United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS S DREW (of Counsel) Instructed By: Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW
For the Respondent	MR J CAVANAGH QC (of Counsel) and MR B CARR (of Counsel) Instructed By: Treasury Solicitor Queen Anne's Chambers 28 The Broadway London SW1H 9JS


 


MR RECORDER LANGSTAFF QC:

1. This appeal raises interesting and difficult questions of discrimination law which arose before the Employment Tribunal at London South, when it struck out the Applicant's claim of indirect discrimination as frivolous, having no prospect of success.

THE BACKGROUND

2. The Applicant, employed as an administrative officer by the Respondent, complained that he had been the victim of discrimination on the ground of race. He complained that since 1989 he had not received as good a rating in annual appraisals as he should have done. This affected his pay, a proportion of which was determined by his appraisal marking, and his promotion prospects. The basis for his complaint was not only a subjective impression that he had been marked down, but what he described as "statistical evidence" showing a "persistent and relatively constant disparity in performance markings (and hence performance-related pay) between whites and staff from ethnic minorities ...". He claimed in his Originating Application that this indicated both direct and indirect discrimination in respect of appraisals. The basis for his claim of indirect discrimination was that a requirement or condition had been imposed that in order to qualify for a higher performance-related pay increase it was necessary to achieve a Box A or B1 assessment. He claimed that fewer ethnic minority employees than white employees could achieve such assessments, and that the requirement or condition could not be justified. He added that:-

"Alternatively, a requirement or condition has been imposed that in order to achieve a Box A or B1 assessment, certain criteria have to be achieved which fewer employees from ethnic minorities than white employees can satisfy, and those criteria cannot be justified."

3. The Respondent denied discrimination, whether direct or indirect.
4. After further investigation by the Respondent of the Appellant's claims, however, the Respondent conceded before the Tribunal on its first day of hearing that:-

"…… the Applicant suffered direct discrimination on the grounds of his race in the period 1992 to 2000 in relation to the manner in which his annual appraisals were conducted and the Respondent accepts that a consequence of this direct discrimination was that the Applicant's performance-related pay was lower than it might otherwise have been. The Respondent accepts that the Tribunal has jurisdiction to deal with the Applicant's claim of direct discrimination for the period 1992/2000 and that such claim is in time in respect of the entirety of this period."

5. Accordingly, the Respondent admitted liability to compensate the Appellant for the discrimination there had been against him, by the making of an award in respect of the injury to his feelings, in respect of loss of performance pay, and in respect of loss of promotion. The Tribunal also made recommendations. The exact terms of these are not material to the issues which arise.
6. Although the Respondent had admitted direct discrimination, the Appellant sought to argue that the Tribunal should hear and determine the Appellant's claim in respect of indirect discrimination.

THE TRIBUNAL'S DECISION

7. The Tribunal heard no evidence. It appears to us that the Tribunal took it that the facts upon which they should resolve the submissions of Counsel should be assumed in favour of the Appellant, as though the facts that he alleged would on the evidence be fully made out. On that basis (so it appears) the Tribunal concluded that:-

"It was not open to us as a Tribunal to find that there was in addition "indirect" race discrimination on the case placed before us. We came to the conclusion that the Applicant's case of direct discrimination was substantially intertwined and overlapping with the alleged case of "indirect" discrimination…. The case actually presented by [the Appellant] we find has correctly and obviously been presented in a claim of direct discrimination because of the various problems .in the appraisal of him by his white line manager… The [Appellant's] whole case in relation to appraisal based performance-related pay (and as later emerged at the remedies hearing) promotion are all, we find inextricably overlapping and intertwined and we could not accept that the same factual matrix could be the basis for a claim of both direct and indirect discrimination.

As a matter of law we directed ourselves that (unlike apparently the United States of America) a claim of discrimination is established as unlawful race discrimination either as direct or as indirect and not both at the same time on the same facts.."

8. What had been admitted was that the line manager of the Appellant had consistently undervalued him in his appraisals, with consequent effect on both pay and promotion.
9. The Tribunal recorded the submission of Ms. Drew (who appeared for the Appellant) as based upon the proposition that the facts gave rise to two entirely separate causes of action, one linked to his appraisal and one linked to his performance-related pay. It said that it rejected that submission "simply on the facts", and went on to observe that:

"..since the (Appellant) was not complaining that the appraisal system was inherently discriminatory or contained any sort of general adverse impact on ethnic minorities his claim was limited to a claim of direct discrimination."

