Indirect discrimination – legitimate aim and proportionate means

Indirect discrimination – Justification / Legitimate aim and proportionate means

A claim of indirect discrimination involves elements such as, depending on circumstances:

1. general application of a PCP – ss 19(1) and 19(2)(a) EQA
2. particular disadvantage to the group that shares the claimant’s protected characteristic
   – s 19(2)(b) EQA
3. disadvantage to the claimant – s 19(2)(c) EQA
4. detriment to the claimant – s 39(2)(d) EQA
5. legitimate aim – s 19(2)(d) EQA
6. proportionate means- s 19(2)(d) EQA

Here we focus on the case law on “justification”, i.e. legitimate aim and proportionate means.

BOTH APPROPRIATE AND REASONABLY NECESSARY
If particular disadvantage is established, the PCP will generally be indirectly discriminatory unless the respondent can show it is justified as being a proportionate means of achieving a legitimate aim.

In Homer v Chief Constable of West Yorkshire Police and West Yorkshire Police Authority [2012] UKSC 15, [2012] I.C.R. 704 Lady Hale cited with approval the explanation provided by Mummery LJ in R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 WLR 3213 at paragraph 151:

“. . . the objective of the measure in question must correspond to a real need and the means used must be appropriate with a view to achieving the objective and be necessary to that end. So it is necessary to weigh the need against the seriousness of the detriment to the disadvantaged group.

…

22. … Although the [provision] refers only to a “proportionate means of achieving a legitimate aim”, this has to be read in the light of the Directive [Council Directive 2000/78] which it implements. To be proportionate, a measure has to be both an appropriate means of achieving the legitimate aim and (reasonably) necessary in order to do so. Some measures may simply be inappropriate to the aim in question …
23. A measure may be appropriate to achieving the aim but go further than is (reasonably) necessary in order to do so and thus be disproportionate. … [Both EU and domestic law] require that the criterion itself be justified rather than that its discriminatory effect be justified …
24. Part of the assessment of whether the criterion can be justified entails a comparison of the impact of that criterion upon the affected group as against the importance of the aim to the employer. …
25. To some extent the answer depends upon whether there were non-discriminatory alternatives available. … [While] an ad hominem exception may be the right answer in personnel management terms but it is not the answer to a discrimination claim. Any exception has to be made for everyone who is adversely affected by the rule. …”

“A REAL NEED ON THE PART OF THE EMPLOYER’S BUSINESS”

In Homer Lady Hale noted that in the context of a business the term legitimate aim could encompass a “real need”:
… The range of aims which can justify indirect discrimination on any ground is wider than the aims which can, in the case of age discrimination, justify direct discrimination. It is not limited to the social policy or other objectives derived from articles 6(1), 4(1) and 2(5) of the Directive, but can encompass a real need on the part of the employer’s business: Bilka-Kaufhaus GmbH v Weber von Hartz (Case 170/84) [1987] ICR 110.

“A REAL NEED ON THE PART OF THE UNDERTAKING”
The classic exposition of the approach to be adopted to justification in that the ECJ in BilkaKaufhaus GmbH v Weber Von Hartz (Case 170/84), [1987] ICR 110:

36. It is for the national court, which has sole jurisdiction to make findings of fact, to determine whether and to what extent the grounds put forward by an employer to explain the adoption of a pay practice which applies independently of a worker’s sex but in fact affects more women than men may be regarded as objectively justified economic grounds. If the national court finds that the measures chosen by Bilka correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objectives pursued and are necessary to that end, the fact that the measures affect a far greater number of women than men is not sufficient to show that they constitute an infringement of article 119.
37. The answer to question 2 (a) must therefore be that under article 119 a department store company may justify the adoption of a pay policy excluding part-time workers, irrespective of their sex, from its occupational pension scheme on the ground that it seeks to employ as few part-time workers as possible, where it is found that the means chosen for achieving that objective correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objective in question and are necessary to that end.

“REASONABLE NEEDS OF THE BUSINESS”
In Hardys & Hanson plc v Lax [2005] EWCA Civ 846, [2005] ICR 1565 held:

32. Section 1(2)(b)(ii) [of the Sex Discrimination Act] requires the employer to show that the proposal is justifiable irrespective of the sex of the person to whom it is applied. It must be objectively justifiable (Barry v Midland Bank plc [1999] ICR 859) and I accept that the word “necessary” used in Bilka-Kaufaus [1987] ICR 110 is to be qualified by the word “reasonably”. That qualification does not, however, permit the margin of discretion or range of reasonable responses for which the appellants contend. The presence of the word “reasonably” reflects the presence and applicability of the principle of proportionality. The employer does not have to demonstrate that no other proposal is possible. The employer has to show that the proposal, in this case for a full-time appointment, is justified objectively notwithstanding its discriminatory effect. The principle of proportionality requires the tribunal to take into account the reasonable needs of the business. But it has to make its own judgment, upon a fair and detailed analysis of the working practices and business considerations involved, as to whether the proposal is reasonably necessary. I reject the employers’ submission (apparently accepted by the appeal tribunal) that, when reaching its conclusion, the employment tribunal needs to consider only whether or not it is satisfied that the employer’s views are within the range of views reasonable in the particular circumstances.
33. The statute requires the employment tribunal to make judgments upon systems of work, their feasibility or otherwise, the practical problems which may or may not arise from job sharing in a particular business, and the economic impact, in a competitive world, which the restrictions impose upon the employer’s freedom of action. The effect of the judgment of the employment tribunal may be profound both for the business and for the employees involved. This is an appraisal requiring considerable skill and insight. As this court has recognised in Allonby [2001] ICR 1189 and in Cadman [2005] ICR 1546, a critical evaluation is required and is required to be demonstrated in the reasoning of the tribunal. In considering whether the employment tribunal has adequately performed its duty, appellate courts must keep in mind, as did this court in Allonby and in Cadman, the respect due to the conclusions of the factfinding tribunal and the importance of not overturning a sound decision because there are imperfections in presentation. Equally, the statutory task is such that, just as the employment tribunal must conduct a critical evaluation of the scheme in question, so must the appellate court consider critically whether the employment tribunal has understood and applied the evidence and has assessed fairly the employer’s attempts at justification.
    …
    
    54. For the reasons Pill LJ gives at para 32, it is for the tribunal to determine whether the employer has shown that the proposal is justifiable irrespective of the sex of the person to whom it is applied. As it is the tribunal which must decide on justification without according any margin of appreciation to the employer, the tribunal must therefore set out a critical and thorough evaluation following the tests set out in Bilka-Kaufaus GmbH v Weber von Hartz (Case 170/84) [1987] ICR 110 when making its determination of the merits of the justification advanced. I agree with Pill LJ that this task requires considerable skill and insight.
    
    55. Where the economics of the business of the enterprise or its working practices form part of the justification, then I would expect the reasons to set out at least a basic economic analysis of the business and its needs; the emphasis in Bilka-Kaufaus was on “objectively justified economic grounds”. Although the extent of the analysis of the economics of the business and its working practices must depend on the nature of justification advanced and of the enterprise being considered, the analysis must be thorough and critical and show a proper understanding of the business of the enterprise.

Hardys & Hanson was approved by Baroness Hale in the Supreme Court in Homer.

It is apparent from these authorities that the assessment of justification will require:

1. an objective balance between the discriminatory effect of the PCP and the
   reasonable needs of the party that applies it
2. the Employment Tribunal making its own judgment (rather that granting a margin
   of appreciation to the employer)
3. a critical and thorough evaluation
4. fair and detailed analysis of the working practices and business considerations
   involved
5. avoiding the risk of superficiality
6. demonstration that the exercise has been carried out

HOW MUCH EVIDENCE IS REQUIRED?

The extent to which evidence is required to conduct the balancing exercise has been considered in the context of justification of age discrimination by Eady J in Pitcher v University of Oxford [2022] I.C.R. 338:

106. The burden of justifying an otherwise discriminatory act falls on the employer. …
107. In Cockram, the employee argued that the employment tribunal should not have accepted the employer’s “assertion” that the aim of the provision in issue was to incentivise retention up to the age of 55 and to disincentivise it thereafter. The Court of Appeal disagreed …
108. … Bean LJ (with whom Leggatt LJ agreed) rejected the proposition that the employer was required to adduce evidence that the customary retirement age clause in the LTIP had in fact led to a high retention rate and that, if it failed to do so, the employment tribunal ought to have inferred that there was no evidence that the provision encouraged retention, observing that:
     “It would be impossible to do so very soon after such a provision was introduced; and even at a later date the causative effect of a provision in the LTIP about customary retirement age would be difficult to isolate: employees in their early 50s make choices about whether to remain in the same employment, move jobs or take voluntary retirement for a whole variety of reasons”: para 31.
     …
     
     110. It seems to us that the points made by Bean LJ at paras 30 and 31 of Cockram are capable of being understood as relating generally to the evidential burden placed on the employer when seeking to establish objective justification. In some cases, some matters will be “so obvious”— Cockram -obvious—that they will barely require evidence. Moreover, whilst the requirement to objectively justify the discriminatory measure arises from the start of its application, evidence of impact on legitimate aims may sometimes be hard to come by soon after the implementation of a particular measure, or, more generally, it may be the case that causative effect is genuinely difficult to isolate; an employment tribunal should not require from an employer evidence which it cannot reasonably be expected to produce.
     
     111. We do not consider, however, that these observations detract from the requirements placed upon the tribunal, as laid down in Hardy & Hansons [2005] ICR 1565 : if the tribunal’s assessment is to demonstrate the requisite critical and thorough evaluation (per Pill LJ at para 33; Thomas LJ at para 54), it will necessarily look for evidence rather than mere assertion (albeit that evidence may take the form of reasoned projection rather than demonstrable result) and will require a degree of cogency in the employer’s case. In this regard, we note the guidance provided by the Court of Justice in Fuchs [2012] ICR 93 on this issue (raised by the second question referred to it) …
     
     112. The principle of proportionality requires an objective balance to be struck between the discriminatory impact of the measure in issue and the needs of the employer; the more serious the disparate adverse impact, the more cogent must be the justification (see the observations of the Court of Justice in CHEZ Razpredelenie Bulgaria AD v Komisia za zashtita ot diskriminatsia (Case C-83/14) [2015] All ER (EC) 1083, at para 123 ). In assessing the discriminatory effect of a measure, the tribunal will need to consider that question both qualitatively (the amount of damage done and/or how long lasting or final that damage is) and quantitatively (the number of people who will or are likely to suffer the discriminatory effect): see University of Manchester v Jones [1993] ICR 474, per Ralph Gibson LJ at p 497.

