Case law round-up – November 2015

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Pushing the boundaries of equality law – is discrimination protection widening?

Three recent court decisions apparently widening the types of discrimination claims that can be brought have caused much discussion and debate within the HR community. We analyse the decisions and look at their practical implications.

Indirect discrimination claims can be brought by someone who does not possess the protected characteristic in question but has suffered alongside a group that do – CHEZ Razpredelenie Bulgaria AD v Komisia C-83/14

It has long been established that individuals must possess a protected characteristic (sex, race, disability etc) in order to bring a claim of indirect discrimination. This is in contrast with direct discrimination and harassment claims where the individual does not have to actually possess the protected characteristic in order to bring a claim (individuals can claim they have been treated less favourably because they associate with someone with a protected characteristic or are perceived to have a protected characteristic).

A decision of the Court of Justice of the European Union (CJEU) has rather upset the apple cart.  It has found that, contrary to what has apparently been set in stone for many years, individuals can suffer indirect discrimination by association. In this case, the claimant (Ms Nikolova) suffered a disadvantage with her Roma neighbours in that the electricity company had placed meters in the Roma neighbourhood 20 feet off the ground. This was driven by a stereotypical assumption that meter tampering was more likely to occur in Roma neighbourhoods. Ms Nikolova was not Roma herself but was unable to check her meter and so she suffered a disadvantage alongside her Roma neighbours. The CJEU held that she could bring a claim of indirect discrimination by association.

Walker Morris comment

This decision arguably extends the concept of indirect discrimination but should UK employers be worried? The answer is probably no. The electricity company’s practice of placing meters high up in Roma areas was, on the face of it, discriminatory and they had not been able to provide any evidence of justification. The company was therefore vulnerable to discrimination claims from the Roma population in any event (indeed, that was where their real exposure lay). If they had been able to justify the practice with proper evidence then Ms Nikolova’s claim would fail along with any indirect discrimination claims brought by Roma individuals. This case therefore underlines the importance of employers being able to objectively justify any potentially indirectly discriminatory policies or practices. There is no need to make changes to equality policies and the advice remains to ensure that there are sound, justifiable reasons for anything the employer does that might indirectly disadvantage a protected group.

Finally, it is worth noting that the facts of this case are quite unique. This was not an employment claim and it is difficult to envisage many workplace situations where someone would be able to bring a claim for associative indirect discrimination.

Claims for associative victimisation may be possible under the Equality Act 2010 – Thompson v London Central Bus Company Ltd – UKEAT/0108/15.

Can someone bring a victimisation claim not because they have complained of discrimination but because they are associated with someone who has done? The Equality Act 2010 clearly states that they cannot. A recent EAT decision, however, has found that EU law may require the Equality Act to be interpreted in such a way that such an ‘associative victimisation’ claim is possible.


Mr Thompson brought a claim that his employer had victimised him (i.e. subjected him to a detriment) by disciplining him for a minor matter. He claimed that the reason the employer had done this was because it associated him with a group of employees who had complained that management were in breach of the Equality Act 2010 (complaints about breach of equality law are defined as ‘protected acts’). Mr Thompson had reported to management, prior to the disciplinary case being instigated against him, that he had overheard staff complaining about discrimination by the employer.

The Employment Tribunal struck out his claim at a second preliminary hearing on the basis that the Equality Act 2010 did not provide him with protection against victimisation by association with another person’s protected act. Mr Thompson appealed to the EAT which allowed his appeal and remitted the case back to the Employment Tribunal to be heard again. The EAT took the view that proper evidence on the ‘association’ point needed to be heard and that the test for the Tribunal to apply was whether Mr Thompson had been subjected to a detriment because of a third party’s protected act. It appeared to accept the Employment Tribunal’s finding at the first preliminary hearing that victimisation can occur by ‘association’.

Walker Morris comment

S27 of the Equality Act 2010 states that the ‘protected act’ must attach to the complainant and not to a third party. If the EAT’s contradictory approach is followed this will therefore be a significant extension to the law on victimisation. It also extends the concept of ‘associative discrimination’ as we have also seen in the CHEZ Razpredelenie case above.

On a practical level, as long as equality policies are followed and employers do not act in a discriminatory way then there is nothing to fear from this decision.

Companies can bring complaints under the Equality Act 2010 for discrimination – EAD Solicitors LLP and others v Abrams UKEAT/0054/15.

The EAT has held that whilst most complainants in direct discrimination claims are individuals, the Equality Act 2010 does not prevent limited companies from bringing such claims.


Mr Edwards was a member (a partner) of EAD solicitors LLP and was due to retire at age 62. For tax reasons, shortly prior to reaching 62, he set up a service company (he was sole shareholder and director) and it became a member of the LLP in his place. EAD solicitors objected to this company remaining a member once Mr Edwards reached age 62 and Mr Edwards made an age discrimination claim to the Employment Tribunal naming both himself and his company as complainants. The Tribunal and the EAT found that the company could bring a complaint of direct discrimination and cited the following reasons:

  • Although the Equality Act 2010 describes discrimination by a ‘person’ it is established that a discriminator may be a company. There was nothing in the wording or interpretation of the Act that prevented the same logic from applying in relation to the ‘person’ discriminated against.
  • The Equality Act 2010 does not require the person complaining of discrimination to actually possess the ‘protected characteristic’ in question. For example, someone can be directly discriminated against because of their association with someone with a protected characteristic or because they are perceived, wrongly, to have a protected characteristic. Therefore there was no merit in EAD’s submission that companies cannot possess a protected characteristic and therefore cannot be discriminated against
Walker Morris comment

It is unlikely that this case will rock employment law to its foundations because most direct discrimination claims are brought by individuals. Circumstances where a company might have an employment related discrimination claim will be very rare. Contractors providing services via service companies and the self-employed are specifically protected from discrimination under the Equality Act in any event.