10. It accordingly came to the view that the Appellant's case of indirect discrimination was unarguable and was thus "frivolous" within the meaning of Rule 13(2)(d) of the Employment Tribunals Rules of Procedure 1993 (which then applied to the case). It went on to observe – although no facts had been established by evidence – that on the same agreed facts and hypothesis as used for the preliminary issue, a claim of indirect discrimination had not been established, and therefore the appellant could not, in any event, succeed in a claim of indirect discrimination.

THE APPEAL

11. The Appellant claimed that there should have been both a hearing and a finding as to whether the pay system operated by the Respondent (as opposed to its appraisal system) was discriminatory. This, submitted Ms. Drew, arose from facts which overlapped, but were not identical to those upon which the direct discrimination claim had been founded. Accordingly, the Tribunal by striking out the claim had deprived the Appellant of an opportunity of obtaining findings of fact as to the performance-related pay scheme operated by the Respondent, and could not obtain a declaration that that pay scheme was discriminatory nor recommendations under the Race Relations Act 1976 as to steps that should be taken to avoid further discrimination. (It might be added that if the pay practice of the Respondent is shown to be indirectly discriminatory, this would imply the existence of an inbuilt disadvantage for people of the Appellant's race, from which he would continue to suffer in the future even though his success in his claim for direct discrimination would resolve the historical effects of the past discrimination from which he had suffered).
12. These central submissions were supported by the argument that discrimination cases should not be struck out save in the clearest of circumstances: thus Lord Steyn said in Anyanwu v. South Bank Students Union [2001] IRLR 305 @ paragraph 24:

"…such vagaries in discrimination jurisprudence underline the importance of not striking out such claims as an abuse of process except in the most obvious and plainest cases. Discrimination cases are generally fact-sensitive, and their proper determination is always vital in our pluralistic society. In this field perhaps more than any other the bias in favour of a claim being examined on the merits or demerits of its particular facts is a matter of high public interest."

13. For the Respondent it was argued that as a matter of principle the self-same facts could not give rise both to a claim of direct discrimination and indirect discrimination; and that in the present appeal the self-same facts were relied upon. Thus, direct discrimination being the appropriate label, and being admitted, there was no claim which the Appellant could prove.
14. It was, submitted Mr Cavanagh Q.C. for the Respondents, within the jurisdiction of the Employment Tribunal to consider whether or not it would treat the question whether the claim should be struck out as a preliminary point. Although in general terms discrimination cases were fact-sensitive, and should normally be resolved by evidence rather than by strike out, here all the facts were assumed in favour of the Appellant. There was no separate and freestanding claim of indirect discrimination available.

THE LAW

15. The Race Relations Act 1976 provides, at Section 1, as follows:-

"(1) a person discriminates against another in any circumstances relevant for the purposes of any provision of this Act 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."

16. It was common ground that Section 4 of the Race Relations Act 1976 provided that it was unlawful for the Respondent to discriminate against the Appellant, if it did so at all, by under-marking his appraisals or by putting additional hurdles in the way of his promotion.
17. Although the words "direct" and "indirect" do not appear in Section 1 of the 1976 Act, discrimination to which Section 1(1)(a) is often termed "direct discrimination", and that to which Section 1(1)(b) applies is often termed "indirect discrimination".
18. The Industrial Tribunals (Constitution and Rules of Procedure) Regulations 1993 annexed the rules relevant to the exercise by this Tribunal of its powers at the time they were exercised. Rule 13 of the Tribunal Rules, after providing that a Tribunal may regulate its own procedure subject to the rules, provided more specifically (by Rule 13(2)(d)) that a Tribunal might

"… at any stage of the proceedings, order to be struck out ... any Originating Application or Notice of Appearance, or anything in such Application or Notice of Appearance, on the grounds that it is scandalous, frivolous or vexatious…"

