of the 1997 Order.

11. The Article 4 type of discrimination (“discrimination by way of victimisation”) is irrelevant in the present context.

12. Two types of discrimination are defined in Article 3 of the Order.

13. According to Article 3(1):

“3(1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Order if –

(a) on racial grounds he treats that other less favourably than he treats or would treat other persons; or

(b) he applies to that other a requirement or condition which he applies or would apply equally to persons not of the same racial group as that other but –

(i) which is such that the proportion of persons of the same racial group as that other who can comply with it is considerably smaller than the proportion of persons not of that racial group who can comply with it; and

(ii) which he cannot show to be justifiable irrespective of the colour, race, nationality or ethnic or national origins of the person to whom it is applied; and

(iii) which is to the detriment of that other because he cannot comply with it.”

14. Article 5 of the Order provides that “racial grounds” means:

“…any of the following grounds, namely colour, race, nationality or ethnic or national origins”.

15. Council Directive 2000/43/EC (the EU Racial Discrimination Directive) was adopted on 29 June 2000.

16. Member States were given until 19 July 2003 to adopt the laws, regulations and administrative provisions necessary to comply with that Directive.

Some key legislative provisions (transfer of undertakings law)

17. At all times which are material for the purposes of these proceedings, the relevant transfer of undertakings legislation consisted of the EU Acquired Rights Directive of 1977 (77/187/EEC) and the Transfer of Undertakings (Protection of Employment) Regulations 1981.

18. At the heart of those regulations is the concept of a “relevant transfer”.

19. If an employee was assigned to an entity when it was the subject of a relevant transfer, the effect of that transfer was as follows:

(1) All of the transferor’s rights, power, duties and liabilities under or in connection with the relevant contract of employment were transferred by virtue of the 1981 Regulations to the transferee. (See Regulation 5(2)(a) of the Regulations).

(2) Anything which had been done prior to the relevant transfer, by or in relation to the transferor, in respect of the relevant contract of employment, or in respect of the relevant employee, is deemed to have been done by or in relation to the transferee. (See Regulations 5(2)(b) of the Regulations).

(3) Where, at the time of the relevant transfer, there was in existence a collective agreement made by or on behalf of the transferor with a trade union recognised by that transferor, in respect of any relevant employee, then that collective agreement, after the transfer, was deemed to have effect as if it had been made, with the relevant trade union, by or on behalf of the transferee. Accordingly, anything done under or in connection with such an agreement, in its application to the relevant employee, was deemed to have been done by or in relation to the transferee as distinct from having been done by or in relation to the transferor. (See Regulation 6 of the Regulations).

The acts complained of

20. Under BT’s “NewGrid”, scheme, Technical Officers (including base site engineers) were to be graded at C3 under BT’s new structure. However, there was a relevant transfer (within the meaning of the TUPE Regulations) in 2000. BT Cellnet (“Cellnet”) was the transferor under that transfer. BT was the transferee. As a result of that transfer, Cellnet base engineers, who had been employed by Cellnet immediately prior to the transfer, became employees of BT by operation of law. Prior to the relevant transfer, Cellnet had agreed that the relevant base site engineers would be graded at D1 under the “NewGrid” scheme (which was common to Cellnet and to BT). After the relevant transfer, and in the wake of negotiations between BT and the Communications Workers Union, it was agreed that base site engineers who had transferred to BT from Cellnet would be graded at the higher grade of D1. The claimant asked to be re-graded at D1, but BT refused that request. That refusal is one of the two acts complained of in these proceedings.

21. Cellnet introduced a “retention scheme” in or about June 2000, which involved the payment of a “Scarce Skills Retention Bonus”, of £40,000, to its base site engineers. Later that year, because of the Cellnet-BT relevant transfer, those engineers became BT’s employees. The claimant asked that the bonus be paid to him as well. BT refused to pay it. That refusal is the second act which is the subject of complaint in these proceedings.

The claims and the defences

22. In this Decision, we use an imprecise form of shorthand for the purpose of referring to all those people who are of Scottish national origins, or who are of Welsh national origins, or who are of English national origins. We refer to all those people collectively as “GB people”. Similarly, we refer to the remainder of humanity as “non-GB people”.

23. The claimant claims that, by refusing to re-grade him as D1, BT: (1) applied to him a requirement or condition (that he be a TUPE-transferred Cellnet employee) which BT applied equally to GB persons, but (2) which was such that the proportion of non-GB people who could comply with it was considerably smaller than the proportion of GB people who could comply with it, and (3) which BT cannot show to be justifiable irrespective of the national origins of the person to whom it was applied, and (4) which was to the detriment of the claimant, because he could not comply with it.

24. The defences of BT in relation to that claim can be summarised as follows. First, the claimant’s chosen comparators were impermissible comparators, because they were based outside Northern Ireland. Secondly, they were inappropriate comparators generally. Thirdly, BT’s decision not to upgrade was justifiable.

25. The claimant’s second claim was that by refusing to pay the relevant bonus to him, BT: (1) applied to him a requirement or condition (a requirement or condition that he be a TUPE transferred ex-employee of Cellnet), which BT applied equally to GB people, but (2) which was such that the proportion of non-GB people who could comply with it was considerably smaller than the proportion of GB people who could comply with it, and (3) which BT cannot show to be justifiable irrespective of national origins of the person to whom it is applied, and (4) which was to the detriment of the claimant because he could not comply with it.

