In Europe: The Sex Discrimination (Indirect Discrimination And Burden of Proof) Regulations 2001, And Their Likely Impact.

New regulations dealing with indirect discrimination and the reversal of the burden of proof in sex discrimination cases (SI 2001/2660) came into force on 12 October 2001. Their likely impact has been the subject of some debate.

The regulations implement the Burden of Proof Directive (97/80) and were made just two days before the deadline for implementation in the UK (22 July 2001). They bring to an end a European process that began as long ago as early May 1988, when the Commission tabled a draft Council directive on the burden of proof in the area of equal pay and equal treatment. Discussions followed and in November 1993, 11 of the then 12 Member States reached agreement. The UK, however, exercised its veto. Then in January 1994 the European Parliament called on the Commission to submit a new draft directive, but referral to the social partners under the Social Chapter stalled the process. Finally the Commission submitted a new proposal in July 1996. On 15 December 1997 the Council adopted Directive 97/80 and Member States were required to bring into force laws to comply with the Directive by 1 January 2001. Following the end of the UK’s opt-out from the Social Chapter, the Burden of Proof Directive was extended to the UK by Directive 98/52 adopted by the Council on 13 July 1998, which gave the UK until 22 July 2001 to comply.

The aim of the Directive is to "ensure that the measures taken by the Member States to implement the principle of equal treatment are made more effective, in order to enable all persons who consider themselves wronged because the principle of equal treatment has not been applied to them to have their rights asserted by judicial process" (Article 1).

It is limited to sex discrimination in the fields of equal pay, equal treatment, pregnancy and parental leave (Article 3). Equal treatment is defined as meaning that that there shall be no discrimination whatsoever based on sex, either directly or indirectly (Article 2). Indirect discrimination is, for the first time in a European law measure, defined (Article 2.2). The burden of proof is shifted to the employer in circumstances where there are facts from which direct or indirect discrimination may be presumed (Article 4.1).

Article 2.2 of the Directive identifies three constituent elements that constitute indirect discrimination:

• There must exist an apparently neutral "provision, criterion or practice".
• That apparently neutral provision, criterion or practice must disadvantage a substantially higher proportion of the members of one sex.
• If the first 2 elements are present, indirect discrimination will be established unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex.

The regulations implement this change by way of amendment to section 1 of the Sex Discrimination Act 1975 ("the 1975 Act"). First, the heading for section 1 incorporates the words "direct and indirect discrimination". Secondly, whilst section 1(1) remains in substance the same, it no longer applies to employment. That role is taken by a new section 1(2) which replicates the Directive’s language of a prohibited "provision, criterion or practice". (There is an equivalent amendment to section 3 of the 1975 Act concerning discrimination against married people.)

There is clearly a change in the law in so far as the 1975 Act now refers to "provision, criterion or practice" rather than a "requirement or condition". The latter made it necessary to identify a requirement or condition which operated as an absolute bar such that failure to comply with it absolutely prevented a woman obtaining the benefit in question: Perera v Civil Service Commission [1983] IRLR 186. This rigidity is now removed, with the new definition seemingly wide enough to encompass both human resources policies and informal work practices in relation to recruitment and during employment.

The amendments to the 1975 Act do not incorporate the actual words of justification used in the Directive, ie. whether the discrimination is "appropriate and necessary and can be justified by objective factors unrelated to sex". This is no doubt because the UK courts have interpreted the 1975 Act as already incorporating the European concept of objective justification.

An unfortunate side-effect of the implementation of the Directive, however, is that the statutory definition of indirect discrimination is different as between sex and race discrimination, at least until the Race Discrimination Directive is implemented, no later than 19 July 2003.

The Directive provides that "Member States shall take such measures as are necessary…to ensure that, when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there had been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment" (Article 4.1).

This is implemented by a new section 63A of the 1975 Act which provides that where, on the hearing of a complaint, the applicant proves facts from which the tribunal could conclude in the absence of an adequate explanation that the respondent has committed an unlawful act of discrimination, the tribunal shall uphold the complaint unless the respondent proves that he did not discriminate.

There is one viewpoint to the effect that this provision will not alter UK law at all. Commentators point to the settled law of King v Great Britain-China Centre [1991] IRLR 513, CA, and state that the new section does no more than codify the principle in that case that, where an applicant can demonstrate that she has been treated less favourably than a comparator, and there is a difference of sex, the tribunal looks to the employer to provide a rational explanation for the less favourable treatment. If no such explanation is forthcoming, or if the explanation is rejected by the tribunal, it may go on to infer that the real reason for the differential treatment was the fact that the applicant is a woman. However, a tribunal is not bound to draw an inference in those circumstances: Glasgow City Council v Zafar [1998] IRLR 36, HL.

The "no change" lobby receives support from the fact that the UK’s position was clearly taken into account and is reflected in recital (15) of the Directive which refers to the necessity of taking account of specific features of certain Member States’ legal systems where an inference of discrimination is drawn absent a satisfactory explanation from the employer. In the Government’s consultation paper, it refers to consolidating the King guidance and states that, in practice, the changes will make little difference to the way discrimination cases are handled.

However, an alternative view is that placing the onus of proving discrimination squarely on the employer appears to go beyond the approach to inferential discrimination which permits but does not require the drawing of inferences. A tribunal will now be compelled to draw an inference of unlawful discrimination where there is no satisfactory explanation by the employer since the tribunal shall uphold the complaint unless the respondent proves that he did not discriminate. Whereas previously a tribunal would ask whether there was a satisfactory explanation and, if not, whether there was any basis for inferring that sex discrimination was the real reason, it now has simply to decide whether the respondent has shown it did not discriminate.

On a separate note: The Employment and Social Affairs Council has agreed on a proposal to amend the 1976 Equal Treatment Directive. The proposal extends the existing Directive to provide that sexual harassment at work constitutes a form of sex discrimination and that it is the responsibility of the employer to provide a work environment that is free from such harassment. The proposal now passes to the European Parliament for a second reading under the co-decision procedure.

Paul Goulding QC is the General Editor of, and Jane Mulcahy a contributor to, the encyclopaedia European Employment Law and the UK, Sweet & Maxwell.