19. The Tribunal concluded that the Appellant's case was, in the particular circumstances, to be categorised and categorised only as direct discrimination. It could not be categorised properly as indirect discrimination. Accordingly, the case on that basis alone was unarguable. Consequently, the claim on that basis was "frivolous" within the meaning of Rule 13(2)(d) set out above. Alternatively, the Tribunal concluded (at paragraph 27) that a claim of indirect discrimination had not been established on what they termed "the same agreed facts and hypothesis as a preliminary issue" (which we take to mean that all the facts that might be in question had been assumed in favour of the Appellant).
20. Accordingly, the first question is whether in the particular circumstances of the present case the actions complained of by the Appellant could constitute not only discrimination under Section 1(1)(a), but also under Section 1(1)(b) of the 1976 Act.
21. In the case of The Chief Constable of the Bedfordshire Constabulary v. Graham [2002] IRLR 239, an Employment Appeal Tribunal under the Chairmanship of Mr Justice Douglas Brown considered a set of facts which the Employment Tribunal had recognised as giving rise both to claims of direct and indirect discrimination on the grounds of sex (which is defined by the Sex Discrimination Act 1975 in terms almost identical to those used to define discrimination on the ground of race). The facts that gave rise to this result were these: Ms. Graham was the wife of the Divisional Commander of D Division. Ms. Graham applied for and was appointed to the post of Area Inspector in that Division. The Chief Constable rescinded her appointment, on the ground that it was inappropriate because her husband was Divisional Commander. She brought claims that she had been discriminated against directly and indirectly on the ground of her sex, and also on the ground of her marital status. The Tribunal found that she had indeed been discriminated against contrary to Section 1(1)(b) of the Sex Discrimination Act 1975 (indirect sex discrimination) and that marital discrimination, both direct and indirect contrary to Section 3(1) of the Sex Discrimination Act had been made out.
22. It may be important, however, to note that the claim of indirect sex discrimination under Section 1 relied upon there being a concession by the Respondent that he had indeed applied a condition or requirement which disadvantaged Ms. Graham – so that the only question then was justification. It is in the respect of marital discrimination that it might be thought that there was a finding of direct and indirect discrimination arising from the same facts. The additional fact required to bring a claim within Section 3, over and above that relied upon for sex discrimination under section 1, was that discrimination under Section 3 required the treatment complained of to be afforded Ms Graham because of her marital status. Whereas the Section 1 claim relied upon the fact that Ms Graham was the partner of the Divisional Commander, the Section 3 claim relied upon the additional fact of marriage. Issues as to justification arose which would apply in the case of spouses but not partners who were simply partners – the supposed justification for the rule being the fact that spouses are not compellable witnesses in law.
23. The Employment Appeal Tribunal upheld the decision of the Tribunal that this was direct discrimination upon the ground of marital status, compellability being both marriage specific and used as a reason for subjecting Ms. Graham to the disadvantage that she suffered. The claim that she was indirectly discriminated against involved evidence as to the proportions of married to unmarried officers of the same sex who could comply with the requirement or condition. There was a distinct difference between them. Thus the same outcome (a finding of discrimination) was reached on the basis of overlapping fact (a decision by the Chief Constable to rescind Ms. Graham's appointment) but with elements of fact that were not identical (in the case of direct discrimination, the application of a marriage specific criterion to Ms. Graham; in the case of indirect marital discrimination, the statistical analysis relied upon indicating a disparity between those who could, or could not comply).
24. The Employment Tribunal in the present appeal was itself alert to the possibility that the facts of a case might give rise to claims both in respect of direct and indirect discrimination. Thus, the Appellant's claim that he had been disadvantaged in the course of his appraisal might arise as a mixture of direct discrimination against him by a racially biased line manager (direct discrimination), yet in part also be explained by the fact that the system (for example) contained a requirement to demonstrate a high degree of fluency in spoken colloquial English (likely to be indirect discrimination). However, again, different facts would be required to demonstrate the different types of discrimination, and the factual circumstances would overlap but not precisely coincide.
25. Where the self-same facts are said to give rise at one and the same time both to a claim in respect of direct, and of indirect, discrimination on the ground of race, Mr Cavanagh Q.C. argued that James v. Eastleigh Borough Council [1990] 2 AC 751 provided authoritatively for determining where the boundaries lay between that which was indirect, and that which was direct. We accept that it does so. That was a case of discrimination on the ground of sex. A man and his wife, both 61, went to a public swimming pool operated by the Respondent. Being of pensionable age (then 60 for women, and 65 for men) the Plaintiff's wife was admitted free. Not being of pensionable age, he had to pay. The Court of Appeal took the view that the discrimination to which he was subject was indirect. The House of Lords, by a majority of 3 to 2 (Lords Bridge, Ackner, and Goff) held that the application of a criterion which directly discriminates between men and women, in that it treats women more favourably than men on the ground of their sex, constituted discrimination "on the ground of sex", and thereby fell within the definition of direct discrimination in Section 1(1)(a) of the Sex Discrimination Act. The phrase "on the ground of her sex" did not import a test which looked to the reason for the discrimination in the mind of the discriminator (a subjective test), but rather to an objective "but for" approach. (See per Lord Bridge at 764D-765D). Further, Lord Bridge said (at 766A-C):-