26. BT’s defences to that complaint are in substance the same as its defences in respect of the re-grading complaint.

27. When the two refusals occurred, the claimant was an employee of BT, working in Northern Ireland. Exactly the same conditions applied to Mr Johnston and Mr Rogan, who worked alongside the claimant here in Northern Ireland. All three of them were employed by BT as base site engineers. All three of them worked in Northern Ireland. Mr Johnston and Mr Rogan also asked for the upgrading and for the award of the relevant bonus, and both were refused. Like the claimant, Mr Dawson and Mr Rogan launched indirect race discrimination proceedings in the industrial tribunals. Originally, all three cases were being heard together. That is why, when the preliminary issue referred to above was determined by a chairman of industrial tribunals, that issue was determined in respect of the Johnston case and the Rogan case, as well as in the present case.

The sources of evidence

28. We received oral testimony from the claimant. We received no oral testimony on behalf of the respondent in this case. The parties had agreed a statement of facts. We also had an agreed bundle of documents. We told the parties that we would not take account, for evidential purposes, of the content of any document in the bundle unless that document was specifically drawn to our attention.

The facts

29. We now set out findings of fact which are relevant to the issues which we have determined.

(1) This is one of a group of three associated cases, in which each claimant makes claims of indirect racial discrimination against BT, in respect of BT’s refusal to upgrade the relevant claimant, and in respect of BT’s refusal to provide a bonus to the relevant claimant. Each claimant says that the relevant refusal was, in relation to himself, indirectly racially discriminatory, because the relevant upgrading and the relevant retention bonus were both offered to all of those BT base engineers who became employed by BT as base engineers as a result of the Cellnet-to-BT relevant transfer which occurred in the year 2000. Andrew Faulkner, the claimant and Peter Rogan were employed by BT as base engineers in Northern Ireland at all times which are relevant for the purposes of these proceedings.

(2) Within BT’s grading structure, base engineers are Technical Officers (although many Technical Officers are not base engineers). The job function of a base engineer is to maintain BT’s mobile technical base sites. In 2000, there was a relevant transfer (within the meaning of the Transfer of Undertakings Protection of Employment Regulations 1981). As a result of that transfer, all of the Cellnet base engineers became BT base engineers.

(3) Prior to that relevant transfer, BT employed no base engineers in Great Britain. Instead, the work of base engineers was done exclusively by base engineers who were employed by Cellnet. The position was different in Northern Ireland. In Northern Ireland, the three base engineers (Mr Faulkner, the claimant and Mr Rogan) were at all material times BT employees.

(4) Cellnet was a separate limited company. By the year 2000, Cellnet was a wholly owned subsidiary of BT.

(5) We have not been provided with any evidence about the governance arrangements which, prior to the relevant transfer, were in operation in connection with the relationship between BT and Cellnet. Therefore, we do not know what influence, if any, was available to BT, prior to the relevant transfer, in relation to the setting of terms and conditions of employment in respect of Cellnet employees, and in respect of related matters.

(6) Prior to the relevant transfer, the mobile telephone base sites, which were the subject of the work of the base engineers throughout the United Kingdom, were the property of Cellnet. In Northern Ireland, Mr Faulkner, Mr Johnston and Mr Rogan spent all of their time maintaining the Cellnet mobile telephone base sites pursuant to a maintenance agreement to which BT and Cellnet were parties. According to paragraph 1.5 of that agreement:

“BT NI will ensure that the work (i.e. the maintenance work) is performed by a number of technical officers as agreed and provide alternative cover in the event of unavailability due to causes such as holidays, sick leave or other similar causes. [Cellnet] shall approve the appointment of all TO’s prior to their commencing work”.

(7) During the periods when they worked as base site engineers, Mr Faulkner, Mr Johnston and Mr Rogan all worked exclusively on maintaining the mobile phone network in Northern Ireland. On a few occasions, they worked in Great Britain, in the context of being given on-the-job training there. They were the only three engineers working full time on the mobile network in Northern Ireland during those periods. The claimant worked in this capacity from 1987 until his retirement in 2002. Mr Faulkner worked in that capacity from April 2000 onwards. Mr Rogan worked in that capacity from 1996 onwards. Each of the three men had done other work for BT in Northern Ireland (in their capacity as BT employees) prior to being assigned to work as base site engineers.

(8) Throughout their employment as a base site engineer, each of the three men was solely a BT employee, although each of them spent most of their working life on Cellnet premises.

(9) Their performance appraisals were conducted by managers in BT, who conducted those appraisals in light of substantial information about the performance of the relevant engineer, which was provided by Cellnet managers.

(10) Each of the three men was supplied with the necessary training, tools and transport vehicles by Cellnet.

(11) The claimant accepted a severance package and ceased to be employed by BT on 30 September 2002. Mr Faulkner and Mr Rogan continued to be employed by BT until recently. They still continue to work as base site engineers, and they continue to carry out maintenance work to the same installations as before (this time under an agreement between BT and O2 plc).

(12) In or about the year 2000, BT introduced a restructuring programme, known as “NewGrid”, one of the aims of which was to simplify employee grades within BT. Another aim was to implement an agreed grading system. The number of different grades was to be reduced, the grading system was to be rationalised, and old grades were to be “mapped across” to a simplified new grade under the new system. The new grades were known as A1, A2, B1, B2, C1, C2, C3 and D1.

(13) Under the NewGrid scheme, Technical Officers, the grade which included the base site engineers, were regarded by BT at C3 under the new structure.

