_______________________

Appeal No. UKEATS/0054/09/BI

EMPLOYMENT APPEAL TRIBUNAL

52 MELVILLE STREET, EDINBURGH, EH3 7HF

At the Tribunal
On 27 May 2010

Before
THE HONOURABLE LADY SMITH
(SITTING ALONE)

**(1) HACKING & PATERSON and
(2) HACKING & PATERSON MANAGEMENT SERVICES LTD (APPELLANTS)**

MRS L M WILSON (RESPONDENT)

Transcript of Proceedings

JUDGMENT

APPEARANCES
For the Appellants 
MR PETER GRANT-HUTCHISON (Advocate)
Instructed by:
Messrs Kerr Barrie Solicitors
250 West George Street
Glasgow
G2 4QY

For the Respondent 
MR ALAN COWAN (Solicitor Advocate)
Instructed by:
Messrs Simpson Marwick Solicitors
58 Albany Street
Edinburgh
EH1 3QR

**SUMMARY
SEX DISCRIMINATION – Indirect**

Appeal against Employment Tribunal’s refusal to strike out claim of indirect sex discrimination by Claimant employed as a property manager where employers were said to have operated a rule that no property managers were allowed to work part time.  Appeal refused.  Employment Judge’s observations on appropriate pool should not, however, be followed.

**THE HONOURABLE LADY SMITH
Introduction**
1. This case concerns a complaint by a female Claimant that includes a claim that her employers discriminated against her indirectly on grounds of sex in relation to her request for flexible working after her maternity leave.  I propose to continue referring to parties as Claimant and Respondents.

2. This is an appeal against a judgment of the Employment Tribunal sitting at Edinburgh registered on 2 September 2009, Employment Judge K J McGowan, refusing the Respondents’ application for strike out of the Claimant’s claim for indirect discrimination.

Background
3. For the purposes of the pre hearing review on 26 August 2009, at which the application for strike out was considered, parties agreed the following hypothesis of fact:

•  the Claimant worked for the Respondents as a property manager from 17 January 2005;
  

- she went on maternity leave on 11 January 2008;
- on 6 August 2008, the Claimant emailed the Respondents to enquire about the possibility of flexible working on her return;
- on 14 August 2008 the Claimant made a formal request for flexible working;
- the Respondents refused to accede to the Claimant’s request;
- the Respondents’ practice was to refuse any requests by any property manager for flexible
working;
- the Claimant appealed against the refusal of her request for flexible working;
- her appeal was refused and the Claimant decided to resign.  She resigned on 4 November 2008.

4. I was advised in the course of the appeal hearing that at the relevant time, the Respondents employed some sixteen property managers, nine of whom were male and seven of whom were female.

5. The Claimant’s claim is that by refusing to accede to her request for flexible working, the Respondents discriminated against her indirectly, contrary to s.1(2)(b) of the Sex Discrimination Act 1975 (“the 1975 Act”).

Relevant law
6. Section 1(2)(b) of the 1975 Act provides:

“In any circumstances relevant for the purposes of a provision to which this subsection applies, a person discriminates against a woman if –
……
(b)  he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but-
(i)  which puts or would put women at a particular disadvantage when compared with men,
(ii)  which puts her at that disadvantage, and
(iii)  which he cannot show to be a proportionate means of achieving a legitimate aim.”

That description of discriminatory activity, refers to circumstances where, rather than different sexes being treated differently, they are subject to the same treatment but it gives rise to adverse consequences.  It is referred to as “indirect discrimination”.

7. Section 5(3) of the 1975 Act refers to how the task of comparison set by section 1 is to be carried out. It provides:

“Each of the following comparisons, that is –
(a) a comparison of the cases of persons of different sex under section 1(1) or (2)
(b) ………
………
must be such that the relevant circumstances in the one case are the same, or not materially different in the other.”

8. So, a pool for comparison purposes needs to be identified.  It is an important step and could be determinative of the success of failure of the claim.  Identification of the pool is a mixed question of fact and law.

9. Indirect discrimination and the issue of determining the appropriate pool was considered by the House of Lords in the case of Rutherford v Secretary of State for Trade and Industry [2006] IRLR 551.  The discussion in the speech of Baroness Hale of Richmond, is of particular relevance, given her consideration of the correct approach in circumstances where the indirect discrimination complained of constitutes refusal to grant a benefit or advantage to an employee.  In this case, the position of the Claimant is that she wanted the Respondents to grant her request for flexible working, something which she saw as a benefit.