"The question of indirect discrimination under Section 1(1)(b) arises only where the "requirement or condition" applied by the alleged discriminator to a person of one sex is applied by him equally to a person of the other sex. Pensionable age cannot be regarded as a requirement or condition which is applied equally to a person of either sex precisely because it is itself discriminatory between the sexes. Whether or not the proportion of men of pensionable age resorting to the Council's swimming pool was smaller than the proportion of women of pensionable age was quite irrelevant. Women were being treated more favourably than men because they attained the age to qualify for free admission 5 years earlier than men."

The word "only" deserves emphasis.

26. We were concerned nonetheless at one stage in the course of argument that it might be possible for essentially the same facts to give rise to a complaint both of direct and indirect discrimination: suppose, for example, that a Chief Constable, determined to prevent the admission to the Force of a particular woman of medium height, instituted a general requirement that all entrants to the Force had to be over 1.6 metres in height. The requirement or condition imposed would plainly be likely to fall foul of Section 1(1)(b) of the Sex Discrimination Act. It would be - generally - indirectly discriminatory. Yet the sole reason for its application to the particular woman whom the Chief Constable in the hypothetical example would wish to exclude would be because of her sex. In other words, the application of that criterion to her would satisfy the "but for" test. Thus, upon her application to a Tribunal, it might be justified in finding both direct discrimination, and indirect discrimination, arising out of the same basic facts: but it should be emphasised that even in this situation it might be arguable that the facts did not entirely overlap. Thus, for direct discrimination to be found, it would have to be shown that but for her sex, the criterion would never have been applied at all to her – and so far as indirect discrimination was concerned, it would involve the fact, self-evident as it might be, that more men than women are likely to achieve the height of 1.6 metres.
27. Such a hypothetical example is, perhaps, extreme: but the fact that ingenuity may devise some circumstances in which it may theoretically be possible for the self-same facts to give rise both to a claim in respect of direct and indirect discrimination would lead us, though attracted by Mr Cavanagh's case, not to wish to rule out entirely the possibility that there might be such circumstances.
28. The question we had to determine, however, was whether on the facts of the case before us there could be both a claim for direct, and one for indirect, discrimination.
29. Not without hesitation, we have come to the conclusion that the facts are such that the Tribunal was entitled to conclude that no claim for indirect discrimination could succeed.
30. Our reasons are these. The Appellant complained of disadvantage to him in both pay and promotion consequent upon his assessment under the appraisal system. The Respondents conceded that the source of the unfairness was in the operation of the appraisal system, and not its inherent design. It was in the way in which the line manager applied it that the system was discriminatory. He applied it as he did by reason of the race of the Appellant (so far as he personally was concerned), and it was this which gave rise to the Appellant's disadvantage. If the manager had approached making an appraisal fairly, there would have been no unfairness in the system (the Tribunal found in Paragraph 21 that: "it is perfectly clear that the Applicant and his advisors and his witnesses accept that if operated fairly and without racial bias the appraisal system is fair", and Mr Cavanagh Q.C. reminded us in his submissions that Ms. Drew, for the Appellant, did not allege that any aspect of the appraisal system created any systematic unfairness).
31. The requirement or condition contended for by the Appellant, at paragraph 8 of his Originating Application, was that "in order to qualify for a higher performance related pay increase, it is necessary to achieve a Box A or B1 assessment." He argued that fewer ethnic minority employees than white employees could achieve such assessments. The Tribunal found that the reason that there was a failure to achieve such assessments was not anything inherent in the system (nor had any such defect been advanced before the Tribunal) but that it was entirely a consequence of the way a fair system was operated, unfairly, by the line manager concerned. In short, the requirement or condition identified was one which could have been indirectly discriminatory by reason of some inherent inability on the part of non-whites to achieve higher grades: but once it had been conceded that no inherent flaw could be identified, then that, coupled with the knowledge that there was a subjective element at play (the way in which the line manager operated the system) meant that discrimination under Section 1 was established, on the basis of direct discrimination, without any room in the evidence in the present case for a further finding of indirect discrimination.
32. In the present case, the statistical facts that might have been established as to the way in which the appraisal system operated were not facts additional to those upon which the claim for direct discrimination was based. Rather, they were illustrations of the extent and existence of that direct discrimination. In the absence of any tenable suggestion why the requirement or condition identified should or might of itself give rise to disadvantage, the statistics that might have been proved would be entirely consistent with the effect of the admitted direct discrimination and could not on their own establish anything more.
