No “reason why”: Essop and Naeem in the Supreme Court

Robin Allen QC

Anna Beale

Robin Allen QC and Anna Beale consider the latest case on indirect discrimination and ask the pressing question: are equal pay cases suddenly significantly easier for Claimants?

The Supreme Court has today handed down judgment in the cases of Essop and others v Home Office (UK Border Agency) and Naeem v Secretary of State for Justice. The judgments restore what had previously been understood as the orthodox position in standard (non-equal pay) indirect discrimination cases: that there is no requirement for a claimant to show the “reason why” a provision, criterion or practice causes individuals with their protected characteristic particular disadvantage.

This central issue arose slightly differently in each case. In Essop, the claimants were civil servants, who were required to pass an exam as a pre-requisite for promotion to higher grades. An analysis of the results of the exam amongst different ethnic groups showed that BME and older candidates had significantly lower pass rates than white and younger candidates. There was no explanation for this disparity. The ET and the Court of Appeal held that it is necessary for claimants to show the reason why the PCP places their protected group at a particular disadvantage, as in order to succeed in an indirect discrimination claim, s. 19(2)(c) Equality Act 2010 requires them to prove that they as individuals are placed at that same disadvantage. The EAT held that the statute did not require proof of the reason.

In Naeem, the claimant was a Muslim chaplain in the Prison Service. The Prison Service operated an incremental pay scale where increases depended primarily on length of service, although at the time of Mr Naeem’s claim, it was transitioning to an accelerated model. Prior to 2002, the Prison Service employed no salaried Muslim chaplains, as it considered there to be insufficient demand. As a consequence of this, Christian chaplains within the Service were paid more on average than Muslim chaplains. Mr Naeem claimed that the scheme was indirectly discriminatory against Muslim or Asian chaplains. The ET held that the scheme did place Asian and Muslim chaplains (including Mr Naeem) at a particular disadvantage, but that it was objectively justified (and indeed the Supreme Court upheld this decision). However both the EAT and the Court of Appeal considered that the scheme was not even prima facie indirectly discriminatory. The Court of Appeal’s reasoning was similar to that in Essop, in that it held that, before any objective justification could be required, it was necessary to show that the reason for the disparate impact was something related or peculiar to the protected characteristic in question.

Lady Hale, who gave the only judgment in the Supreme Court, made an admirably concise summary of the development of the concept of indirect discrimination in European and domestic provisions. In concluding that there was no justification for incorporating a “reason why” or “related to” requirement into the law of indirect discrimination, she made the following points:

• None of the various definitions of indirect discrimination includes any express requirement for an explanation of the reasons why a particular PCP puts one group at a particular disadvantage when compared with others.

• Direct discrimination expressly requires a causal link between the characteristic and the less favourable treatment; indirect discrimination only requires a causal link between the PCP and the particular disadvantage suffered by the group and the individual, because its aim is to achieve equality of results, not equality of treatment.

• The reasons why one group may find it harder to comply with the PCP than others are many and various, and need not be unlawful or under the control of the employer. Removing either the PCP or the “reason why” could resolve the problem (the sub-text being that the PCP is within the control of the employer).

• There is no requirement that the PCP place all members of the group at a disadvantage.

• It is commonplace for the disparate impact to be established on the basis of statistical evidence, which can show only correlation, not a “causal link” (or indeed the reason why).

• It is always open to an employer to justify a PCP that disadvantages a particular group.

Dealing with the particular arguments in Essop, Lady Hale pointed out that all individual claimants need to do is show a correspondence between the disadvantage suffered by the group and the disadvantage suffered by the individual (i.e. in that case failure of the test, or the increased likelihood of failure). It would, for example, be open to a respondent to argue that a particular claimant should not succeed because his personal disadvantage in failing the test arose because he did not attend for the examination, rather than because the test disadvantaged BME or older candidates.

On the facts in Naeem, Lady Hale held that it could not be appropriate to incorporate a requirement that the disadvantage reflect some characteristic peculiar to the protected group as that would undermine almost all claims of indirect discrimination. There is, for example, nothing peculiar to womanhood in taking the larger share of caring responsibilities in a family.

Lady Hale also made useful comments about the use of “pools” within which the “particular disadvantage” comparison should be made. It had been held by the EAT in Naeem that the pool for comparison should include only those chaplains whose service commenced after 2002, as those chaplains who started before 2002 were in materially different circumstances. If the post-2002 pool was applied, there was no disparity in pay between Christian and Muslim chaplains. Lady Hale held this was the wrong comparison pool. The pool should cover all workers affected by the PCP in question; there is no warrant for including only some such individuals, and the EAT’s approach in effect drew the pool so as to incorporate the disputed condition.

This clear judgment is a welcome reaffirmation of indirect discrimination as a concept concerned with “equality of results” rather than “equality of treatment”. So far so clear!

What is the impact for equal pay cases?

It is important to remember, however, that the initial move away from that orthodoxy and towards a “reason why” approach came in the field of equal pay law, where successive Courts of Appeal in Armstrong v Newcastle upon Tyne NHS Hospital Trust [2006] IRLR 124 and Gibson v Sheffield City Council [2010] ICR 708 held that even where disparate impact of a pay practice on women has been demonstrated, the employer has an opportunity to prove that the disparate impact has nothing to do with sex before the court proceeds to justification.

Gibson was appealed to the Supreme Court and the Equality and Human Rights Commission were to argue that Armstong was wrongly decided. However it was settled before it could be heard. It is therefore a shame that in this judgment in Essop and Naeem the SC does not expressly hold that these two cases were wrongly decided. However, in our view, Lady Hale’s clear judgment has comprehensively discredited the Armstrong line of authority. Practitioners dealing with equal pay cases where the Armstrong argument is made now have a much stronger weapon in their armoury.

The problem remains that the equal pay provisions of the Equality Act 2010 can be read as assuming that Gibson at least was rightly decided in the Court of Appeal, so it will be necessary to rely explicitly on the European law right to equal pay for work of equal value as trumping those provisions. This is – for the time being at least – old law: Redcar and Cleveland BC v Bainbridge No.1 [2008] I.C.R. 238; [2007] I.R.L.R. 984.

Essop and Naeem make it clear that it is not necessary in an indirect race pay claim to show that a PCP was disadvantageous in some way because of the protected characteristic; there can be no possible reason in logic why a woman in an equal pay case should have to do so.