(14) However, by the time the relevant transfer took place, Cellnet had already informed its base site engineers that they would be graded by Cellnet at D1 (which was superior to C3) under the new structure.

(15) Cellnet introduced a retention scheme in or about June 2000 which involved the payment of a Scarce Skills Retention Bonus of £40,000 to all of its base site engineers who met some minimal criteria. (Nearly all of Cellnet’s base site engineers met those qualification criteria in respect of the retention bonus).

(16) In Great Britain, prior to the relevant transfer, BT did not employ any base site engineers. The relevant transfer took effect on 6 October 2000. It included all of the base site engineers who were working for Cellnet on that date. It did not include the claimant, Mr Faulkner or Mr Rogan. (They were already BT employees prior to the relevant transfer).

(17) The re-grading of the ex-Cellnet base engineers took effect from 1 January 2001. The bonus was paid by BT in two tranches to the ex-Cellnet base engineers, at post-transfer dates.

(18) The claimant, Mr Faulkner and Mr Rogan all challenged both of the refusals (the refusal to allow them to be upgraded to D1 and the refusal to give them the bonus which was being given to the ex-Cellnet base engineers).

(19) Their challenge was rejected by Mr Paul Cox of BT. That rejection was communicated to them by letter dated 14 September 2001 from Pat Willis, HR business partner, Core Networks.

(20) At the time of the relevant refusals (the upgrading refusal and the bonus refusal), neither BT nor the claimant knew that he would only be with them for a relatively short period thereafter.

(21) With a view to minimising avoidable duplication, we have included some additional findings of fact elsewhere in this Decision.

The issues

30. The main issues can be summarised as follows:

(1) What is the claimant’s (self-designated) racial group?

(2) Are the claimant’s chosen comparators inappropriate because they were not located in Northern Ireland?

(3) Are the claimant’s chosen comparators inappropriate for any other reason (any reason other than the circumstance that they were located beyond the borders of Northern Ireland)?

(4) Who constituted the disadvantaged group (for the purposes of comparison)?

(5) Who constituted the favoured group (again, for the purposes of comparison)?

(6) In granting the upgrading to the employees who transferred from Cellnet, and in withholding that upgrading from the claimant, was BT imposing a requirement or condition? (It is agreed between the parties that any such requirement or condition was to the detriment of the claimant).

(7) In paying the bonus to those staff who transferred from BT to Cellnet, while refusing to pay an equivalent bonus to the claimant, was BT imposing a requirement or condition? (It is agreed between the parties that any such requirement or condition was to the detriment of the claimant).

(8) Has BT shown “justifiability” in relation to the refusal to upgrade?

(9) Has BT shown “justifiability” in relation to the refusal to pay the bonus?

Both parties made oral arguments in this case. In addition, Mr Potter (for the claimant) provided us with a written submission (“the Submission”).

The claimant’s racial group

31. Originally, for the purposes of these proceedings, the claimant identified his own racial group as consisting of people whose national origins were “Northern Irish”. We pointed out to Mr Potter that there is no reported decision, at appellate level, in which it has been definitively decided that the people of Northern Ireland constitute people who have distinctive national origins (in the sense in which the term “national origins” is used for the purposes of the 1997 Order).

32. We invited Mr Potter to consider whether the claimant wished to define his racial group as comprising all of humanity with the exception of GB people. (See paragraph 34 below). In response to that query, it was confirmed that the claimant did indeed now wish to define himself as being part of the non-GB group.

33. Article 5(4) of the 1997 Order is in the following terms:

“(4) The fact that a racial group comprises two or more distinct racial groups does not prevent it from constituting a particular racial group for the purposes of this Order.”

34. The effect of Article 5(4) is that, for the purposes of the 1997 Order, a particular racial group can consist of all those individuals who do not have English, Scottish or Welsh national origins. (See Orphanos v Queen Mary College [1995] IRLR 349, at 353.18).

A purposive approach

35. In the Submission, Mr Potter argued that the 1997 Order, as a discrimination enactment, should be construed in a purposive manner. We agree.

36. The 1997 Order made distinctive provision for Northern Ireland in two respects. First, it was explicitly declared that, for the purposes of that Order, the term “racial group” includes the Irish Traveller community. Secondly, the 1997 Order specifically declared that, for its purposes, the term “racial group” does not include a group of persons defined by reference to religious belief or political opinion.

37. However, subject to the foregoing, it seems to us to be clear, from a comparison of the structure and detailed provisions of the Race Relations Act 1976 on the one hand and of the structure and detailed provisions of the 1997 Order on the other hand, that, in general, the 1997 Order was intended to make provision for Northern Ireland which was substantially the same as the provision which had already been made (through the enactment of the 1976 Act) for Great Britain. So, if we want to know what the purposes of the 1997 Order are, we need to identify the purposes of the 1976 Act.

38. We note from its preamble that the 1976 Act was intended to make provision with respect to “discrimination on racial grounds”. The Act’s definition of indirect discrimination has to be seen within that context.

39. But what is the point of outlawing indirect racial discrimination (in the context of the situations outlined at Article 6 of the 1997 Order and at section 4 of the 1976 Act)? Mr Potter asserted, and we agree, that the answer to that question is to be found in the following extract from the judgment of the EAT (Browne-Wilkinson J) in Clarke v Eley (IMI) Kynock Ltd [1982] IRLR 482:

“The purpose of the legislature in introducing the concept of indirect discrimination into the 1975 [Sex Discrimination] Act and the Race Relations Act 1976 was to seek to eliminate those practices which had a disproportionate impact on women or ethnic minorities and were not justifiable for other reasons”.