33. That leads us to consider the Tribunal's alternative approach which was to review the evidence and conclude that taking that evidence at face value the appellant could not in any event establish indirect discrimination, rather than, or in addition to, the direct discrimination which had already been admitted. The witness statement of John Moloney (especially at paragraphs 17 and 18) was to the effect that the appellant's trade union had always taken the position that there was nothing intrinsically wrong with the appraisal system itself – the issue was its application. The witness statement of Mr Lewtas, senior national officer of the union, repeated that it had never been the union's position that the actual system was unfair. He complained, rather, of its effect, which might be due to unconscious racist assumptions by line managers operating the appraisals. In effect, as Mr Cavanagh submitted, insofar as the requirement or condition which needed to be satisfied had been identified, it was that the individual should be white, in order to obtain the better markings from the racially biased appraiser. If so, the claim was one of direct discrimination.
34. There remains a submission which Ms. Drew made before the Tribunal, which she repeated before us, that the Appellant's case involved two entirely separate causes of action. One was in respect of his appraisal. The other was in relation to the Respondent's pay system. The failure of the Appellant, in company with others of his ethnic background, to achieve comparable levels of pay to those who were white was, she argued, a claim separate from that made in respect of the appraisal system.
35. We consider that the Tribunal was entitled to reach the conclusion it did that that submission should be rejected "simply on the facts". Although that latter phrase might suggest that evidence had been heard, which it was not (though the written witness statements were read), we consider that the Employment Tribunal was entitled to conclude that what was at issue was the amount of performance-related pay to which the Appellant was entitled. At paragraph 21 of its extended reasons it had noted that the appraisal system was the sole route to performance-related pay and was directly linked to it. It therefore took the view that the only arguable case was that the pay disparity identified was a consequence of the appraisal system complained of. Similarly, in an earlier hearing before a differently constituted Tribunal, the complaint in relation to pay was considered to be a consequence of linkage with the appraisal system and not a separate claim in itself. The Tribunal whose decision is before us took the same view, though without express reference to the earlier Tribunal.
36. In Sougrin v. Haringey Health Authority [1992] IRLR 416 at paras 9 and 32, the Court of Appeal advised Tribunals to look for the substance of a complaint, and urged them not to approach the wording of an Originating Application in a technical, narrow or legalistic manner. It seems to us that one of the first tasks a Tribunal may often have to perform is that of identifying the substance of a complaint before it. Providing that is done judicially, and is not wrong in principle, any exercise of this sort which a Tribunal undertakes is unlikely to be set aside on appeal.
37. As to whether the identification of the substance of a complaint is wrong in principle, a Tribunal cannot, in our view, properly exclude what is obviously part of a complaint clearly made in the originating application from consideration by the Tribunal, for to do so would be to fail to provide the judicial determination of an Applicant's civil rights and obligations, to which he is entitled not least by virtue of Article 6 of the European Convention of Fundamental Human Rights.
38. In our view, however, a decision which comprehended the Appellant's complaint in the present case that he had suffered losses of pay in consequence of discrimination, and did not exclude that complaint, was not such as to shut the Appellant out from arguing a case which he was plainly advancing. It was, rather, to impose a scheme or order upon the facts to be laid before it, and submissions which were to be made to it which was necessary if the Tribunal was efficiently to approach the application of legal principle to the facts giving rise to the complaint. This, as we see it, is a fundamental task for any Tribunal. For most it will be made easy by a simple identification in the Originating Application (which may complain of, for instance, "unfair dismissal" or "unlawful deduction from wages", and thereby indicate the nature of a single complaint.) It will be more difficult, however, where there is a complaint identified as unlawful discrimination, but where the facts recited in the Originating Application may quite reasonably be categorised either as illustrations of one continuing act, or as all being separate and free standing complaints, or indeed as properly viewed as groups of complaints. The need for effective case management is such that unless there is such an error in principle as that to which we have referred, the decision of the Tribunal as to the appropriate approach will usually be respected by an Appellate Court.
39. We have, accordingly, considered whether the complaint of discrimination in pay demanded to be dealt with as a separate head of complaint, rather than as a necessary consequence of the identified discrimination upon appraisal. We have concluded it did not, and that the Employment Tribunal was entitled to approach its decision in the way it did.
40. Accordingly, in our view the Employment Tribunal was entitled to come to the view that the Appellant simply could not and would not succeed in the case of indirect discrimination sought to be advanced before it.
41. Although the power to strike out a claim is one which should be exercised sparingly, and although full regard must be paid to the words of Lord Steyn in Anyanwu v. South Bank Students Union [2001] UKHL 14, at paragraph 24, that there is a high public interest which should bias a Tribunal in favour of a claim being examined on the merits or demerits of its particular facts, if a Tribunal reached a tenable view that the case cannot succeed, then it had a discretion to strike out a claim under what was then Rule 13 of the Employment Tribunal Rules. The decision of Care First Partnership Limited v. Roffey [2001] IRLR 85, C.A. apparently limiting the use of the power to strike out has no application to the present appeal, as was agreed before us: as the later Court of Appeal decision in Balamoody v. United Kingdom Central Council for Nursing, Midwifery and Health Visiting [2001] EWCA Civ 2097 makes clear at paragraphs 41 to 45.
42. In effect, this case was held by the Tribunal to be bound to fail upon the basis advanced before it. Considering, as we do, that the Tribunal was entitled to take that view it follows that it was also entitled, on the authorities, to strike it out as frivolous under Rule 13.