EMPLOYER MUST ASSERT AND ESTABLISH THE AIM AND ESTABLISH THAT THE PCP WAS A MEANS

In Heskett v Secretary of State for Justice [2020] EWCA Civ 1487, [2021] ICR 110 Underhill LJ stated:

17. It will be seen that section 19(2)(d) requires the putative discriminator to show two things – (a) that the purpose of the PCP was to achieve a legitimate aim; and (b) that it represented a proportionate means of achieving that aim. The distinction between the two is in principle important since the aim, so long as “legitimate”, must be a matter for the choice of the employer whereas the proportionality of the means chosen must be assessed by the tribunal. A recent example of that distinction being applied was the decision of this court in Chief Constable of West Midlands Police v Harrod [2017] ICR 869 (per Bean LJ at para 30, myself at para 41 and Elias LJ at para 48); but see also Chief Constable of West Midlands Police v Blackburn [2009] IRLR 135. Having said that, it has to be recognised that the case law sometimes slurs over the distinction between aim and means, perhaps because it is not always easy, or necessary, to draw it.

18. I consider that it is helpful to break down the justification requirement a little further. The respondent must assert and establish the aim. It is for the Employment Tribunal to decide whether the aim is legitimate. The respondent must establish that the PCP was a means of achieving that aim. It is for the Employment Tribunal to decide whether the adoption of the PCP was proportionate to achieve the aim.
19. The EHRC Employment Code of Practice provides that:
    4.28 … The aim of the provision, criterion or practice should be legal, should not be discriminatory in itself, and must represent a real, objective consideration.
20. The legitimate aim need not necessarily have been thought about specifically at the time that the PCP was applied, but the aim must nonetheless be genuine and legitimate and be a means of achieving the aim; British Airways plc v Starmer [2005] IRLR 862, EAT:
    8.3 Whether the tribunal erred in rejecting the respondent’s case of justification. It is important to make clear that the respondent did not refuse the claimant’s request for 50%, did not apply the PCP, by reference to safety considerations, but only to ‘resource’ considerations. The respondent sought before the tribunal to rely, not only on such resource considerations, upon which it did rely at the time, but also on safety considerations, which it did not have in mind at the time. There was and is no issue as a matter of law that justification of an otherwise discriminatory PCP can be put forward by reference to consideration not in mind at the time of application of the PCP
    (see Schönheit v Stadt Frankfurt am Main [2004] IRLR 983 at paragraphs 86–87).
21. The EHRC Employment Code of Practice says of proportionality:
    4.31 Although not defined by the Act, the term ‘proportionate’ is taken from EU Directives and its meaning has been clarified by decisions of the CJEU (formerly the ECJ). EU law views treatment as proportionate if it is an ‘appropriate and necessary’ means of achieving a legitimate aim. But ‘necessary’ does not mean that the provision, criterion or practice is the only possible way of achieving the legitimate aim; it is sufficient that the same aim could not be achieved by less discriminatory means.
22. Necessary has been interpreted to mean reasonably necessary; Hardy & Hansons plc v Lax
    [2005] EWCA Civ 846, [2005] ICR 1565.

The employer does not have to demonstrate that no other proposal is possible. The employer has to show that the proposal is justified objectively notwithstanding its discriminatory effect. The principle of proportionality requires the tribunal to take into account the reasonable needs of the business. But it has to make its own judgment, upon a fair and detailed analysis of the working practices and business considerations involved, as to whether the proposal is reasonably necessary. Justification cannot be established by mere generalisation.

APPLICATION OF A JUSTIFIED RULE TO AN INDIVIDUAL IS GENERALLY JUSTIFIED

If the setting of a rule is justified, the application of the rule to an individual will also generally be justified; Seldon v Clarkson Wright & Jakes [2012] UKSC 16, [2012] ICR 716:

64. The answer given in the Employment Appeal Tribunal [2009] 3 All ER 435, para 58, with which the Court of Appeal agreed [2011] ICR 60, para 36, was:
    “Typically, legitimate aims can only be achieved by the application of general rules or policies. The adoption of a general rule, as opposed to a series of responses to particular individual circumstances, is itself an important element in the justification. It is what gives predictability and consistency, which is itself an important virtue.”
    Thus the appeal tribunal would not rule out the possibility that there may be cases where the particular application of the rule has to be justified, but they suspected that these would be extremely rare.
65. I would accept that where it is justified to have a general rule, then the existence of that rule will usually justify the treatment which results from it.