In the May 2009 edition of Highlights we reported on the publication of the long-awaited Equality Bill. The Equality Bill finally received Royal Assent on 8 April 2010, becoming the Equality Act 2010 (the Act). The original version of the Bill has not altered a great deal during its passage through Parliament although some changes have been made. The UK government has of course changed since Royal Assent was granted and this may well have an impact on some of the Act’s provisions. However, as promised, when the Act comes into force it will replace all the existing discrimination legislation. This edition of Employment Highlights looks at the key employment law provisions of the Act and considers its potential impact. (References to the Government are to the Labour Government which was in power during the Bill’s progress through Parliament).

Introduction

The Act has two main purposes - to harmonise discrimination law and to strengthen the law to support the progress on equality. In summary, the Act replaces the Equal Pay Act 1970, the Sex Discrimination Act 1975 (SDA), the Race Relations Act 1976, the Disability Discrimination Act 1995 (DDA), the Employment Equality Regulations on religion or belief, sexual orientation and age, much of the Equality Act 2006 and other ancillary pieces of legislation. It harmonises existing provisions to give a single approach where appropriate. Inevitably, the Government’s aim to harmonise existing laws has resulted in some changes to them and its desire to strengthen existing equality laws has involved the introduction of certain new laws. The key provisions of the Act which impact employment law are outlined below.

Protected characteristics

Discrimination law in this country has developed in many stages over the past 40 years. As listed above there are a number of different acts and regulations which deal with the different strands: sex; race; disability; marriage and civil partnership; sexual orientation; religion or belief; pregnancy and maternity; gender reassignment; and age. The Act brings together all these different strands and lists each of them as “protected characteristics” which form the basis of the discrimination provisions in the Act.

There is no change from the list of characteristics currently protected under the law although certain minor changes have been made to the definition of some of the characteristics. For example, the test for establishing whether someone has a disability has been amended slightly. Currently, under the provisions of the DDA, an impairment only qualifies as a disability if it affects one or more of the listed capacities of mobility; manual dexterity; physical co-ordination; continence; ability to lift, carry or otherwise move everyday objects; speech, hearing or eyesight; memory or ability to concentrate, learn or understand; or perception of the risk of physical danger. The Act no longer lists these capacities but relies on the general requirements in the original definition that the impairment must be long-term and have a substantial effect on a person’s ability to carry out normal day-to-day activities. However, further guidance on whether someone has a disability will also be issued.

These proposals should not, in theory, lead to a significant widening of the definition of disability in the employment context, but removing the list of capacities should make it less onerous for employees to prove their case.

In addition, there is currently a power in the DDA for the Government to exclude certain types of cancer from the definition of disability. However, this has not been replicated in the Act as the Government has no intention of using it.

The Act also changes the current definition of “gender reassignment” by no longer requiring a person to be under medical supervision to fall within it. This means that a person who was born female but chose to spend the rest of her life as a man, without seeking medical advice or intervention, would have undergone gender reassignment for the purposes of the Act. However, transvestites, or those who choose temporarily to adopt the appearance of the opposite sex, would not be covered by the definition.

There had been suggestions as part of the Discrimination Law Review that discrimination law should be expanded to protect characteristics related to language, caste and genetic predisposition, and to protect parents and carers. These proposals were rejected during the consultation process and are not included in the Act. However, there is provision in the Act for the definition of the protected characteristic of race to be amended to include caste in the future.

Direct discrimination

The current definition of direct discrimination requires the claimant to show that he or she has been treated less favourably than a real or hypothetical comparator “on grounds of” (or “on the ground of”) a particular characteristic. There is no need for a comparator in pregnancy or maternity cases and it was debated whether this requirement should be removed for all forms of discrimination. The Government decided however to leave the law as it is on this point.

However, the words “on the grounds of” or “on the ground of” in the current definition of direct discrimination have been replaced with the words “because of” to make the definition “more accessible” to the ordinary user (as stated in the Explanatory Notes). This general definition also allows discrimination to be interpreted very widely because it makes no reference to the protected characteristic of any particular person. Under current law, direct discrimination on grounds of a perceived (rather than actual) characteristic or direct discrimination based on the characteristic of someone with whom the claimant is associated are only prohibited in certain areas of discrimination law. This change will mean that claims of direct discrimination based on both association and perception in relation to any of the protected characteristics will be possible with the exception of marital or civil partnership status (in which case a claim of discrimination may only be brought on grounds of the claimant’s own status as married or a civil partner). An example of associative discrimination given in the Explanatory Notes to the Act is of a Muslim shopkeeper who refuses to serve a Muslim woman because she is married to a Christian. This would be direct religious discrimination by reason of the woman’s association with her husband. An example given of “perceptive” discrimination is of an employer who rejects a job application from a white man whom he wrongly thinks is black, because the applicant has an African-sounding name. This would amount to direct race discrimination based on the employer’s mistaken perception.