10. At paragraph 71, Lady Hale summarises “the essence of indirect discrimination” as being that:

“an apparently neutral ….provision, criterion or practice….in reality has a disproportionate adverse impact upon a particular group.  It looks beyond the formal equality achieved by the prohibition of direct discrimination towards the more substantive equality of results.  A smaller proportion of one group can comply with the requirement, condition or criterion or a larger proportion of them are adversely affected by the rule or practice.  This is meant to be a simple objective enquiry.  Once disproportionate adverse impact is demonstrated by the figures, the question is whether the rule or requirement can objectively be justified.”

11. As Lady Hale observes at paragraph 72, it is no answer to a claim of indirect discrimination to say that the rule in question applies equally to men and women since the question is whether, in a case such as the present, the application of the rule puts women at a “particular disadvantage” as compared to men.  The illustrative example that Lady Hale provides at the end of paragraph 72 is instructive.  She says:

“Suppose, for example, a rule requiring that trainee hairdressers be at least 25 years old.  The fact that more women than men want to be hairdressers would not make such a rule discriminatory.  It would have to be shown that the impact of such a rule worked to the comparative disadvantage of would-be female or male hairdressers as the case might be.”

12. So, in that example, the pool for comparison would not be all would-be hairdressers.  It would be restricted to all would-be hairdressers under the age of 25.

13. Lady Hale discusses the need, in an “access to benefit” case, for the pool to be comprised only of those who want the benefit.  At the end of paragraph 77, she states:

“.. one should not be bringing into the comparison people who have no interest in the advantage in question.”

and at paragraph 78, she observes that that approach defines advantage and disadvantage “by reference to what people want” and that it chimes with a passage by McIntyre J in Andrews v British Columbia [1989] 1 SCR 14 from which she quotes.

14. Also, having considered various examples of circumstances in which employees might seek to be granted various benefits by their employers, she adds, at paragraph 82:

“The common feature is that all these people are in the pool who want the benefit – or not to suffer the disadvantage – and they are differentially affected by a criterion applicable to that benefit or disadvantage. Indirect discrimination cannot be shown by bringing into the equation people who have no interest in the advantage or disadvantage in question.”

I note that both Lord Scott of Foscote and Lord Rodger of Earlsferry considered their reasoning and that of Lady Hale to be essentially the same.

15. In the case of British Medical Association v Chaudhary [2007] IRLR 800, the Court of Appeal discussed the issue of identifying the appropriate pool in a case of indirect discrimination.  The discussion was obiter but detailed and of particular interest in the present case since it involved circumstances where a member of the appellant association had been denied access to a benefit, namely the support of the association in challenging a refusal to grant his application for transition to the status of specialist registrar.  The reason for the refusal was that his challenge involved allegations of race discrimination by various medical regulatory bodies and it was the policy of the association not to provide support when such allegations were made.

16. The Court of Appeal in Chaudhary saw no reason to distinguish Rutherford on its facts and agreed with its ratio which was binding on them and which, so far as identification of the pool was concerned, at paragraph 195, they interpreted as being:

“….the pool had to comprise all those affected by the condition.”

17. At paragraph 201 – 2, they explain their approach to the identification of the pool:

“201. …the position in this case is that the appropriate pool comprised all BMA members who want the advice and support of the BMA in race discrimination claims against the specific regulatory medical bodies.  No member of that pool could comply with the condition or requirement imposed by the BMA.  It follows that there was no comparative disadvantage or advantage for any racial group and no indirect race discrimination against members of the racial group to which Mr Chaudhary belonged.

202.  Mr Hendy submitted that the pool was all the members of the BMA…..as all the members of the BMA may from time to time want the support and advice of the BMA in proceedings.  This does not, however, conform to the reasoning of the majority that the pool should be defined by reference to the nature of the rule, condition or requirement in issue.  The wider pool brings into the exercise of comparison people who have no interest in the particular advantage or actually want the particular benefit in question….”.

18. In Grundy v British Airways plc [2008] IRLR 74, a differently constituted Court of Appeal described the above obiter discussion in Chaudhary as having gone “to the opposite extreme” to Rutherford (para. 29) whilst recognising that, in Rutherford the pool identified by the House of Lords was “the only pool that made sense” (para. 27) in the light of the issue in the case.  General comments were also made in Grundy regarding the fact sensitive nature of pool identification and, as discussed in other cases, the need for it not to be so narrow as to lead inevitably to an unreliable answer on the issue of disparate impact.

