A recent ruling from the European Court of Justice (“ECJ”) could spell tougher race discrimination laws, with a potentially significant impact on employers across Europe. 

We reported previously on this case (Chez Razpredelenie Bulgaria), when the court issued an indicative opinion on the scope of indirect discrimination. This has now been confirmed in a binding ruling.

The ECJ has ruled that the concept of indirect race discrimination can apply much more broadly than had been previously assumed. To recap, the case concerned the placement of electricity meters - high up electricity poles, apparently to avoid tampering but also making them impossible for residents to read - in an area of a Bulgarian city mostly populated by people of Roma origin. A non-Roma inhabitant argued that the placement of the meters disadvantaged her, was based on a negative perception of Roma people, and hence was indirectly discriminatory on grounds of race. The case relates to goods and services, but the same principles apply in the employment context.

Indirect discrimination: the principles

This is a highly technical area, but the practical impact could be far-reaching.

A reminder of the key principles. Under the EU’s Race Directive, indirect discrimination “shall be taken to occur where an apparently neutral provision, criterion or practice [known as a “PCP”] would put persons of a racial or ethnic origin at a particular disadvantage compared with other persons, unless that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary”. 

The classic example of indirect race discrimination was an employer with a PCP of refusing to consider any job applications from a particular postal region. This was shown to disadvantage a racial group who made up a large proportion of the residents of that area and hence was indirect discrimination against a claimant from that same racial group.

However, in the current case, the ECJ found that where there is such a PCP which negatively and disproportionately affects a particular group which has a protected characteristic (eg, a group of a particular ethnic origin), an individual who does not have that protected characteristic but nevertheless suffers disadvantage alongside that group as a result of the PCP can claim indirect discrimination.

This is a significant widening of the scope of discrimination protection. If the postal districts case arose again today, under this new ruling, it appears that anyone from that postal area who was disadvantaged by the PCP (irrespective of their race) could bring an indirect race discrimination claim.

In both the recent electricity meters case and the “postal district” case, a particular geographical area was singled out for different treatment, so it is perhaps understandable that the ECJ decided to protect all residents of that area – even if they were not from a particular protected group. However, indirect race discrimination can apply much more broadly than that. For example an apparently harmless dress code requirement can disadvantage racial groups who, for cultural reasons, have different norms of dress. The potential implications of this case are therefore much broader than at first sight.

Employers can still objectively justify a PCP as a defence to an claim of indirect discrimination. However, in practice this is a significant additional hurdle for employers, especially as justification is often something of a grey area.

What does this mean for employers?

The decision raises a number of issues for employers across the EU:

  • It creates real uncertainty about how far such protection extends. It is unclear how this ruling will be interpreted in national courts: its impact may be largely confined to circumstances where an inherently detrimental PCP has been applied as was the case on these facts, or where there is some inherent link between the PCP and the protected characteristic. However, the judgment does not make this clear and there is now a significant risk that national courts will consider it applies to anyone disadvantaged by a PCP who can show that a racial group is disproportionately affected by that PCP, whether they belong to that racial group or not.
  • It is also unclear whether this case is limited to claims for race discrimination, or whether the arguments could be extended to other types of discrimination protection. There seems no reason in principle why not. If so, as we highlighted previously, employers could face a raft of new types of claim, for example for indirect sex discrimination. For example, female employees have in the past successfully brought indirect sex discrimination claims where employers have required them to work full time: they have argued that this is a PCP which impacts particularly on women as (frequently) the main childcarers. Now men who are affected in the same way may be able to bring the same claim.
  • The precise impact of this ruling will vary across EU jurisdictions, depending on how they have implemented the Race Directive. We anticipate a raft of imaginative new arguments from employees and their lawyers. In the UK, for example, courts may be urged to rule that national law is incompatible and must be interpreted differently to encompass a wider definition of discrimination. In Germany, the ruling has opened up the application of the German General Act on Equal Treatment, and it remains to be seen how the German courts will react to it. In Spain this represents an extension of the principles of indirect discrimination, which may dictate a more cautious approach from employers in setting working conditions.
  • Employers should seek advice from lawyers in all relevant EU jurisdictions if they have concerns about this issue.