The European Court of Justice has finally handed down its judgment in two cases involving employees dismissed for wearing an Islamic headscarf at work, Achbita and Bougnaiou. The Advocate-General opinions in the cases took very different approaches as to whether dress codes should be classified as direct or indirect discrimination and as to the extent to which the employer's business interests could justify restricting an individual's freedom to display their religious identity.

Employers will welcome the ECJ's ruling that a dress code prohibiting visible signs of political, philosophical or religious belief in the workplace is to be viewed as potential indirect discrimination rather than direct discrimination. The distinction is important as indirect discrimination can be lawful if it is objectively justified, ie it is an appropriate and necessary means of achieving a legitimate aim, whereas direct discrimination cannot be justified (except in very limited circumstances).

The case of Achbita was one of potential indirect discrimination because the policy in question was in effect a requirement imposed on all employees to dress neutrally. The position would be different where a policy specifically prohibits particular items of religious dress, as the Court ruled that differential treatment directly based on an individual's belief or their manifestation of their belief in public would be direct discrimination. It would also be direct discrimination to dismiss an employee for wearing a headscarf in the absence of a policy, as was the case in Bougnaoui. There the employer had acted upon a request from a specific customer that the individual not wear a headscarf (because it had apparently upset some of the customer's employees). The Court unsurprisingly ruled that the willingness of an employer to take account of a customer's wish could not constitute a genuine occupational requirement providing a defence to direct discrimination under EU law. The defence is only available where the characteristic related to religion is "objectively dictated by the nature of the occupational activities concerned or of the context in which they are carried out" and cannot cover subjective considerations such as a willingness to accede to a particular customer's wishes.

Helpfully, in relation to dress codes the judgments do not appear to endorse the Advocate-General's view in Bougnaoui that a policy would only fall outside the scope of direct discrimination if it also prohibited items reflecting a person's identity or individuality (in addition to different types of belief), such as football club shirts or university ties; it would appear sufficient that all visible signs capable of being associated with any type of political, philosophical or religious belief are prohibited.

Of course, if a neutral dress code is applied more strictly to individuals wearing religious dress than to others that would be direct discrimination, so it is important that any code is applied consistently.

The more controversial part of the ECJ's ruling in Achbita relates to the issue of whether the policy was indirectly discriminatory, a question which had not been referred to the ECJ but on which it wanted to offer 'guidance' to the national court. The Court stated that the desire to display, in relations with both public and private sector customers, a policy of political, philosophical or religious neutrality "must be considered legitimate". The use of an internal rule prohibiting visible signs capable of being associated with beliefs will be appropriate to achieve the application of a policy of neutrality, provided the policy is "genuinely pursued in a consistent and systematic manner". The Court stated that, provided the policy is only applied to workers who interact with customers, it "must be considered strictly necessary" to achieve the aim and therefore lawful. Whether it is then justified to dismiss a worker for refusing to comply when interacting with customers will depend on whether it would have been possible for the employer to find her a role not involving customer contact, "taking into account the inherent constraints to which the undertaking is subject" and without requiring the employer "to take on an additional burden".

The ruling that a desire to display neutrality to customers "must" be legitimate is surprising, certainly if it is to be viewed as generally applicable rather than confined to the facts of that particular business. The business in this case operated in a country where secularism has constitutional status, and the employer's business involved supplying security and reception staff to a variety of public and private sector clients, ie supplying individuals to fulfil roles which would encompass in effect being the public face of the clients themselves. Arguably there could be a more persuasive business need for neutral appearance in such circumstances compared with situations where an individual is simply providing advice to or servicing equipment for a client, for example. However, it is unfortunate that the Court's statement that overt neutrality must be a legitimate aim does not appear to be dependent on the particular type of business or role in this case.

This 'guidance' seems to accord more with the Advocate General's view in Achbita that religious identity is a choice which can be put to one side to accommodate the employer's freedom to conduct its business, rather than "an integral part of a person's very being" which cannot be left at the door of the workplace (as suggested by the Advocate-General in Bougnaoui) and for which reasonable accommodation should be made. Certainly the European Court of Human Rights adopted a more balanced approach in the earlier case of Eweida, where BA's aim of projecting a professional corporate image and promoting recognition of brand and staff was held to be legitimate, but did not justify prohibiting the wearing of a necklace with a cross given that the cross was discrete and did not really detract from professional appearance.

Notwithstanding the ECJ's guidance, UK employers should continue to keep dress rules to a minimum, both to minimise the risk of discrimination and to avoid narrowing their talent pool. Health and safety, or the need for facial communication, may well justify some restrictions. If employers wish to go further and adopt a requirement for a neutral appearance, they should have good reasons for doing so (bearing in mind that secularism does not have the same status in the UK as in some other parts of Europe) and ensure that the requirement is applied only to as few customer-facing roles as possible. They should also look for alternative non customer-facing positions for an employee affected by the rule, prior to dismissing.