We also agree, as was pointed out by Browne-Wilkinson J in that case, that the concept of indirect discrimination, in the context of the Sex Discrimination Act 1975 and of the Race Relations Act 1976, was derived from the concept of indirect racial discrimination which had been developed in the law of the United States, mainly as a result of the decision of the U.S. Supreme Court in Griggs v Duke Power Company [1971] 401 US 424. As Burger CJ made clear in that case (at pages 429 and 430):

“The objective of Congress in the enactment of [the Civil Rights Act 1964] is plain from the language of the statute. It was to achieve equality of employment opportunities and remove barriers that have operated in the past to favour an identifiable group of white employees over other employees. Under the Act, practices, procedures or tests neutral on their face, and even neutral in terms of intent, cannot be maintained if they operate to “freeze” the status quo of prior employment practices”.

40. Accordingly, as the Griggs judgment makes clear, the concept of indirect discrimination was being developed and implemented in order to tackle a legacy of direct, overt, and blatant past racist practices.

Are the comparators impermissible because of their GB location?

41. There is a statutory presumption that Great Britain or Northern Ireland legislation applies only to acts or omissions which occur within a location which falls within the geographical extent of the relevant legislation. (See Halsbury’s Laws of England, Volume 44(1), 4^th Edition Reissue, at paragraph 1320).

42. But the acts complained of in this case are acts which did occur in Northern Ireland. The claimant in this case does not complain about discrimination in itself. Instead, he complains about two refusals. First, he complains that BT refused to upgrade him. Secondly, he complains that BT refused to give him a bonus. Both of those refusals occurred in Northern Ireland.

43. In order to establish liability pursuant to Article 6(2) of the 1997 Order, the claimant has to address the issue of whether or not the refusals were discriminatory. In order to deal with the allegedly discriminatory nature of the refusals, the claimant wished to make a comparison, for the purposes of Article 3(1)(b) of the 1997 Order. There is no principle of statutory interpretation which involves any presumption that, in those circumstances, for that purpose, the claimant is precluded from referring to the way in which his employer has behaved in places beyond the borders of Northern Ireland.

44. Furthermore, we see nothing in the structure or detailed provisions of the 1997 Order, or in the 1976 Act, to indicate that extra-territorial comparisons cannot be made for the purposes of determining whether or not a Northern Ireland employer, by doing what he does do within Northern Ireland is, or is not, living up to his Northern Ireland racial equality of treatment obligations.

45. The 1976 Act was enacted only a year after the Sex Discrimination Act was passed. The 1976 Act’s definition of indirect racial discrimination, which is contained at section 1(1)(b) of that Act, is clearly modelled on the definition of indirect sex discrimination which was contained at section 1(1)(b) of the Sex Discrimination Act 1975 (“the SDA”).

46. The SDA definition of indirect discrimination makes no explicit reference to the question of whether or not comparators from beyond the boundaries of Great Britain are permissible. However, the Equal Pay Act, which was substantially amended and restated by the 1975 Act, did contain an explicit provision which prevented a comparison, for equal pay purposes, with any comparator located outside Great Britain.

47. Quite apart from the circumstance that the Equal Pay Act was restated in the Sex Discrimination Act, it is now settled law that the Equal Pay Act and the Sex Discrimination Act have to be regarded as constituting a single package of measures which, together, were intended to comprehensively address problems of gender inequalities in the workplace in Great Britain.

48. Against that background, it seems to us that there are two possibilities. The first possibility is that the legislator did not intend to prevent an employee in Great Britain, in the course of a complaint about an act of alleged racial discrimination which occurred in Great Britain, from referring to the way in which the relevant employer had behaved in places beyond the boundaries of Great Britain; and that is why the 1976 Act does not contain any provision which would cut down the apparent generality of the words of section 1(1)(b) of that Act.

49. The second possibility is that the legislator did intend to preclude comparisons which were based on conduct which had occurred outside the borders of Great Britain, but omitted to make any explicit provision to that effect, while simultaneously making clear and explicit provision to that effect in respect of equal pay.

50. In our view, the first possibility is much more plausible than the second possibility.

51. Against that background, and for those reasons, we have decided that the claimant is not precluded from comparing himself, in the present context, with people who worked in Great Britain.

52. BT has not suggested to us that the differences between the economic circumstances of Northern Ireland and Great Britain in 1997 provide any assistance in the context of our task of interpreting the 1997 legislation.

53. We should make it clear that our conclusion in this part of the case is not based on anything which was said in Parliament during the enactment of the 1976 Act, and it is not based on any view that any particular interpretation of the 1997 Order has to be adopted because of the requirements of EU law.

What was the disadvantaged group?

54. In our view, in the circumstances of this case, in relation to each claim, the disadvantaged group must consist of the following:

(1) In relation to the upgrading refusal, the disadvantaged group must consist of all those persons who were BT base site engineers at the time of the relevant refusal, with the exception of those base engineers who had become such as a result of the relevant transfer. (In this Decision, people who become BT engineers because of that transfer are referred to as “ex-Cellnet”).

(2) In relation to the refusal to pay the bonus, it must consist of all those people who were BT base engineers at the time of that refusal, with the exception of ex-Cellnet people.

Accordingly, in each instance, the disadvantaged group consists only of Mr Faulkner, Mr Rogan and the claimant, together with any BT base engineers who were in post at the time of the relevant refusal and who had been appointed to a post in Great Britain at any time after the Cellnet relevant transfer.

