Hailed as “the biggest overhaul of discrimination law in decades”1, the first set of provisions under the Equality Act 2010 (the Act) was implemented on 1 October this year. The Act harmonises and replaces previous strands of discrimination legislation. Various alarmist articles have been written about the predicted influx of tribunal claims employers are likely to face as a result of this new legislation and the vast expense predicted in handling them. This Client Alert will take a more temperate look at the changes that have been and will be introduced and identifies the 10 most important points employers should be aware of in light of the new provisions.

Protected Characteristics

The Act is concerned with discrimination in respect of the following protected characteristics: age; disability; gender reassignment; race; religion and belief; sex; sexual orientation; marriage and civil partnerships; pregnancy and maternity. Employers will note that there has been no change to the list of characteristics which were previously protected under discrimination law but the Act has brought them together under one unifying piece of legislation. Whilst this list has remained the same, there have been some minor changes made to certain definitions, for example, gender reassignment, which is now a protected characteristic whether or not the employee in question is under medical supervision.

Discrimination by Association and Perception

The Act attempts to simplify and strengthen the previous law in relation to discrimination by association and perception. The Act prohibits direct discrimination and harassment based on association and perception in respect of race, sex, gender reassignment, disability, sexual orientation, religion or belief and age.

Discrimination by association will arise where an employee is discriminated against because they associate with another person who possesses a protected characteristic. For example, employees who are carers of elderly or disabled family members. Discrimination by perception will arise against an individual because others think they possess a particular protected characteristic (even if the person does not actually possess that characteristic). For example, where colleagues taunt an employee because they perceive him to be a homosexual, even if in fact the employee is heterosexual.

Note, direct discrimination based on association or perception in respect of marriage or civil partnership is not covered and therefore only less favourable treatment because of the victim’s status will amount to discrimination in these areas.

Liability For and Application of Harassment

The Act harmonises the general harassment provisions across all the protected characteristics. Note, pregnancy and maternity and marriage and civil partnership are not relevant protected characteristics for harassment purposes but unwanted conduct relating to these areas could fall within sex or sexual orientation harassment. Another key change in this area is liability for third party actions (e.g., harassment by clients/customers). In order for a claim to be brought, the harassment must have occurred on at least two previous occasions (whether or not by the same third party); the employer must have been or should reasonably have been aware of the harassment and must have failed to take reasonable steps to prevent it. Additionally, employees can complain of harassment not actually directed at them but where an offensive environment is created, for example, if a group of employees was making offensive jokes in close proximity to another employee who was not participating and who was offended by such behaviour, that employee could bring a claim for harassment.

Types of Disability Discrimination

Another significant change introduced by the Act is in relation to disability discrimination. The concept of ‘disability-related’ discrimination has been replaced with discrimination ‘arising from a disability’. Under the Act, it is discriminatory to treat an employee unfavourably because of something arising in consequence of their disability, for example, a tendency to make spelling mistakes because of dyslexia. In addition, employees can now bring a claim for indirect disability discrimination. Prior to October 2010, case law had evolved in such a way that it was almost impossible to make a successful disability discrimination claim because anyone bringing a claim would be compared to another employee who behaved in the same way, for example was repeatedly absent, but who was not disabled. Therefore, provided the employer would treat both employees in the same way, they would be able to defend the claim. The Act has reversed this position by removing the need for a comparator; the employee must simply establish that the unfavourable treatment is because of something connected with their disability. Note, an employer can seek to objectively justify both discrimination arising from a disability and indirect disability discrimination.

Pay Secrecy

Most prevalent in the financial sector, pay secrecy or “gagging” clauses require an employee to keep the details of his remuneration package secret and prevent him from discussing his pay with colleagues. Contrary to the initial proposals, the Act does not actually ban pay secrecy clauses and employers can continue to include such clauses in their employment contracts. However, the extent to which an employer can enforce pay secrecy clauses is now more limited as a pay secrecy clause will be unenforceable against employees who make or solicit a “relevant pay disclosure”. A relevant pay disclosure is a disclosure that is made by an employee to establish whether there is a connection between their pay and having (or not having) a particular protected characteristic. For example, where a female employee who thinks she is being underpaid has a discussion with a male colleague to establish whether there is a difference in their pay and whether there may be pay discrimination. If the male employee in that situation was disciplined for disclosing details of his pay, he could bring a claim against the employer for victimisation.