Indirect discrimination

The Act harmonises the definitions of indirect discrimination in relation to all protected characteristics, adopting the standard definition of indirect discrimination, being when a provision, criterion or practice (PCP), which is applied to all, puts those having a particular protected characteristic at a particular disadvantage, and that PCP is not a proportionate means of achieving a legitimate aim. The key difference between the current law and the Act is that the concept of indirect discrimination is extended to cover both disability and gender reassignment for the first time.

In practice, the extension of the concept of indirect discrimination to disability could present real problems for employers and caused concern during the consultation process. This concept is aimed at targeting unjustified practices which disproportionately place particular groups of people at a disadvantage. However, disability can arise from a wide range of impairments which can have different effects from person to person so that unless the provision is construed narrowly, employers could face the impossible task of anticipating the impact that their employment practices could have on a range of hypothetical individuals with a variety of impairments whose effects could be unique to those concerned. However, it may also be difficult for a disabled employee to demonstrate that there is a group of people who are placed at a particular disadvantage as each member of the group with his disability may suffer different impairments. Complaints of indirect discrimination in disability cases will be monitored closely.

Objective justification

Currently, the “objective justification” defence is used in relation to indirect discrimination and direct age discrimination. The defence has been worded differently in a number of pieces of legislation over the years. For employment law purposes, the current test in all cases (except colour or nationality) is that the measure in question must be “a proportionate means of achieving a legitimate aim”. In addition, disability-related discrimination under the DDA involves a justification test but this is not an objective justification test. Employers can justify treating a claimant less favourably for a reason related to their disability where the reason for the treatment is “material and substantial”. This has been held to be equivalent to a “band of reasonable responses” test, giving the employer considerable latitude.

The Act harmonises the concept of justification in discrimination cases as a “proportionate means of achieving a legitimate aim”. The key change here for employment lawyers is the imposition of an objective justification test in relation to the two new disability claims of indirect discrimination and discrimination arising from a disability. (For more detail on these changes please see the section on disability discrimination below).

It is important to note that for most of the protected characteristics it is not possible to justify direct discrimination. The Act, however, continues to allow for justification where the protected characteristic is age.

Harassment

Currently, the harassment provisions under the SDA are wider than under other strands. In particular, after changes to the SDA in April 2008, employers can be held liable for harassment of employees by a third party (such as a customer or contractor) if harassment has occurred on at least two earlier occasions and the employer has failed to take reasonably practicable steps to stop it. The Government saw this situation as an anomaly and therefore the Act extends this protection to all the protected characteristics covered by the harassment provisions (which does not include the protected characteristics of marriage and civil partnership or pregnancy and maternity).

The Act also widens the definition of harassment across the various strands so that it catches conduct ‘related to’ a protected characteristic which means that there is no need for a particular person’s protected characteristic to be the reason for the unwanted conduct. Harassment based on perception and association will also be covered so that a person who is harassed because of their spouse’s religious beliefs or because they are wrongly perceived to be gay, would have a claim.

Disability discrimination

The new definition for the protected characteristic of disability has been dealt with above under the section on protected characteristics. The Act, however, makes a number of other changes to the law on disability discrimination.

In summary, the Act introduces two new types of disability discrimination claim.

Currently the DDA, unlike other discrimination legislation, makes no provision for indirect discrimination. However, as mentioned above, the Act extends the concept of indirect discrimination to cover disability despite the concerns raised during the consultation process of the difficulties this would give rise to.

In addition, the Act introduces the new concept of “discrimination arising from disability” which, effectively, will replace the outgoing disability-related discrimination provisions. As a result of the House of Lords’ decision in London Borough of Lewisham v Malcolm [2008] UKHL 43, it has become much more difficult for a claimant to establish disability-related discrimination because of the Court’s ruling on the correct comparator in such cases. Hence the decision to replace this concept in the Act with the new potential claim of “discrimination arising from a disability”. In essence the new provisions prohibit an employer from treating a disabled employee in a way which, because of the employee’s disability, is to their detriment and which cannot be objectively justified. The employer has a defence if he can show that he did not know and could not reasonably be expected to know that the employee had a disability. This new claim is broadly equivalent to that of disability-related discrimination as it existed before Malcolm with the difference that lack of knowledge is a potential defence and the new form of discrimination is subject to the standard objective justification test discussed above.