It is, however, possible to think of examples of how this decision might give rise to claims in other business areas. For example, a lender refusing a business loan to a limited company because of the owner’s ethnic origins or a refusal to lease premises to a company because it intended to set up a religious centre.

The bigger question is whether a company could be awarded an injury to feelings award or whether a company could bring an indirect discrimination claim. The case of CHEZ Razpredelenie (above) suggests that a ‘person’ (which we now know can include a limited company) does not need to actually possess a protected characteristic in order to bring an indirect discrimination claim. It is very much a case of watch this space!

TUPE and service provision changes – identifying the ‘organised grouping’ of employees Inex Home Improvements Ltd v Hodgkins and others (UKEAT/0329/14) and BT Managed Services Ltd v Edwards and another (UKEAT/0241/14)

The EAT has provided helpful guidance on identifying the ‘organised grouping of employees’ when dealing with Service Provision Changes under TUPE.

Service Provision Changes (SPCs) happen in outsourcing, second generation outsourcing and when a client brings an activity back ‘in-house’. TUPE states that, immediately before the change, there must be ‘an organised grouping of employees carrying out the relevant activities on behalf of the client’. In practice, there is often debate over which employees are assigned to the organised grouping. Two recent EAT decisions provide some guidance in this area.

In Inex Home Improvements Ltd v Hodgkins and others, the EAT held that a temporary lay-off of staff prior to a change in contractor did not prevent there being a SPC. In this case, the client released the work in tranches so the contractor would lay off staff in between tranches on the understanding that staff would be re-engaged as soon as the next phase of work came in. In this case, the client changed contractors in between tranches of work and a dispute arose as to whether there could be an SPC given that there was, apparently, no organised grouping of staff at the point of transfer as they had been laid off. The EAT considered that the cessation of work was temporary and that there was an expectation that the work would continue on release of the next tranche of work by the client. As TUPE is designed to protect employment the EAT had no hesitation in finding that the workers who were laid off at the point of transfer formed part of an ‘organised grouping’ and therefore transferred under TUPE according to the SPC rules.

In BT Managed Services Ltd v Edwards and another, the question was whether an employee who was still on the employee’s books and in receipt of PHI payments was assigned to the organised grouping of employees transferring under TUPE. The employee, Mr Edwards, had been off on long term sick since 2008 and the SPC occurred some 5 years later in 2013. Mr Edwards was in receipt of PHI payments and BT accepted that it had no expectation of him ever returning to work. He had been allowed to remain as an employee ‘on the books’ only in order to benefit from the PHI payments.

The EAT found that Mr Edwards was not assigned to the organised grouping of employees for the purposes of TUPE. It held that whilst employees on long term sick leave may, in many cases, remain assigned to the organised grouping there must at least be some expectation that they will return to work at some point.

Walker Morris comment

Whether an employee is assigned to an organised grouping of employees for the purposes of TUPE will always be a question of fact based on the circumstances of the case. However, these two cases provide helpful guidance in cases of temporary cessation of work and long term sick leave.

To what extent can HR influence a disciplinary case? Ramphal v Department of Transport (UKEAT/0352/14)

How much involvement does your HR team have in disciplinary decisions? Does it decide on guilt and sanction and write all the letters and reports for the manager to sign off? Or does it let the managers steer proceedings and make decisions with appropriate support?

A recent EAT decision highlights the risks of HR advice going too far. In a nutshell, ‘behind the scenes’ advice must not stray too far from procedural and legal advice into the territory of apportioning blame and determining the sanction.

The facts

Mr Ramphal was accused of over claiming expenses. A disciplinary investigation was handled by his manager, Mr Goodchild, who had no previous experience of conducting such investigations. Mr Goodchild found that Mr Ramphal had committed misconduct but was unable to find that he had been dishonest. He wrote a report in which he recommended that Mr Ramphal be given a final written warning. The report went to HR and by the time it was sent out to the employee it had been changed to find that he had been dishonest and that he should be dismissed for gross misconduct.

Mr Ramphal appealed the Employment Tribunal’s finding of a fair dismissal on the basis that there was no explanation as to why the final draft of the investigation report was so different from the one prepared by Mr Goodchild. He asked, “How could the sanction in the final report have changed so fundamentally from the sanction recommended in the first report?”

The EAT were not satisfied that the Department of Transport had adequately answered this question and so it remitted the case back to the Employment Tribunal to decide if input from HR after the disciplinary investigation meeting changed the final disciplinary decision. The law permits HR to provide procedural and legal input but not to change or decide on disciplinary sanctions made by a manager especially where the employee has not had the opportunity to address any new concerns that HR might have raised.

Walker Morris comment

This case has a lot of practical relevance to day to day HR practice and there are several tips that can be drawn from it:

  • Always remind managers that documents, emails, internal notes and reports relating to disciplinary proceedings are disclosable unless they are covered by legal professional privilege (e.g. correspondence with lawyers).
  • If you are not satisfied that the manager has asked the right questions or addressed the right issues make sure that they arrange a further meeting with the employee to do so. ‘Papering over’ cracks in managerial investigations is never a good idea. It is always worth taking the time to go back and do it properly even if that means an extra meeting with the employee.
  • Remind managers that they do not have to be satisfied of an employee’s misconduct ‘beyond reasonable doubt’. It is not uncommon for inexperienced managers to be under the misapprehension that unless the misconduct can be proved the employee cannot be found guilty of it. The correct test is that the manger must be satisfied that the employee committed the misconduct on the balance of probabilities following a fair and reasonable investigation.