Who were within the advantaged group?

55. According to the claimant, in both instances (in relation to the refusal to upgrade and also in relation to the refusal to give the claimant an equivalent bonus), the advantaged group included all of those BT base site engineers who had become such as a result of the BT relevant transfer.

56. However, we note that the definitions of racial discrimination, which are contained in Article 3(1) of the 1997 Order, have to be read in conjunction with Article 3(3) of that

Order. Article 3(3) provided as follows:

“A comparison of the case of a person of a particular racial group with that of a person not of that group under paragraph (1) must be such that the relevant circumstances in the one case are the same or not materially different, in the other.”

57. Furthermore we note that, for the purposes of comparison under Article 3(1)(b), a comparison of the case of a person of a particular racial group with a person not of that group has to be “… such that the relevant circumstances in the one case are the same, or not materially different in the other”. (See Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] IRLR 285).

58. In our view, the ex-Cellnet engineers are not appropriate comparators because their relevant circumstances were different, in one important respect, from the circumstances of the people who fall within the disadvantaged class. Unlike the disadvantaged people, the ex-Cellnet people had been made promises by the entity which had been their employer at the time when the promises were made. Unlike the disadvantaged class members, the ex-Cellnet people had been told that they would be re-graded. Unlike the disadvantaged class, the ex-Cellnet people had been told that they would be eligible (subject to compliance with some minor and easy conditions) to receive the bonus. In making those promises, Cellnet did not directly or indirectly discriminate against its staff on racial grounds, because it made the same promises to all of its base site engineers.

59. Accordingly, we are satisfied that the ex-Cellnet engineers are not appropriate comparators for the purposes of the definition of indirect racial discrimination.

60. We would have decided that the ex-Cellnet engineers are not appropriate comparators even if the claimant had continued to identify himself as having “Northern Ireland” national origins, and even if we had concluded that people with such national origins are a protected group under the 1997 Order.

A requirement or condition?

61. We accept that the claimant was refused the re-grading because he had not been assigned to the transferred entity at the time of the 2000 relevant transfer. We also accept that the claimant was refused the bonus for the same reason.

62. We also accept that, in each instance, BT was applying a requirement or condition to the claimant (that requirement or condition being a requirement or condition that the claimant must have become a BT base engineer by reason of the 2000 relevant transfer).

Was there “adequate” disparate impact?

63. It will be recalled that an essential element of the definition of indirect racial discrimination is that the proportion of persons of the same racial group as the claimant, who can comply with the relevant requirement or condition, must be “… considerably smaller than the proportion of persons not of that racial group who can comply with it …”. In other words, to use an imprecise but useful form of legal shorthand, there must be “adequate” disparate impact. (There will not be adequate disparate impact, for the purposes of the definition of indirect discrimination, unless the proportion of the persons of the same racial group as the claimant who can comply with the relevant requirement or condition is “considerably smaller” than the proportion of persons not of that racial group who can comply with it).

64. The “adequate” disparate impact element of the definition of indirect discrimination can be paraphrased, in the circumstances of this case, in the following terms. In relation to each refusal separately, the claimant must be able to show that, at the time of the relevant refusal, the proportion of non-GB base engineers who could comply with the Cellnet relevant transfer requirement was considerably smaller than the proportion of GB people who could comply with that requirement.

65. In the case of each refusal, the indirect discrimination claim must be dismissed (without considering justification) if the claimant is unable to establish adequate disparate impact. (In other words, that element of the definition of indirect discrimination will not be satisfied if the proportion of non-GB base engineers in the advantaged class was not “considerably smaller”, within the meaning of the 1997 Order, than the proportion of GB base engineers in that class).

66. If we are right in our conclusion that the ex-Cellnet people cannot properly be considered as being part of the advantaged class, then the claimant has been unable to establish that there has been adequate disparate impact and, on that ground alone, these claims must be dismissed.

67. However, if we are wrong in that conclusion, and if the ex-Cellnet engineers ought to be included within the advantaged class, then we are obliged and entitled to decide this case, in relation to each claim, on the basis of an agreed conclusion that there has been “enough” disparate impact to satisfy the disparate impact element of the definition of indirect racial discrimination. (BT has conceded, in relation to each refusal, that the requirement of disparate impact is met if, but only if, the advantaged class properly consists of the ex-Cellnet BT base site engineers).

68. However, it should be noted that, even in that scenario (even in a situation in which we had decided that the ex-Cellnet engineers could properly be included within the advantaged class) we would have no evidence, and could therefore arrive at no conclusion, as to the extent of the disparate impact (beyond deciding that the extent was sufficient to satisfy the requirements of the relevant element of the indirect discrimination definition). For example, we simply do not know, because we have not been told, how many of the ex-Cellnet base engineers were non-GB people (in the sense of not having English national origins, Scottish national origins, or Welsh national origins).

Justification

69. BT does not have to meet the justifiability test in either instance unless we are wrong in our conclusion that the ex-Cellnet employees cannot properly be included within the advantaged class.

70. We are satisfied that the imposition of the relevant condition (the requirement that the claimant be an ex-Cellnet employee) was justified both in the context of the re-grading refusal and in the context of the bonus refusal. We have arrived at that conclusion against the following background and for the following reasons.