Medical Records

It is now unlawful to ask job applicants about their health before they are offered a role. There are limited exceptions to this general rule, which include:

  • To decide whether there is a need to make any reasonable adjustments to the selection process for the applicant
  • To decide whether an applicant can carry out a function which is intrinsic to the job
  • To monitor diversity among applicants
  • To take positive action to assist disabled people by making reasonable adjustments to the working conditions or the role itself
  • To ensure that where a job requires a person to have a specific disability, that they do have it

Employers are advised to review their recruitment procedures to ensure health-related questions are only asked where necessary to achieve one of the goals listed above. It should be noted that this prohibition can only be enforced by the Equality and Human Rights Commission, who will have the power to investigate the use of such prohibited questions and may levy fines up of to £5,000.

Victimisation

When bringing a claim for victimisation, the employee in question is no longer required to be able to identify a comparator (another employee who has been treated in the same way as the claimant but who has not made or supported a complaint or raised a grievance). Simply being subjected to a detriment or less favourable treatment because an employee exercised their rights under the Act, for example by bringing a claim for harassment, will be enough to enable them to raise a victimisation claim. The definition of protected acts in relation to victimisation is extended to cover seeking, making or receiving a relevant pay disclosure — see Pay Secrecy section above.

Dual Discrimination

This part of the Act is not expected to come into force until April 2011 but once implemented, this provision will allow employees to bring a claim in relation to a combination of two protected characteristics (excluding marriage and civil partnership, and pregnancy and maternity). This only applies to direct dual discrimination; indirect discrimination, harassment and victimisation are not covered. It is not necessary that a claim for discrimination on the grounds of each of the two protected characteristics taken separately would succeed. On the other hand, it will be possible to bring a claim for dual discrimination in addition to two separate claims for discrimination on the grounds of each separate characteristic. This provision has been introduced in recognition of the fact that some of the worst discrimination and disadvantage is suffered by people who possess more than one protected characteristic, for example, Pakistani women.

Positive Action

This new provision is split into two separate parts, the first of which has already been brought into force and the second of which is expected to come into effect in April 2011. The first limb permits employers to take voluntary positive action, in a general way, by taking proportionate measures to enable or encourage those employees who share a protected characteristic and who are considered to be under-represented in the relevant industry, or who suffer a disadvantage connected to their shared protected characteristic to overcome any related disadvantage or increase their participation. When taking proportionate measures, employers will need to look carefully at their aims and the evidence they have to support them in order to justify any positive action they may take. Under the second limb, which has not yet been enacted, employers may take positive action in relation to recruitment and promotion. This will permit employers to voluntarily treat those applicants with a protected characteristic more favourably, provided that they were equally as qualified as other applicants. However, it should be noted that this positive action provision does not permit “quotas” for minority groups or selection of employees regardless of merit. This provision may have further reaching application than was initially expected, in that it may permit “reasonable adjustments” for protected characteristics other than disability, for example, it may permit free English language lessons to non-English speaking employees.

Gender Pay Reporting

This provision is not yet in force. Once implemented, it will mean public bodies with 150 employees or more will be obliged to publish their gender pay disparities, while private sector bodies with 250 employees or more will be expected to do the same on a voluntary basis until 2013 when it is likely to become required by regulation. It is expected that the size of organisation thresholds for making pay gap disclosures will also be reduced so as to extend the remit of the Act to more employers.

Summary

Employers are advised to review their existing policies, particularly those relating to recruitment, in light of the new discrimination provisions under the Act. Although the day-to-day responsibilities for employers will not change significantly, it remains to be seen how the provisions will be interpreted by the tribunals and courts and therefore the liability of employers for discrimination claims. An issue relating to independent legal advisers advising employees on compromise agreements has already sparked widespread concern. On a strict interpretation of the drafting of the Act, it appears that a solicitor instructed by an employee to negotiate exit terms or to bring a claim on an employee’s behalf cannot also be the employee’s independent legal adviser for the purposes of entering into a compromise agreement. As a temporary solution, counsel for the Government Equalities Office has suggested involving ACAS and using its COT3 procedure where the financial stakes are high, or alternatively taking the approach that this outcome was not the Government’s intention, and therefore no tribunal would adopt this strict interpretation. There is clearly uncertainty here that will hopefully be resolved, although it may require an amendment to the legislation which is likely to be a lengthy process.