For certain higher grade posts in the civil service, candidates had to pass a core skills assessment (CSA) test. A report commissioned by the Home Office showed that there was a lower success rate amongst BME and older candidates. No reason was identified to explain the differential impact and many BME and/or older candidates passed the CSA. Conversely, many white candidates also failed the CSA, including those who were 34 or younger. Nevertheless, the claimants, who were from BME backgrounds or over 35 and who had failed the CSA, brought proceedings against the Home Office, arguing that the requirement to pass the CSA (the provision, criterion or practice – PCP) amounted to indirect race discrimination.

At a pre-hearing review, the Employment Judge decided that, in order to establish indirect discrimination, the individual claimants had to prove the reason for the lower pass rate in these groups; it was not enough for them simply to rely on the statistical differential impact and that they had failed it. Although the claimants successfully appealed the Tribunal's decision to the EAT, the Court of Appeal reinstated it. The claimants had shown group disadvantage but not a causal link with the protected characteristic.

The Supreme Court in Essop v Home Office has now allowed the claimants' appeal and sent the case back to the Tribunal. The Court of Appeal had taken the wrong approach to indirect discrimination:

  • There is no express requirement for an explanation of the reasons why a particular PCP puts one group at a disadvantage when compared with others. It is enough that it does.
  • The PCP does not have to put every member of the group at a disadvantage, so 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/younger candidates.
  • There has to be a causal link between the PCP and the particular disadvantage suffered and the disadvantage suffered by the individual must correspond with that suffered by the group. Here the disadvantage was that members of the group failed the CSA disproportionately and the claimants suffered this too.

Lady Hale, giving the only judgment, illustrated this by explaining that if a claimant had failed the CSA because he or she didn’t turn up, for example, then clearly they would not have suffered harm as a result of the PCP and in that case it would be open to the employer to show that the causal link between the PCP and the individual disadvantage was not present.

Lady Hale also commented that it is always open to an employer to show that the PCP is justified but that "a wise employer will monitor how his policies and practices impact upon various groups and, if he finds that they do have a disparate impact, will try and see what can be modified to remove that impact while achieving the desired result." This emphasises once again the importance of being able to demonstrate that selection criteria go no further than is necessary to achieve the recruitment objective.

The Supreme Court heard another appeal, Naeem v Secretary of State for Justice, at the same time. In this case an imam had been employed as a prison chaplain in 2004. The incremental pay system for prison employees was based on length of service. The average basic pay of Muslim chaplains on the chaplaincy pay band was lower than the average basic pay of Christian chaplains because the Prison Service had only begun to employ Muslim chaplains in 2002.

The Court of Appeal, taking a similar approach to the Court of Appeal in Essop, decided that the claimant had not suffered indirect race or religious discrimination. The cause of the disparity in remuneration was the more recent start-dates of the Muslim chaplains, and that was not the result of anything related to them as Muslims; it reflected the fact that there had been no need for the services of Muslim chaplains before 2002. The Supreme Court found that, as in Essop, the Court of Appeal's approach had been wrong. The incremental pay structure affected all chaplains and did put the Muslim chaplains at a disadvantage compared with Christian chaplains. However, the Tribunal in Naeem had found that the disadvantage suffered by the claimant was no more than was necessary as part of a legitimate aim – the transition to a new shorter pay scale. In other words, the discrimination was justified. The Supreme Court could not re-visit that finding, so it dismissed the claimant's appeal.