The Act also addresses the problem of pre-employment enquiries about health issues, often considered to be one of the main reasons why disabled job applicants frequently fail to reach the interview stage of the recruitment process. These provisions were not included in the original Bill but were introduced and substantially amended during its passage through Parliament. The final provisions in the Act prohibit an employer from asking about a job applicant’s health (including any disability) before offering him work or before placing him in a pool of applicants to whom he intends to offer work in the future. An employer does not commit an act of disability discrimination merely by asking questions about an applicant’s health, but the employer’s conduct in reliance on information given in response may lead a tribunal to conclude that he has done so. In these circumstances it would be for the employer to prove that no discrimination took place.

Multiple/dual discrimination

The Bill, as originally drafted, did not refer to multiple discrimination claims. It has been recognised that some of the worst discrimination and disadvantage is suffered by people falling into more than one disadvantaged group. Currently, however, a tribunal hearing a direct discrimination claim must consider the grounds of, for example, race and sex separately and may not make a global finding, that, for example, the claimant was treated less favourably because she was a “Pakistani woman”.

Following publication of the Bill, the Government launched a further consultation seeking views on whether provisions should be inserted into the Bill to deal with the issue of multiple discrimination claims. In the consultation document, the Government proposed that the Bill be amended to allow multiple discrimination claims from no earlier than April 2011. However, in its view, claims should only be able to be brought in relation to a combination of two, and not more, of the “protected characteristics” and only direct multiple discrimination should be outlawed; the provision should not cover indirect discrimination, harassment or victimisation. The consultation closed on 5 June 2009 and, as a result of the response, the Bill was amended so that the final Act makes provision in respect of dual discrimination allowing a claim of direct discrimination to be brought in relation to a combination of two of the protected characteristics of age; disability; gender reassignment; race; religion or belief; sex; or sexual orientation. The protected characteristics of marriage and civil partnership, and pregnancy and maternity are not covered by this provision.

Occupational requirement exception

The current legislation on race, religion or belief, age and sexual orientation sets out a genuine occupational requirement” (GOR) defence. This enables an employer to stipulate that, because of the nature of the job in question, only people with a particular discriminatory characteristic are eligible. However, in relation to sex, gender reassignment and nationality, there is no general GOR defence but there are specific “genuine occupational qualifications” (GOQs) serving a similar purpose. For example, the SDA contains GOQs relating to, amongst other things, drama, entertainment and modelling or the need to preserve decency or privacy. The Act harmonises the law by introducing an “occupational requirement” (OR) defence across all protected characteristics and removes the job-specific GOQs in sex, gender reassignment and nationality cases. The Explanatory Notes state that the requirement must be crucial to the post. In addition, the person seeking to rely on the requirement must be able to show that it is a “proportionate means of achieving a legitimate aim”. This mirrors the objective justification test elsewhere in the legislation and, as under the existing law, the OR exception applies to direct and indirect discrimination only and not to claims of harassment or victimisation. The Explanatory Notes give examples of how the general OR might work in practice such as where the need for authenticity or realism might require someone of a particular race, sex or age for acting roles (for example, a black man to play the part of Othello) or modelling jobs.

After much debate on the subject during the Bill’s passage through Parliament, the Act’s provisions replicate the effect of specific defences under current law in respect of employment for the purposes of an organised religion and employments where there is an ethos based on religion or belief. Where employment is for the purposes of an organised religion, the Act allows an employer to apply a requirement that the employee, for example, be of a particular sex or sexual orientation, but only if the requirement in question is applied so as to comply with the doctrines of the religion or to avoid a conflict with the strongly held religious convictions of a significant number of the religion’s followers. This exception replaces the general religion or belief GOR which is worded differently. However, as under the current law and as explained in the Explanatory Notes, this exception will apply to only a very narrow range of employment posts such as ministers of religion and a small number of lay posts. Therefore whilst it would apply to a requirement that a Catholic priest be a man and unmarried, it would be unlikely to apply to a requirement that a church youth worker who primarily organises sporting activities be heterosexual or celibate if gay.

Positive action

Under the provisions of the Act employers will be allowed (although not required) to take under-representation or perceived disadvantage of particular groups into account when selecting between two equally-qualified candidates for promotion or a new position. Employers must take such decisions on a case-by-case basis as opposed to having a blanket policy of positive action and will not be permitted to select a less qualified candidate for these reasons.