19. In the course of the appeal hearing I was also referred to Coker and Osamor v Lord Chancellor’s Department [2002] IRLR 81, which concerned a requirement for appointment to a post that was said to have disparate effect. It was not an “access to benefit” case.  The requirement discussed was that, to qualify for appointment as special adviser to the Lord Chancellor, the candidate needed to be personally known to him; at paragraph 38, delivering the opinion of the court, Lord Phillips MR, as he then was, said:

“The test of indirect discrimination focuses on the effect that the requirement objected to has on the pool of potential candidates.  It can only have a discriminatory effect within the two statutes if a significant proportion of the pool are able to satisfy the requirement.  Only in that situation will it be possible for the requirement to have a disproportionate effect on the men and the women, or the racial groups, which form the pool.”

20. Coker was not concerned with the identification of the correct pool.  It was authority for the proposition that if it cannot, in a “requirement” case, be shown that a significant proportion of the pool can satisfy the requirement, it cannot be concluded that any group in the remaining proportion have suffered indirect discrimination.  For reasons which I explain below, I do not consider that Coker, which turned on a set of facts that were individual if not unique, is of assistance in the present case.

21. I was also referred to the first instance cases of The Home Office v Holmes [1984] IRLR 299, Faulkner v The Chief Constable of Hampshire Constabulary UKEAT/0505/05, and Pike v Somerset County Council and another UK EAT/0046/08.  Further, I was referred to the decision of the Court of Appeal in Pike where Lord Justice Maurice Kay referred to the underlying principle of Rutherford as being that the pool must be one which suitably tests the particular discrimination complained of and observes, in common with Sedley LJ in Grundy that there may not be a single suitable pool for every case.

22. Having given careful consideration to Rutherford and the discussions of it in the authorities to which I was referred I consider the ratio of Rutherford to be relevant to the present case and to be binding on me.  It is relevant because, like the applicants in that case, the Claimant’s complaint is about the adverse outcome of being denied a benefit to which she seeks to be afforded.  In Rutherford, the adverse outcome founded on by the applicants was that they were not in receipt of monetary payments (redundancy payments and unfair dismissal compensation).  In the present case, the adverse outcome, according to the Claimant, is that she cannot accommodate whatever are her chosen child care arrangements (they are not specified) with working full time and so she cannot carry on working for the Respondents.

Identification of the Pool: the competing contentions
23. Before the Employment Judge, Mr Grant-Hutchison sought to argue that the Claimant’s claim could not succeed because the appropriate pool was all property managers working for the Respondents who wanted flexible working and since they would, on the Claimant’s hypothesis, all be refused any such request, the answer had to be that there was no indirect discrimination.  That, he submitted, was the effect of Rutherford as exemplified by Chaudhary.  Before me, the same argument was advanced and, in addition, Mr Grant-Hutchison relied on Coker as showing that the answer had to be that once the pool was identified as being property managers who wanted flexible working, there was no discrimination because all of their requests would be declined.

24. Mr Cowan’s contention was that the pool should be wider. It should include all of the Respondents’ property managers. Fewer women were, he said, likely to be able to work full time on account of child care responsibilities.  There was prima facie indirect discrimination and it was the Respondents to show that the requirement was a proportionate means of achieving a legitimate aim. That remained his position on appeal.

The Tribunal’s Reasons
25. The Employment Judge noted that essential issue between parties was the identification of the pool to be used for the necessary comparison.  At paragraphs 50 to 52, he explains his reasons for rejecting the Respondents’ contention that the Claimant’s claim should be struck out:

“50.   Now it is not for me to say this stage of (sic) facts will be proved in relation to any suggested pool; and what conclusions in fact and law a Tribunal hearing this case might make in relation to that crucial matter.  But the point is that the claimant is offering to prove a particular pool which may be the right one and may show discrimination.  In my opinion, that, on its own, is sufficient to defeat the argument that this claim has no reasonable prospect of success, because it has “crossed the line of possibility”.

1.  In any event, I am fortified in the view that the decision in Chaudhray does not have the effect contended for by the respondent for a number of other reasons. Firstly it was a race discrimination case. Secondly, it concerned access to a benefit.  Thirdly, the remarks relied on are obiter. Fourthly if the principle said to be enunciated was a general application, it is surprising that the line of defence is (is) now being argued for has not materialised in any reported decision concerning applications for part-time working by women returning from maternity leave.
   

1.  Finally, I am satisfied that the present case is not described as an “access to benefit” case (permission to work part-time). It is instead more properly categorised as an “imposition of an obligation” case (requirement to work full- time) (see Rutherford paragraph 78).  Once that is understood the potentially discriminatory nature of the PCP becomes clear.”

26. The Employment Judge thus went further than determining that the case for strike out was not to be upheld.  He appears to imply that the pool contended for by Mr Cowan is the correct pool and, furthermore, on one view, determines that a prima facie case of indirect discrimination is made out. He also determines that the relevant PCP is, as he puts it, the “imposition of an obligation” to work full time.  Accordingly, even if the Respondents’ appeal against the refusal to strike out the Claimant’s claim is not well founded, it is understandable that they have concerns that significant issues appear to have been predetermined.

Discussion and Decision
27. I deal firstly with the question of the appropriate pool, under reference to my discussion of the relevant authorities above.  As I have indicated, it seems to me that the approach in Rutherford applies.  In the circumstances of this case that means that the appropriate pool is such of the Respondents’ property managers as, at the relevant time, wanted flexible working to be available.  Those who had no interest in flexible working ought not, for the reasons explained in Rutherford, to be included in the pool. I do not, however, consider that if the pool is made up only of those persons that the inevitable answer is that there was no indirect discrimination and for that reason I agree that the Employment Judge was correct to refuse the application for strike out.  The fact that all of them did or would have received a negative response to a request for flexible working does not mean that all would have suffered what can properly be characterised as a disadvantage or that the disadvantage to them would necessarily have been the same.  It will be important to look at the nature of the consequences of the negative response.

28. Mr Cowan asserts that women will inevitably be disproportionately adversely affected by a refusal to grant flexible working. Society has, however, changed quite dramatically since, for instance, the era in which the case of The Home Office v Holmes [1984] IRLR 364 was decided. Many women return to full time employment after childbirth. The child care arrangements available to some women are such that they cannot work full time. The position of some women is, though, that whilst they are able to access child care arrangements which would enable them to work full time they do not want to do so; for them, part time working is a matter of choice rather than necessity.  More men take on child care responsibilities. People (both male and female) seek flexible working for different reasons including, for instance, enabling them to combine jobs, pursue other interests or follow educational courses.  A negative response to the request for flexible working may, accordingly, give rise to differing effects.  Where the effect is on an employee who is able to work full time but does not wish to do so, it is difficult to see that it would be correct to talk in terms of that employee being disadvantaged.  Where the effect does amount to a disadvantage, the question of whether it amounts to a particular disadvantage that is liable to be experienced by women as opposed to men arises.  The Claimant will, in short, have to address the issue of whether or not refusal of the request for flexible working puts women at a “particular disadvantage”.  She may or may not be able to do so.  That is for the Tribunal to decide.

29. Thus, whilst, as I have explained, the Employment Judge was correct in refusing to strike out the indirect discrimination claim, insofar as the Employment Judge’s reasons fall to be read as him determining that the pool should be all property managers, I consider that he is wrong about that.  His attempt to distinguish Chaudhary is hard to follow.  The fact that it concerned race discrimination in no way detracts from the discussion of principle contained in it, I do not agree, for reasons explained below, that the present case is not an access to benefit case and the Employment  Judge’s fourth point is of no moment.  The fact that a point has not been taken before does not make it a bad one, the Employment Judge refers to no particular reported decisions in which he would have expected it to have arisen and it is not clear if he has borne in mind that a number of decisions on the matter that are reported have focussed on issues surrounding the employers’ establishment of justification for the indirect discrimination, often in circumstances where indirect discrimination has been conceded.  The Employment Judge also, I note, fails to consider the implications of Rutherford for the present case yet he ought, in the circumstances, to have done so.

30. I turn separately to the Employment Judge’s characterisation of the present case as being one which involves the imposition of an obligation.  That is not the nature of the Claimant’s complaint.  She was not in the position of, for instance, the applicant in the case of London Underground v Edwards [1998] IRLR 364, who was being asked to sign a new contract of employment which contained new rostering arrangements.  The contract into which she had willingly, and without complaint, entered into in 2005 remained unchanged.  The Respondents were not seeking to change it.  They were not seeking to impose any new obligation. I do not accept that the subsistence of terms and conditions which were agreed years before can properly be characterised as the imposition of an obligation.  The Claimant’s complaint was that when, in 2008, she asked the respondents to vary it so as to afford her a new benefit, they refused to do so.  I would add that I do not read anything in para. 78 of Rutherford as being indicative of the contrary. Rather, Rutherford, in my view, applies to the present case with the result that the pool is as I have indicated and that it would not be appropriate, at this stage to reach any view as to whether or not a prima facie of indirect discrimination is made out.

Disposal
31. In these circumstances I will dismiss the appeal and remit the case to the Employment Tribunal to proceed as accords.