71. Rainey v Greater Glasgow Health Board [1987] IRLR 26 is clear authority for the proposition that so far as the requirements of objective justification are concerned, there is no material distinction to be drawn between the onus upon an employer under the equal pay legislation and that upon an employer who seeks (under Article 3(1)(b) of the 1997 Order) to justify the imposition of a relevant requirement or condition which has adverse disparate impact upon people of a particular racial group. (See paragraph 53 of the Court of Appeal judgment in Redcar and Cleveland Borough Council v Bainbridge [2008] IRLR 776, which is referred to in this Decision as “Bainbridge 1”).

72. It seems to be arguable that even if an employer imposes a detrimental requirement or condition which produces disparate adverse impact upon people of a particular racial group, it does not necessarily follow that the employer will have to show objective justification. According to this argument, even though there is evidence of disparate adverse impact, it is still open to the employer to satisfy the tribunal that the impact is not due to the difference of race, directly or indirectly, and was not tainted by racial discrimination; and, if it does so, there is no obligation to justify. (See Armstrong v Newcastle Upon Tyne NHS Hospital Trust [2005] EWCA Civ 1608, which is referred to at paragraph 57 of Bainbridge 1). However, no Armstrong argument has been presented in this case. Therefore, we proceed on the basis that, if there has been disparate adverse impact, BT is under an obligation to justify, in relation to both claims in this case.

73. An employer who is under an obligation to justify will be found to have racially discriminated unless he is able to justify the imposition of the relevant adverse requirement or condition; the onus of proof in respect of justification is on the employer.

74. Against that background, Mr Potter has pointed out that we have received no oral testimony on behalf of the respondent in relation to the justification issue. That is true. However, we are entitled to take account of the oral testimony of the claimant in this case. We are also entitled to take account of the voluminous documentation which has been made available to us.

75. On behalf of BT, Mr Dunlop drew our attention to the fact that some of the case law prescribes rather lax criteria in the context of the justification of indirect racial discrimination. For example, in Ojutiku v Manpower Services Commission [1982] ICR 661, Eveleigh LJ thought that justification would be proven if the alleged discriminator produced reasons which would be “acceptable to right thinking people as sound and tolerable reasons”. However, the law has moved on since Ojutiku. The principle which was stated in Hampson v Department of Education and Science [1989] IRLR became the authoritative test in relation to the test of justifiability under “old” indirect racial discrimination law. According to Hampson, justification required an objective balance to be drawn between the discriminatory effect of the relevant condition and the reasonable needs of the employer. Furthermore, the court in Hampson held that there was no significant difference between that test and the objective test adopted in sex discrimination and equal pay cases, derived from EU case law, and derived, in particular, from the Bilka-Kaufhaus case (Bilka-Kaufhaus GmbH v Weber von Hartz [1987] ICR 110 ECJ).

76. The Hampson test requires that the condition or requirement should correspond to a real need on the part of the employer, should be appropriate with a view to achieving the objective pursued, and should be necessary to that end.

77. In Pulham v London Borough of Barking and Dagenham [2010] IRLR 184, Upperhill P made the following comments, which are relevant in the context of the Bilka-Kaufhaus formula:

“As Elias P observed in MacCulloch v Imperial Chemical Industries Ltd [2008] ICR 1334 (see para. 10 (2), at p. 1338 A-B), what the language of reg. 3 [of the age discrimination regulations] is intended to express is the classic proportionality test, which has been applied to resolve issues of justification in discrimination cases at least since the decision of the European Court of Justice in Bilka-Kaufhaus GmbH v Weber von Hartz [1987] ICR 110. The exercise required of the tribunal on such a test is:

"… to weigh the reasonable needs of the undertaking against the discriminatory effect of the employer's measure and to make its own assessment of whether the former outweigh the latter"

- (see para. 10 (4) in MacCulloch, at p. 1338 C-D). That exercise of course necessarily involves identifying the "legitimate aim" which the employer is seeking to achieve by taking the measure complained of – that measure being the "means". But the dichotomy of "aim" and "means" is not always clear-cut and the two elements can sometimes reasonably be formulated in more than one way. In Loxley v. BAE Systems Land Systems (Munitions & Ordnance) Ltd [2008] ICR 1348 Elias P observed in relation to the justifications relied on by the employer in that case that "whether [they] are better described as aims or as proper means of achieving the aims is perhaps a matter of semantics" (see para. 37, at p. 1356C). Tribunals need not cudgel their brains with metaphysical inquiries about what count as aims and what count as means as long as the underlying balancing exercise is carried out.”

78. Bainbridge 1 is authority for the proposition that pay protection arrangements, or “red-circling”, cannot be justified if they are intended to perpetuate pay differentials which were created as a result of indirect discrimination, in circumstances in which the person who set up the pay protection was well aware, at that time, of the indirectly discriminatory basis of the original pay arrangements.

79. Certainly, BT cannot claim ignorance in this case, as a basis for asserting justification, because they were informed, at the time of both of their refusals, that it was being asserted that those refusals were directly racially discriminatory.

80. However, in our view, when Cellnet agreed to the re-grading, and when Cellnet agreed to the award of bonuses, Cellnet was not being racially discriminatory, because Cellnet was upgrading and offering bonuses to all of Cellnet’s base engineers.

81. During the course of argument, Mr Potter suggested that Cellnet’s offer of re-grading together with its offer of bonus, constituted discrimination against the claimant in his capacity as a contract worker. However, no such tribunal claim was made. No such allegation was made at the time. And in any event, it is difficult to see how such a claim could have succeeded, given that Cellnet was not responsible for the claimant’s remuneration at all.