This proposal attracted much media attention when the Bill was first published, not all of which accurately reported the Bill’s intention. The reality is that the choice as to whether to invoke the new provision is the employer’s, who must demonstrate that the successful applicant is from a protected group which is at a disadvantage or under-represented, and that they are no less qualified than any other applicant. The Government has been keen to stress that the principle of “selection on merit” will still be key. However, it is not clear how questions of whether candidate A is as qualified as candidate B would be resolved. The Government indicated in debate that it would not be limited to academic qualifications, and the Explanatory Notes make it clear that suitability, competence and professional performance should also be considered. In addition the Equality and Human Rights Commission’s draft Employment Code of Practice suggests that employers prepare “an objective set of criteria that relate to the job or post” and then conduct “an objective assessment or evaluation of each candidate against that set of criteria and against each other“. Employers therefore have some scope for establishing that a candidate is as qualified as another according to their chosen criteria but it will rarely be a clear-cut issue.

Equal pay and the gender pay gap

Despite the introduction of the equal pay legislation more than 30 years ago, a significant gender pay gap still exists. The Government believes that greater equality can be achieved by encouraging transparency in a number of different areas. Therefore, the Act renders unenforceable “secrecy clauses” in employment contracts which seek to prevent employees disclosing information about their pay to colleagues with a view to finding out if there are any differences that are related to a protected characteristic. So, in order for a secrecy clause to be unenforceable, the disclosure of information about pay must relate to the possibility of discrimination - there is no general prohibition on secrecy clauses.

The Act also contains a power for the Government to issue regulations requiring private sector employers with 250 or more employees to publish information relating to employees’ pay, for the purposes of showing whether there are differences in the pay of male and female employees. The Government’s aim was to encourage larger employers to publish details of any gender pay gap within their organisation on a regular and voluntary basis. For this reason, it decided to give employers time to implement any such measures and stated that it would not use this power before April 2013 and only then “if sufficient progress on reporting has not been made”.

The position regarding gender pay reporting in the public sector is different. The Government envisaged that public bodies with over 150 employees would, from 2011, be required to publish annual details of their gender pay gap; ethnic minority employment rates; and disability employment rates.

Public sector equality duties

The Act builds on the existing equality duties for public bodies to create a single equality duty. Public bodies will be required to have regard, in the exercise of their functions, to the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Act. They must also have regard to the need to advance equality of opportunity and foster good relations between those with a protected characteristic and the wider community (except in relation to marriage and civil partnership). In order to recognise the part class plays in determining success, the Act also imposes a duty on certain public bodies (including local authorities and NHS bodies) to have regard to socio-economic factors when making strategic decisions.

Territorial scope

Unlike existing discrimination legislation, the Act is silent as to its territorial scope. According to the Explanatory Notes, the decision to remove territorial scope from the Act follows the precedent of the Employment Rights Act 1996 (ERA) - (section 196 ERA which dealt with territorial scope was repealed by the Employment Relations Act 1999) - and the Act therefore leaves it to tribunals to determine whether the law applies, depending for example on the connection between the employment relationship and Great Britain. At present, therefore, there is much uncertainty as to the territorial scope of the Act’s provisions. Whilst some commentators suggest that the tribunals will follow the Lawson v Serco line of cases which deal with the territorial scope of the unfair dismissal provisions of the ERA, it remains to be seen whether they are correct.

Enforcement

Following a finding of discrimination made against an employer, under the provisions of the Act, tribunals will have a new power to make recommendations in respect of the employer’s workforce as a whole and not just in relation to a particular claimant, as at present. The recommendation must state that the employer must take a specified action to reduce the adverse effects of any matters raised in the proceedings within a specified time. A tribunal might recommend, for example, that the employer introduces an equal opportunities policy or retrains staff.

What happens next?

This edition of Highlights outlines the key employment provisions of the Act as it stands. Although no commencement order has yet been published, it was the Labour Government’s intention that its main provisions come into force in October this year with the provisions on socio-economic duties, the integrated public sector equality duty and dual discrimination being held back until April 2011 and the private sector gender pay reporting obligations not coming into force until 2013 at the earliest. However, the final outcome of the General Election is also likely to have an impact. The Conservatives, for example, had indicated prior to the establishment of the new coalition government that they would not bring all of the Act’s provisions (such as those on the public sector socio-economic duty, positive action and gender pay reporting) into force. It remains to be seen what the new government will decide to do.