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Web JCLI | [1996] 1 Web JCLI | Download
How an ECJ Decision on Equal Pay May Affect British Indirect Discrimation Law
Michael Connolly
Senior Lecturer in Law,Nene College, Northampton
M_dowle@europa.nene.ac.uk
Copyright © 1996 Michael Connolly.
First Published in Web Journal of Current Legal Issues in association with Blackstone
Press Ltd.
Summary
This note will bring into focus one element of Britain's indirect discrimination legislation: the need for the alleged discriminator to have applied a requirement or condition to the claimant. The standing of the Court of Appeal's judgement in Perera v Civil Service Commission (No 2) [1983] ICR 428 on this element will be examined in light of the decision of the European Court of Justice in Enderby v Frenchay Health Authority [1994] ICR 112, a case on equal pay.
Contents
- Introduction
- The Loophole Explained
- The English Cases
- 1. The First Case - Perera v Civil Service Commission (No 2) [1983] ICR 428
- 2. The Second Case - Meer v Tower Hamlets London Borough Council [1988] IRLR 399
- 3. Summary of Perera and Meer
- European Union Law
- 1. The Legislation of the European Union
- 2. The Effect of the European Legislation
- 3. Enderby v Frenchay Health Authority [1991] ICR 382 (EAT) and [1994] ICR 112 (CA and ECJ)
- 4. The Binding Authority of Enderby
- 5. English cases since Enderby
- Conclusion
Introduction
British discrimination legislation allows a loophole to employers who indirectly discriminate (be it intentional or not) on grounds of gender or race in the recruitment, transfer and promotion of workers. The legislation demands that before a case of discrimination can succeed it must be shown that the employer has applied a requirement or condition which adversely affects the protected group. According to the Court of Appeal that requirement or condition must be in the form of an absolute bar to the claimant. This excludes from the ambit of the law employers' mere preferences (commonly manifested in a selection criteria) which in themselves may not debar the claimant, but would still lessen his of her chances of success because of their gender or race. In other words it is possible to discriminate lawfully on grounds of sex or race. This note will argue that the British position is untenable against the law of the European Union. This calls for a review of the English cases which set the precedent and the recent developments in European law which undermine it.
The English precedent was set in 1983 by the Court of Appeal in Perera v Civil Service Commission (No 2) [1983] ICR 428; that was followed in Meer v Tower Hamlets London Borough Council [1988] IRLR 399. These cases were accepted as good law by the Court of Appeal as recently as December 1992 in University of Manchester v Jones [1993] ICR 474. However, an apparently unrelated case - Enderby v Frenchay Health Authority [1991] ICR 382 (EAT) and [1994] ICR 112 (CA and ECJ) - decided by the European Court of Justice ("ECJ") in 1993 may serve to undermine Perera and Meer.
The Loophole Explained
The loophole is in the law of indirect discrimination (or adverse effect or disparate impact). This is a more subtle form of discrimination than direct discrimination. For example, an employer may accompany a job advertisement for a librarian with the phrase: "Applicants must be at least 6 foot tall." Although neutral on its face this advertisement effectively discriminates against women (and, incidently, some racial groups).The relevant British legislation (Race Relations Act 1976 s 1(1)(b)) provides:
(1) A person discriminates against another...if-...
(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 that same racial group who can comply with it is considerably smaller than the proportion of persons not of that racial group who can comply with it;...
and
(iii) which is to the detriment of that other because he cannot comply with it.
The Sex Discrimination Act 1975 employs this formula with references to gender instead of race.(1) If one looks at s 1(1)(b) it can be seen that several elements make up the principle of indirect discrimination. These are: [a person] applies [to another]; requirement or condition; the comparison of proportions who can comply between groups; and detriment. The element requirement or condition is at the root of the loophole mentioned above: an employer, when advertising for staff, may, instead of applying a requirement or condition in the form of an absolute bar, apply a mere preference, in the sense that a person may be disadvantaged, but not absolutely barred. Thus the simple example above may be amended to read: "Librarians wanted. Applicants at least 6 foot tall will be preferred."
Does the exchange of the word preferred for must make this job advertisement lawful? Women (and some racial groups) remain disadvantaged by the modified criterion, yet strictly speaking, it falls outside of the statutory words requirement or condition. Thus the problem facing judges is whether to enforce the spirit and policy of the Act, or its literal wording.
The English Cases
1. The First Case - Perera v Civil Service
Commission
(No 2) [1983] ICR 428
In Perera an advertisement for a legal assistant stated that candidates with a good
command of the English language, experience in the U.K. and with British nationality
would be at an advantage. Obviously that puts a higher than average proportion of some
racial groups at a disadvantage. However, it was held that these "mere
preferences" did not amount to a requirement or condition within the meaning of
s 1(1)(b) of the Race Relations Act. To come within the Act the preference should be
elevated to a requirement or "absolute bar" which has to be complied with, in
order to qualify for the job. Stephenson, LJ said (at pp 437-438):"...a brilliant man whose personal qualities made him suitable as a legal assistant might well have been sent forward... in spite of being, perhaps, below standard on his knowledge of English."
This comment reveals the problem. If a candidate has to be "brilliant" in order to compensate for his racially based "weakness" then he is at a disadvantage because of his race. A "brilliant" black person will obtain a post otherwise suitable for an "average" white person. Further, the Court of Appeal did not address Mr Perera's strongest argument, that several "preferences" which could not be complied with added up to an absolute bar. If a candidate lacked a good command of the English language, experience in the UK and British nationality he stood no chance of being selected.
2. The Second Case - Meer v Tower Hamlets London Borough Council [1988] IRLR 399
Perera was followed by the Court of Appeal in Meer. In this case, the respondent employer attached twelve "selection criteria" to an advertised post. One of these was experience in the Tower Hamlets district. That put persons of Indian origin at a disadvantage because a higher than average proportion of them were new to the area. The Court of Appeal rejected Mr Meer's claim of indirect discrimination holding that the "criterion" (or preference) of Tower Hamlets experience did not amount to a requirement or condition.Balcombe, LJ acknowledged that this interpretation of s 1(1)(b) "may not be consistent with the object of the Act" (at p 403), declined to expound upon this statement, and chose to follow Perera as binding precedent. His two brethren on the bench applied Perera with more enthusiasm; in particular, Staughton, LJ rejected the appeal because otherwise: "...s 1(1)(b) would have such an extraordinary wide and capricious effect" (at p 403). The problem with this comment is that this kind of discrimination is extraordinarily wide and capricious; it is surely desirable that the legislation should have an appropriate effect. His Lordship also commented that an employer would be exposed to a charge of racial discrimination: "...whether or not he had the slightest intention to discriminate on racial grounds and whether or not racial grounds had any effect whatever on his decision" (at p 403). This simply misses point of the legislation, which applies irrespective of the intention of the employer.(2)
3. Summary of Perera and Meer
It is clear from the facts of these two cases that mere preferences can amount to race or gender discrimination. Yet the decisions hold that anti-discrimination law is not applicable to mere preferences. This reveals the loophole. An unscrupulous employer can avoid the law simply by reclassifying his job conditions as "mere preferences". His, or her, job advertisement might read:"Librarians wanted. Candidates must have an excellent command of English. Preference will be given to those who: have a Home Counties accent; are over 6 feet tall; are under 30 years old;(3) are willing to wear trousers to work;(4) wear a beard; and have lived in the area all of their lives.
This advertisement, which effectively would debar almost all except burly white men would not be unlawful under British legislation according to Perera and Meer. Clearly then the Court of Appeal favours a narrow interpretaion of the legislation. This approach can be contrasted with the Australian approach. Australian discrimination legislation carries the same phrase 'requirement or condition'. However in Secretary of Department of Foreign Affairs and Trade v Styles (1989) 88 ALR 621 the Federal Court of Australia (New South Wales district) held that an employer's preference' for higher grade journalist ammounted to a 'requirement or condition' for the purposes of the Sex Discrimination Act 1984. And the High Court of Australia held in Waters v Public Transport Corporation (1991) 173 CLR 349 that the phrase 'requirement or condition' in the Equal Opportunity Act 1984 should be given a wide interpretation. Thus it was held that the removal of conductors from trams imposed a requirement or condition that complainants (certain disabled persons) could fully avail themselves of the tram service only if they could use trams without the assistance of conductors.
More recently, in Jones v University of Manchester [1993] ICR 474, the Court of Appeal were faced with a "preference" that candidates be under a certain age. This would adversely affect women of child bearing and child rearing age. All three judges stated that they would not interfere with the Industrial Tribunal's finding of fact that the "preference" actually amounted to a requirement or condition. They said nothing of the interpretation of section 1(1)(b). If this is right, that whether a criterion is a preference or a requirement is a matter of fact and not a matter of law, then the Court of Appeal has little obligation to follow Perera as binding precedent.
European Union Law
An apparently unrelated case decided a year ago by the ECJ may force the English Courts to turn away from Perera. In Enderby v Frenchay Health Authority [1994] ICR 112 the ECJ were considering the term requirement or condition in the context of equal pay.
1. The Legislation of the European Union
Before discussing Enderby it necessary to set out the relevant legislation and its effect upon British law. Article 119 of the Treaty of Rome provides: "Each Member State shall... maintain the application of the principle that men and women shall receive equal pay for equal work". The United Kingdom's domestic equivalent is contained in the Equal Pay Act 1970. Also, the European Commission has enacted the Equal Treatment Directive (Directive 76/207). This extends the European Union's sex discrimination law to cover recruitment, transfer and promotion, employment conditions and dismissal. It provides for the elimination of sex discrimination "...either directly or indirectly." The United Kingdom's equivalent is contained in the Sex Discrimination Act 1975 (see above).The European Union has no race discrimination laws as such. However Article 48 of the Treaty of Rome(5) provides that there shall be no discrimination on grounds of nationality against nationals of the Union in the field of employment. This covers pay, recruitment, transfer and promotion, employment conditions and dismissal. These activities are covered by the British Race Relations Act 1976. The domestic statutes do not reflect the Union legislation exactly. The differences stem mainly from the form of the respective legislation. European legislation is more open ended, giving the courts latitude to implement the policy behind the legislation. The domestic legislation is more precise in form.
2. The Effect of the European Legislation
In the European Union, a traditional "federal" problem arises - which law prevails when there is an apparent conflict between State and European law? The answer is not straightforward. The starting point is this: when the difference is between a Directive and domestic law, the Directive is enforceable in the United Kingdom against emanations of the State only. (See Case 152/84, Marshall v Southampton & South West Area Health Authority [1986] ECR 723, [1986] QB 401). This is known as vertical direct effect. The logical consequence of this is that an employer which is not an emanation of the State has no obligations under a Union Directive where it is inconsistent with domestic law. However, the employer should be aware that domestic courts have a duty to interpret domestic law in light of the wording and purposes of Directives (Article 5 Treaty of Rome; Case 14/83, Von Colson v Land Nordrhein- Westfalen [1984] ECR 295; Case C 106/89, Marleasing SA v La Comercial Internacional de Alimentacion [1990] ECR I-4135; Litster v Forth Dry Dock & Engineering Co [1989] 1 All ER 1184.) This is indirect effect. Thus a domestic tribunal, entertaining a discrimination case, will only directly apply a relevant European Directive if the employer is an emanation of the state. Otherwise, the tribunal may indirectly apply a Directive. More generally, Treaty Articles are enforceable against emanations of the State and individuals. They are directly enforceable vertically and horizontally.
3. Enderby v Frenchay Health Authority [1991] ICR 382 (EAT) and [1994] ICR 112 (CA and ECJ)
In Enderby, a speech therapist made a claim of equal pay for work of equal value. She compared her pay with that of a pharmacist who, it was accepted, did work of equal value. The vast majority of speech therapists were women and most of the pharmacists were men. The pay of both workers was set by collective bargaining: each group (that is speech therapists and pharmacists) having a separate agreement. Therefore this was a case of (alleged) indirect discrimination.The relevant domestic legislation in this case is the Equal Pay Act and the Sex Discrimination Act (s 1(1)(b)). The Equal Pay Act, (as amended by the Equal Pay (Amendments) Regulations 1983) provides, inter alia, that there shall be equal pay for work of equal value. The Sex Discrimination Act defines indirect discrimination (see s 1(1)(b) above). Article 119 of the Treaty of Rome is directly effective here as well (see Case 96/80 Jenkins v. Kingsgate [1981] ECR 911).
The Health Authority argued, inter alia, that the Equal Pay Act was but a detailed exposition of the Sex Discrimination Act; an equal pay claim may be based upon direct or indirect discrimination. In either case a court should look to the Sex Discrimination Act for a definition of the type of discrimination in question. Therefore, the Health Authority argued, in an equal pay case based on indirect discrimination, the applicant must show that there was a requirement or condition applied by them, which caused the variation in pay. No such requirement had been applied to any speech therapist. Doctor Enderby could have trained and qualified as a pharmacist and received the preferable remuneration. There was no barrier in her way because she is a woman. The only cause of the lower pay was her decision to enter less well payed profession.
The case went to the Court of Appeal where the potential conflict between the domestic legislation and Article 119 was recognised.(6) Section 1(1)(b) of the Sex Discrimination Act demands that in cases of indirect discrimination there must be a requirement or condition. Article 119 makes no such demand. After expressing their opinion in favour of the complainant the Court of Appeal referred the question to the ECJ. Here, Advocate-General Lenz, when considering the "nature of indirect discrimination", stated in his Opinion:
"...attention should be directed less to the existence of a requirement or hurdle by which women suffer a disadvantage, and more to the discriminatory result." (at p 154, para 35)
And the Court of Justice held:
"Where significant statistics disclose an appreciable difference in pay between two jobs of equal value, one of which is carried out almost exclusively by women and the other predominantly by men, Article 119 of the EEC Treaty requires the employer to show that the difference is based on objectively justified factors unrelated to any discrimination on the grounds of sex." (at p 164)
In other words if there is disparate pay then a prime facie case is established. There is no need to show that there was a requirement or condition which caused the difference. The employer must justify the difference. Note here that the ECJ not only refused to make a distinction between a "mere preference" and a requirement or condition. They disposed the notion of a barrier altogether.(7)
4. The Binding Authority of Enderby
It is true that this case is confined to sex discrimination in pay where the complainant will not wish or even be qualified to become a member of the advantaged group. However one should consider that:(a) domestic law must be harmony with European law; and
(b) the Equal Pay Act and the Sex Discrimination Act "are two parts of a single code";(8) and
(c) although Article 119 is confined to equal pay the Equal Treatment Directive 1976 outlaws sex discrimination in recruitment, transfer, promotion, working conditions and dismissal; and
(d) the Race Relations Act and the Sex Discrimination Act should be given the same interpretation in the domestic courts.(9)
If a claimant were to bring a case to the ECJ under the Equal Treatment Directive where there was no requirement or condition in the form of an "absolute bar", there can be little doubt that the ECJ would adhere to the general principle stated by the Advocate- General (above). This, in turn, would make it very difficult for an English court to carry on demanding a requirement or condition in the form of an "absolute bar" in all employment cases (not just equal pay) under the Sex Discrimination Act 1975. And as the Race Relations Act should share the same interpretation as the Act of 1975, that should fall into line too.
There is yet a stronger argument: it stems from Article 48 of the Treaty of Rome, which provides that there shall be no discrimination on grounds of nationality against nationals of the Union. Thus where an employment practice adversly affects an EU citizen because of his or her nationality it shall offend Article 48. Article 48 covers indirect discrimination (see Case 33/88, Allué and Coonan [1989] ECR 1591) and (like Article 119 and the Equal Treatment Directive) makes no demand for a requirement or condition, unlike the Race Relations Act 1976. Hence domestic and European law in this area are inconsistent.
A hypothetical case will illustrate this point. Suppose a case with identical facts to Perera except that the applicant was a Greek national. As in Perera the job advertisement for a legal assistant stated that candidates with a good command of the English language, experience in the UK and with British nationality would be at an advantage. And suppose that the Greek applicant could not comply with any of these "mere preferences". As English domestic law stands today, the Greek national would lose his claim of indirect race discrimination under the Race Relations Act. This is because no requirements or conditions as "absolute bars" have been applied to him. Yet if he brought his claim under Article 48 of the Treaty of Rome the tale is different. As noted already, the ECJ are not concerned with the notion of requirement or condition in cases of indirect discrimination. The ECJ interpret Article 48 consistently with previous cases and with other EU legislation on discrimination. It follows that, as Article 48 would be directly effective in this case, an English court would be obliged to find in the Greek applicant's favour.
5. English cases since Enderby
Bhudi v IMI Refiners [1994] ICR 307 (EAT) involved a claim of unlawful dismissal, made under s 1(1)(b) of the Sex Discrimination Act. The Equal Treatment Directive was not relied upon. In this case the respondents employed full-time and part-time cleaners. They made the part-time cleaners redundant because: (a) they were administered by a separate department; (b) they worked out-of-office hours, unlike the full-timers; and (c) it was therefore cheaper to contract out the part-time work. The applicant's case was that this adversely affected women because the part-timers were women and the full-timers were men. However the Industrial Tribunal found that no requirement or condition had been applied to the applicant. On appeal to the Employment Appeal Tribunal it was argued, inter alia, by the applicant that Enderby had removed the need for a claimant to prove that a requirement or condition had been applied in a claim under s 1(1)(b) of the Sex Discrimination Act.Mummery, J dismissed this argument on two grounds. First, he stated that Enderby was confined to cases brought under Article 119 on equal pay. However he recognised that Enderby may be followed in a case under the Equal Treatment Directive by a higher court. Second, the Tribunal was bound by House of Lords' authority (Duke v Reliance Systems [1988] ICR 339, at 352; Finnegan v Clowney [1990] ICR 462 and Webb v Emo Air Cargo [1993] ICR 175, at 186 and 187) which states that domestic legislation should be construed to accord with a Directive if it is possible to do so. However, as Enderby could be distinguished from the instant case there was no need to disregard the words requirement or condition in the domestic legislation.
In British Coal v Smith [1994] ICR 810 (CA) (a case under the Equal Pay Act 1970), Balcombe, LJ (who sat in the Meer case) stated the result of Enderby was that issues raised under the Equal Pay Act and the Sex Discrimination Act are "separate question[s]" (at 856E) for the respective statutes. Clearly the English judiciary are not prepared to appreciate the potential impact of European law signalled by Enderby.
Conclusion
From all directions the authority Perera is under attack. The effect of the ECJ ruling in Enderby is that in certain cases of equal pay the words requirement or condition in s 1(1)(b) of the Sex Discrimination Act should be disregarded. Cases under the Equal Treatment Directive and Article 48 may erode the application of s 1(1)(b) further. Rulings of the ECJ, in time, will leave English domestic discrimination law so riddled with anomalies that the present interpretation of requirement or condition in s 1(1)(b) shall have to change.
Footnotes
(1) Section 1(1)(b) of the Sex Discrimination Act 1975 provides:
"A person discriminates against a woman ... if ... he applies to her a requirement or condition which he applies ... equally to a man but-Back to text.(i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, ... and
(iii) which is to her detriment because she cannot comply with it."
(2) This is confirmed by section 57(3) of the Act of 1976 which provides that no damages shall be payable in cases of unintentional indirect discrimination (Emphasis added). See for example Orphanos v Queen Mary College [1985] AC 761. See also James v Eastleigh Borough Council [1990] 2 AC 751 (a case on direct discrimination). Back to text.
(3) See Price v Civil Service Commission (No 2) [1978] IRLR 3. Back to text.
(4) See Malik v British Home Stores CRE Report 1980 p 78. Back to text.
(5) This is implemented by Regulation 1612/68. Also see Article 7 for a general edict against discrimination on grounds of nationality against EU nationals. Back to text.
(6) In Meer and Perera European law was not considered. Back to text.
(7) This follows a line of ECJ cases going starting with Case 96/80 Jenkins v. Kingsgate (Clothing Productions) Ltd [1981] ECR 911 and Case 170/84 Bilka-Kaufhaus GmbH v Weber von Harz [1986] ECR 1607. This is also in harmony with the American model of disparate impact analysis. See Griggs v. Duke Power 401 US 424, Montana Rail Link v Byard 260 Mont 331 (1993) and Rowe v General Motors Corporation 457 F.2d 348. 490 US 642, (5th Cir 1972). Back to text.
(8) Per Orr, LJ Shields v Coome Holdings [1978] ICR 1159, at 1174. Cited in approval by Wood, J in Enderby v Frenchay [1991] ICR 382 EAT at 402H and by Balcombe, LJ in British Coal v Smith [1994] ICR 810 CA, at 841H. See also Lord Keith in Rainey v Greater Glasgow Health Board [1987] AC 224, 3 WLR 1017, at 1028. Back to text.
(9) In Hampson v Department of Education [1990] 2 All ER 25 the Court of Appeal, when interpreting the element justification in section 1(1)(b) of the Race Relations Act 1976 followed the House of Lords' interpretation of the element justification from the Sex Discrimination Act 1975. In support of this the Court of Appeal cited the White Paper, Racial Discrimination (Cmnd 6234) and the long title of the Act of 1976. Back to text.