82. It appears to be clear that if an employer negotiates impugned arrangements without considering the equal pay (or indirect discrimination) position, that is a factor which ought to be weighed in the balance, against the employer, on the question of justification. However, in this instance, when BT refused to provide the claimant with upgrading or with the bonus, it did so in the full knowledge of the arguments which were being made that this constituted indirect racial discrimination.

83. Market conditions can justify differences of pay in different locations. According to contemporaneous Cellnet documents, the promise (of a bonus) was made to the Cellnet base engineers because of Cellnet’s perception that, in many areas of Great Britain, such inducements were necessary because of competition between Cellnet and its competitors for the services of people with the skills of base site engineers. To create pay differentials with a view to retaining staff, in the context of stiff competition for the relevant staff, is clearly a legitimate aim.

84. Cellnet took a broad-brush approach to the bonus. It offered it to all its base site engineers, in all GB localities, without examining the staff recruitment in each particular locality. However, in the post-transfer situation, when the claimant asked BT to extend those broad-brush arrangements (regarding upgrading and regarding the payment of bonus) to himself and to the other two non ex-Cellnet base site engineers, he was refused because BT was of the view that there were no relevant recruitment problems in Northern Ireland.

85. In our view, the broad-brush approach to salary enhancements in GB, when contrasted with the precise approach to enhancements in Northern Ireland, precludes BT from establishing justification based on the recruitment market pressures which faced Cellnet.

86. As already noted above, we have no evidence as to the precise extent of any relevant disparate impact. All we know is that there was enough relevant disparate impact to satisfy that element of the definition of indirect racial discrimination, which is that “the proportion of persons of the same racial group as that other than who can comply with it is considerably smaller than the proportion of persons not of that racial group who can comply with it”. In Barry v Midland Bank [1999] ICR 859, at 870E Lord Nicholls said:

“The more serious the disparate impact on [the protected class], the more cogent must be the objective justification”

87. In our view, less cogency is required in the context of the objective justification of a border-line disparate impact (a disparate impact which is just enough to satisfy the threshold requirements in respect of disparate impact) than would be required in the context of a very substantial disparate impact.

88. As Mr Potter has pointed out, in the context of the dispute about these refusals, BT never put forward calculations as to cost or affordability. However, the precise cost of extending the bonus to the claimant was always obvious to all concerned. Furthermore, no complex calculations were required in relation to cost in respect of re-grading, because all concerned always knew that the cost of upgrading the claimant would be well in excess of £10,000. So, although there were no complex or detailed contemporaneous costings, the general scale of expenditure was clear, at the time of the refusals, to all concerned.

89. In the context of affordability, Mr Potter rightly draws attention to the fact that BT is a major enterprise, and that it has not suggested that it was in financial difficulties at the time of the refusals. We agree that BT was probably better placed than many businesses to withstand financial pressures which would have resulted from granting the claimant his desired upgrading, and granting him the bonus which he wanted. However, even large enterprises, and even economically successful enterprises, are entitled to operate on a value for money basis.

90. In the present context, we also note the comments of Underhill P in the Pulham case (at footnote 7):

“At para. 20(1) of the Grounds of Appeal it appears to be contended that cost was an impermissible consideration in principle; and in their skeleton argument counsel referred to the decision of this Tribunal in Cross v British Airways [2005] IRLR 423 in support of a proposition to the effect that cost by itself could not be relied on as a factor justifying discrimination. Mr Cavanagh did not pursue that argument. Whatever the effect of Cross and the decisions of the European Court of Justice which it seeks to follow (which is far from clear), it is plain from Bainbridge that in principle it is open to an employer to seek to justify discriminatory pay protection arrangements on the basis that it would be disproportionately expensive to extend the benefits in question to all employees: see in particular para. 175, quoted at para. 25 above.”

91. In our view, Cross was concerned mainly with the question of whether or not the European Court of Justice had outlawed costs as a justification factor in the context of European-derived discrimination legislation (including equal pay law). Furthermore, in Cross the EAT did not have to decide whether or not cost on its own could, or could not, be relied upon as a factor justifying discrimination. (That was unnecessary because the employment tribunal had found as a fact that cost was not the only factor which justified the discrimination in that case).

92. Against that background, we are satisfied that the pre-2003 Race Relations Order does not in all circumstances preclude an employer from justifying prima facie racial discrimination solely on the ground of disproportionate cost.

93. If the relevant requirement or condition was imposed with the formal or tacit agreement of a trade union, that is not a determinative factor in favour of the employer’s plea of justification. (See Pulham, paragraphs 40-41).

94. However, in any event, we have received no adequate evidence that the two refusals in this case were done with the approval of the relevant trade union.

95. The claimant accepted a severance package from BT only a short number of years after the refusals. However, at the time of the refusals, nobody could be certain that his subsequent service would be relatively short. In our view, the circumstance that the claimant retired relatively soon after the refusals is not a circumstance which can properly be taken into account in deciding whether or not either of the refusals is justified.

96. Why did BT refuse upgrading to those BT base service engineers who were not ex-Cellnet? For two reasons. First, BT did not want to pay anybody any more than what it considered to be that person’s entitlement (whether under a contractual agreement, under contractual entitlements imposed by law, or under entitlements flowing from promises which had been made by that employee’s employer). In our view, that was a legitimate aim. In our view, a refusal to pay any remuneration beyond the claimant’s entitlements was a proportionate means of achieving that aim.

