The Supreme Court has held that there is no requirement for a claimant to prove the reason why a PCP puts (or would put) an affected group sharing a protected characteristic at a particular disadvantage. The essential element is establishing a causal connection between the PCP and the disadvantage suffered, both by the group and the individual. This may be easier to prove if the reason for the group disadvantage is known, but is a question of fact rather than law.

Essop & Ors v Home Office (UK Border Agency) (Essop) and Naeem v Secretary of State for Justice (Naeem)

Background

The Equality Act 2010 (EA 2010) prevents discrimination against employees in the workplace on the grounds of nine "protected characteristics", which include age, race and religion or belief.

Indirect discrimination is defined in section 19 of the EA 2010. This provides that an employer may indirectly discriminate against an employee on the grounds of a protected characteristic where an apparently neutral "provision, criterion or practice" (PCP) puts persons with a protected characteristic at a particular disadvantage, and puts the employee themselves at that disadvantage. If the employer can't justify a discriminatory PCP, then the employee will succeed in their claim of indirect discrimination and will be able to seek uncapped compensation.

Mr Essop's case related to the protected characteristics of both age and race. Mr Naeem's case related to the protected characteristics of both race and religion but primarily religion.

Essop: the facts

In Essop, the relevant PCP was a requirement to pass a Core Skills Assessment test (CSA) as a pre-requisite to promotion to certain civil service grades.

Mr Essop is an immigration officer for the Home Office and the lead appellant in a group of 49 people. When an equality impact assessment established that black and minority ethnic (BME) candidates and older candidates had a lower pass rate for the CSA than white and younger colleagues, he and other employees who had failed the CSA brought claims of indirect race and/or age discrimination, relying on findings that:

  • the BME pass rate was only 40.3% of the pass rate for white candidates;
  • the pass rate of candidates aged 35 or older was 37.4% of that of those below that age; and
  • in each case, there was a 0.1% likelihood that this could happen by chance.

No-one knows why the proportion of BME or older candidates failing is significantly higher than the proportion of white or younger candidates failing.

An Employment Tribunal (ET) found that section 19 EA 2010 required the claimants to prove what the reason for the lower pass rate was (i.e. why so many more BME and older candidates failed the CSA), and to determine whether they were put at the same disadvantage as the group. This was to avoid employees making a claim based on statistics regardless of whether they had been actually affected by the adverse impact suffered by the group. The claimants appealed.

The Employment Appeal Tribunal (EAT) disagreed with the ET and said that the claimants did not have to prove the reason for the lower pass rate. It was enough to show that the group had suffered, or would suffer, the particular disadvantage of a greater risk of failure and that each individual had also suffered the disadvantage of failure. However, the Home Office appealed to the Court of Appeal (CA) which held that the claimants had to show why the requirement to pass the CSA put the group at a disadvantage and that he or she had failed the test for that same reason.

Mr Essop appealed to the Supreme Court (SC). The main question referred to the SC was whether section 19 EA 2010 requires the reason for the group disadvantage to be established and whether the reason why the individual has suffered from that disadvantage needs to be the same reason.

Naeem: the facts

In Naeem, the relevant PCP is the Prison Service pay scheme for chaplains, which incorporates pay progression over time and means that pay is related to length of service.

Mr Naeem is an imam who works as a chaplain in the Prison Service, initially on a sessional basis, but as a salaried employee from 2004. Before 2002, Muslim chaplains were only engaged on a sessional because the Prison Service believed that, until that time, there were not enough Muslim prisoners to justify employing Muslim chaplains on a salaried basis.

The Prison Service's pay system places emphasis on length of service. When Mr Naeem became a salaried employee it would take 17 years to progress from the bottom of the pay scale to the top. The Prison Service has since started to reduce this, with the aim of reducing the timescale to 6 years, but the process was halted by government pay freezes from 2010 / 2011 onwards.

Consequently, in April 2011, the average basic pay for Muslim chaplains was £31,847, compared to £33,811 for Christian chaplains. This was because Muslim chaplains had only been employed on a salaried basis since 2002, whereas many of the Christian chaplains had started employment before that date (although a Christian chaplain who started in salaried employment on the same date as a Muslim chaplain, and who had the same appraisal record, would be paid the same).

Mr Naeem claimed that the incremental pay scale was indirectly discriminatory against Muslim or Asian chaplains and resulted in his being paid less than Christian chaplains in a post where length of service served no useful purpose as a reflection of ability or experience.

An ET found that the pay scheme was indirectly discriminatory in relation to both race and religion, but that it was objectively justified as a proportionate means of achieving a legitimate aim because the Prison Service was trying to transition to a new scheme under which length of service would be determinative of pay over a shorter period. Both sides appealed to the EAT, where it was held that the pay scheme was not indirectly discriminatory at all, because chaplains employed before 2002 should be excluded from the comparison between the two groups (although, the EAT said if they were found to be wrong about that then they did not think the pay scheme could be justified as a proportionate means of achieving a legitimate aim because there were ways of modifying the scheme to avoid the disadvantage suffered by people such as Mr Naeem).

The CA dismissed Mr Naeem's appeal on the basis that it was not enough to show that the length of service criterion had a disparate impact upon Muslim chaplains. The CA ruled that it was also necessary to show that the reason for that disparate impact was something peculiar to the PC in question. Mr Naeem appealed to the SC. The main questions referred to the SC were:

  • whether the reason for the disadvantage which he as the claimant suffers has also to be related to the PC of his religion or race; and
  • whether the pool for comparison should be all prison chaplains or only those employed since 2002.

Supreme Court – guidance regarding indirect discrimination claims

The SC allowed both appeals on the question of whether, on the face of it, indirect discrimination had been established. In their judgment, the SC took the opportunity to clarify a number of key features of indirect discrimination.

  1. To succeed in claiming indirect discrimination, there has never been a requirement for a claimant to show why the PCP puts one group sharing a particular PC at a particular disadvantage when compared with others; it is enough that it does.
  2. Whilst direct discrimination requires a causal link between the less favourable treatment and the PC, indirect discrimination does not. Instead, it merely requires a causal link between the PCP and the particular disadvantage suffered by the group and the individual.
  3. "Context factors": The reasons why one group may find it harder to comply with the PCP than others are many and various (e.g. genetic, social, related to the traditional division of labour, starting at the bottom of an incremental pay scale). Such examples show that the reason for the disadvantage need not be unlawful in itself or be under the control of the employer or provider (although sometimes it will be). They also show that both the PCP and the reason for the disadvantage are "but for" causes of the disadvantage; removing one or the other would solve the problem.
  4. The PCP need not put every member of the group sharing the PC at a disadvantage. For example, in Essop, it was irrelevant that some BME or older candidates could pass the CSA; the group was at a disadvantage because the proportion who could pass was smaller than the proportion of white or younger candidates.
  5. When establishing particular disadvantage, it is common for the disparate impact to be established on the basis of statistical evidence.
  6. It is always open to a respondent to show that the PCP is justified

Supreme Court - decision in Essop

More specifically, in Essop, the SC held that it was not necessary to establish the reason for the particular disadvantage to which the group was put in order to succeed in an indirect discrimination claim.

However, the SC accepted that the disadvantage suffered by the individual must correspond with that suffered by the group. Applying this to the facts of the case, the SC found that:

  • Here, the disadvantage was that BME and older candidates failed the CSA disproportionately and the claimants suffered this disadvantage.
  • However, a candidate who failed the CSA because he or she did not prepare or did not turn up would not suffer harm as a result of the PCP in question.
  • Therefore, it would be open to the Home Office in such a case to show that the causal link between the PCP and the individual disadvantage was absent.

As a result, the SC allowed Mr Essop's appeal but sent the case back to the ET for them to determine whether the disadvantage suffered by each individual corresponded with that suffered by the group.

Supreme Court – decision in Naeem

In Naeem, the SC held that it was not necessary to show that the reason for the particular disadvantage related to the protected characteristic and confirmed that the pool for comparison included all chaplains affected by the relevant PCP.

Therefore, although the reason why the pay scale put Muslim chaplains at a disadvantage was known (because they had, on average, a shorter length of service than Christian chaplains), this did not need to be related to the PC. It was enough to establish that the PCP put Muslim chaplains at a particular disadvantage compared with Christians and section 19 EA 2010 was therefore satisfied.

However, the SC noted that it was not open to them to overturn the ET's original finding that the PCP was objectively justified (see facts above). As a result, the SC declined to interfere with the ET's assessment on the question of justification and so Mr Naeem's appeal was therefore dismissed.

Although claimants (and those who advise them) will no doubt have been the most relieved by the Supreme Court's decision, it has nevertheless been welcomed more widely for bringing some much-needed clarification to this area of law. Following this decision, it is clear that the extra hurdle previously imposed by the Court of Appeal in Essop (requiring claimants to prove the reason for any group disadvantage) has now been removed.

In addition, it appears that employment tribunals will now need to have regard to whether there are any "context factors" when considering indirect discrimination claims. In short, this will involve firstly considering whether there is a PCP, but secondly, whether or not there is a "context factor" at play (although not necessarily what it is and being aware that it does not need to be related to the relevant PC or be the "fault" of, or under the control of, the employer). The next step is to look for a causal connection between the PCP and the group disadvantage (which is likely to easier if the context factor is known). Finally it will be necessary to establish that the claimant suffered that same disadvantage, with the reason for the individual disadvantage being causally connected to the PCP.

Employers should remember that, even if indirect discrimination is made out on the face of it, employers are only liable where their actions are unjustifiable. Provided that there is a legitimate aim and the means for achieving that aim are proportionate, an employer will be able to successfully defend an indirect discrimination claim even where there is persuasive evidence that certain groups are significantly disadvantaged.