OBSERVATIONS

43. It emerged during the hearing that part of the concern of the Appellant to have a case of indirect discrimination heard and determined was that he might then obtain recommendations from the Employment Tribunal which would have the effect of ensuring that the pay systems of the Respondent did not operate against him unfairly in the future. We do not think that any Tribunal should feel inhibited from making appropriate recommendations under the statute by the classification of a discrimination claim as being one under Section 1(i)(a) rather than Section 1(i)(b), or vice versa. What should matter is the substance of the allegation, and the nature of the appropriate recommendations in the light of that substance.
44. Secondly, if the Appellant should in the future feel that he remains subject to some disadvantage inherent in the system the fact that the present claim has been resolved upon the basis that he has been directly discriminated against should operate as no bar to any future proceedings. They will have to be determined upon their individual merits.
45. Finally, although this case raises interesting questions as to the relationship between direct and indirect discrimination, our decision should not be taken as establishing categorically that there will never be circumstances in which the self-same facts might not give rise to a claim in respect of both: we do not find it necessary to determine that issue in such general terms. We have concluded simply that on the facts of the present case the Industrial Tribunal was entitled to take the view that no question of indirect discrimination within the terms of Section 1(1)(b) arose, nor could it have been proved to its satisfaction even taking the available evidential material put forward by the Appellant at face value.
46. Accordingly, we dismiss this appeal.
47. In her Skeleton Argument Ms. Drew sought leave to appeal should we resolve the issues against her submissions. If she wishes to pursue that application, having considered our judgment, we would wish to have the application made in writing to us.