97. BT also refused to voluntarily upgrade the claimant because of their wish to preserve the integrity of the NewGrid process. Again, in our view, that was a legitimate objective. Again, in our view, a refusal to upgrade the claimant was a proportionate means of achieving that objective.

98. BT was unwilling to pay the bonus to the claimant because it did not want to pay him something to which the claimant was not entitled (because the employer had not contractually agreed to make the payment, because a contractual entitlement was not imposed by law, and because the claimant’s employer had not promised to make him eligible for a bonus scheme). Again, in our view, refusal to pay the bonus was a proportionate means of achieving that aim.

99. In the interests of brevity and clarity, we have focused, in these Reasons, on Mr Potter’s principal arguments. However, in arriving at this Decision, we have carefully considered all of Mr Potter’s arguments, particularly relating to the justification issue.

100. We note that in his Submission, Mr Potter suggests that it is inconceivable that cost was a key factor, given that the exclusion affected only three people. However, if BT had granted the upgrading, or had granted the bonus, to Mr Johnston, the claimant and Mr Rogan, how well would they have been placed to address any indirect racial discrimination claim made by people who became BT employees on some post-transfer date?

101. According to Mr Potter, BT has failed to demonstrate that there was a legal entitlement to upgrading which transferred under TUPE. However, we consider that at the time of the upgrading refusal, BT had good reason to believe that promises made by the relevant employer (Cellnet) in respect of upgrading were binding upon the transferee employer because of the requirements of transfer of undertakings law.

102. The Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”) have to be construed in light of the requirements of the EU Acquired Rights Directive of 1977. The main thrust of TUPE is to achieve a situation in which there will be a seamless transition, for the assigned employees, from the employment of the transferor to the employment of the transferee. As part of that seamless transition, the legislation anticipates that the transferee will step into the shoes of the transferor.

103. In our view, the spirit of undertakings law, and possibly the specific requirements of transfer of undertakings law, imposes an obligation on a transferee employer to honour commitments which have been made by the transferor, prior to the transfer, to employees who were assigned to the transferred entity, regarding their terms and conditions of employment. Certainly, a transferee who reneged on commitments (regarding re-grading and bonus) which the transferor had made in that connection would not be acting in a manner which was consistent with good industrial relations.

104. Mr Potter made the point that Cellnet made the relevant promises (regarding upgrading and regarding the bonus scheme) at a time when the impending relevant transfer was or ought to have been apparent to Cellnet. We agree. However, as already noted above, we have no evidence as to the extent of any control which BT had upon Cellnet in relation to the fixing of terms and conditions of remuneration in respect of Cellnet employees.

105. TUPE obligations featured much more prominently during the hearing of this case than they had featured during the debate which BT had had with the claimant and with the other Northern Ireland base site engineers at the time of the refusals. However, everybody who was involved in that debate knew that a relevant transfer was the context within which BT had agreed to honour Cellnet’s the re-grading and bonus commitments. Furthermore, a defence of justification cannot be excluded on the basis that the respondent had not himself articulated or recognised the matters now relied upon at the time he did the act which is the subject-matter of the relevant proceedings. (See Pulham, at paragraph 32).

106. Regulation 10 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 imposed an obligation upon the employer of any affected employee to consult with that employee’s union, in relation to any contemplated relevant transfer. Regulation 10(2) provided that, in the course of any such consultations, the employer is to inform the union representatives of the legal, economic and social implications of the proposed transfer for any affected employee. According to Mr Potter, there was a failure on the part of BT to comply with the relevant requirements of Regulation 10. Maybe so, maybe not. (The matter was not argued in detail before us). However, even if BT failed to comply with the Regulation 10 requirements, withdrawal of the potential defence of justification would not be an appropriate remedy in respect of that failure. (Instead, the 1981 Regulations contained within them the only available remedies in respect of any such failure).

107. As Mr Potter has pointed out (again, in the Submission), the position in relation to the bonus scheme was as follows. Originally, the base site engineers employed by Cellnet were identified as potential beneficiaries of the bonus scheme. Subject to meeting other eligibility criteria, a Cellnet base site engineer would receive the bonus if he continued to be a “permanent employee of BT Cellnet”. After the relevant transfer, the latter criterion was transmuted into a requirement that the candidate be a “permanent employee of BT Network Transport Field Operations Business Unit …”. But that change in wording did not reflect any change in the personal scope of the business arrangements. Instead, that change in wording merely reflected the circumstance that those potential bonus beneficiaries who had been employed in Cellnet had now, by operation of law, ended up in the Network Transport Field Operations Business Unit of BT.

108. We would have decided that the respondents had justified the imposition of the relevant requirements or conditions even if the claimant had continued to identify himself as having “Northern Ireland” national origins, and even if we had concluded that people with such origins are a protected group under the 1997 Order.

General comments

109. We fully understand the claimant’s sense of frustration of seeing people who carried out the same work as himself, on the same types of installations, at the same time, getting offered re-grading and a bonus which were both withheld from him. However, race relations legislation is not fair wages legislation. Instead, it addresses only those wages differentials which are the result of direct or indirect racial discrimination.

110. In summary, we have great sympathy for the situation in which the claimant finds himself. However, our duty is to apply the law to the facts which we have found. Having done so, it is clear to us that we must dismiss these claims.

Chairman:

Date and place of hearing: 21-23 October, 29 October and 21 December 2009, at Belfast.

Date decision recorded in register and issued to parties: