House of Lords - Regina v. Secretary of State For Employment (Original Appellant and Cross-Respondent) Ex Parte Seymour Smith (A.P.) and Another (Original Respondents and Cross-Appellants)

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Session 1999-2000
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Judgments - Regina v. Secretary of State For Employment (Original Appellant and Cross-Respondent) Ex Parte Seymour Smith (A.P.) and Another (Original Respondents and Cross-Appellants)

HOUSE OF LORDS

Lord Slynn of Hadley Lord Goff of Chievley Lord Jauncey of Tullichettle Lord Nicholls of Birkenhead Lord Steyn

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE
REGINA

v.

SECRETARY OF STATE FOR EMPLOYMENT

(ORIGINAL APPELLANT AND CROSS-RESPONDENT)

EX PARTE SEYMOUR SMITH (A.P.) AND ANOTHER

(ORIGINAL RESPONDENTS AND CROSS-APPELLANTS)

ON 17 FEBRUARY 2000

LORD SLYNN OF HADLEY

My Lords,

    The respondents to this appeal who were dismissed from their employments in May 1991 claimed before an Industrial Tribunal that they had been unfairly dismissed and were entitled to compensation pursuant to section 54(1) of the Employment Protection (Consolidation) Act 1978. The Tribunal refused to register their claims because they had not been continuously employed for the minimum period specified in section 64(1)(a) of that Act which at all material times was two years by virtue of the Unfair Dismissal (Variation of Qualifying Period) Order 1985. They sought judicial review of the 1985 Order on the grounds that it indirectly discriminated against women, since fewer women than men were able to comply with it and therefore it was contrary to Council Directive 76/207/EC ("The Equal Treatment Directive").

    The Divisional Court dismissed their application ([1995] I.C.R. 889) on the basis that it had not been shown that the proportion of women who could comply with the qualifying period was "considerably smaller than the proportion of qualifying men". The Court of Appeal allowed the claimants' appeal in respect of the Equal Treatment Directive ([1995] I.C.R. 919). After a detailed review of the Authorities and the statistics, they held that:

"Despite our anxieties, however, we have been forced to the conclusion that on the material before us it has been demonstrated that for the period leading up to the dismissals of the two applicants there had been and continued to be a considerable and persistent difference between the numbers and percentages of men and women in the groups that did comply and the groups that did not comply with the two-year qualification period" (page 953).

    They further held that the Secretary of State had not on the evidence established objective justification for the discriminatory impact of the two-year qualifying period. They allowed the applicants to raise for the first time the complaint that the 1985 Order was also in breach of Article 119 of the EC Treaty, but made no ruling on this, since they did not think it sufficiently clear that compensation for unfair dismissal was "pay" within the meaning of Article 119, which would have required a reference to the European Court of Justice under Article 117 of the Treaty. In view of their decision as to the Directive, they made no reference to the Court. They held that it would have been inappropriate to make an order quashing the Order of 1985, but the applicants were entitled to "a declaration" that at the time of their dismissals (1991) the Order of 1985 was indirectly discriminatory and that there was no objective justification for that discrimination.

    Your Lordships' House [1997] 1 W.L.R. 473 held that such a declaration was inappropriate, since it did not enable the claimants to claim compensation for unfair dismissal, the Directive not being enforceable against the employers in domestic law, either directly or indirectly as the claimants sought to do. Nor did it indicate to the Government that the Order was incompatible with Community law in 1995, so that it ought to be changed. The House, however, accepted in the circumstances of the case that it was right to deal with the claim under Article 119 even though it would have been more appropriate for the claim to have been made before an Industrial Tribunal. As a preliminary issue, however, questions were referred to the European Court of Justice relating to the construction of Article 119.

    It is with the response to these questions contained in the European Court's Judgment of 9 February 1999 (Case C-167/97 [1999] 2 A.C. 554) that your Lordships are now concerned in order to dispose of the appeal in relation to Article 119. In the light of the Court's judgment, it does not seem to be necessary to consider earlier European Court or United Kingdom cases.

    The House asked first whether compensation for breach of the right not to be unfairly dismissed, such as that provided in the Act, constituted "pay" within the meaning of Article 119. The Court answered that it did and nothing further turns on that point.

    The Court held, secondly, that in a case where, as here, the dismissed employees are claiming compensation, the conditions determining whether they are so entitled, because they have been unfairly dismissed, fall within the scope of Article 119 rather than Directive 76/207. The latter applies where the claimant seeks re-instatement or re-engagement because of unfair dismissal.

    This is clearly a claim for compensation and there is no issue as to this point remaining. The claim falls within Article 119.

    It is with the answers to the remaining questions that the House is now concerned, questions 3 and 4 dealing with the issue of indirect discrimination and question 5 with objective justification if there is such discrimination.

    Question 3 asked:

"What is the legal test for establishing whether a measure adopted by a Member State has such a degree of disparate effect as between men and women as to amount to indirect discrimination for the purposes of Article 119 of the EC Treaty unless shown to be based on objectively justified factors other than sex?"

    Question 4 asked generally at what time the appropriate legal tests fell to be applied to a measure adopted by a Member State and, in particular, whether it was when the measure was adopted, when it was brought into force or when the employee was dismissed.

    In answer to the third question, the Court set out the rival positions adopted before it. Thus, (a) the applicants contended that where there are significant statistics covering the entire workforce which cannot be regarded as fortuitous, "anything more than a minimal difference" in impact could be a breach; (b) the United Kingdom contended for "a markedly different impact"; (c) the Commission proposed a test by which "the existence of statistically significant" evidence is enough to establish disproportionate impact.

    The Court then indicated its conclusion as to the proper approach. The first question is whether the measure has "a more unfavourable impact on women than on men". The best approach to the comparison of statistics relevant to that is "to consider, on the one hand, the respective proportions of men in the workforce able to satisfy the requirement of two years' employment under the disputed rule and of those unable to do so, and on the other, to compare those proportions as regards women in the workforce": [1999] 2 A.C. 554, 597, para. 59.

    The Court continued.

"60. As the court has stated on several occasions, it must be ascertained whether the statistics available indicate that a considerably smaller percentage of women than men is able to satisfy the condition of two years' employment required by the disputed rule. That situation would be evidence of apparent sex discrimination unless the disputed rule were justified by objective factors unrelated to any discrimination based on sex."

"61. That could also be the case if the statistical evidence revealed a lesser but persistent and relatively constant disparity over a long period between men and women who satisfy the requirement of two years' employment. It would, however, be for the national court to determine the conclusions to be drawn from such statistics."

"62. It is also for the national court to assess whether the statistics concerning the situation of the workforce are valid and can be taken into account, that is to say, whether they cover enough individuals, whether they illustrate purely fortuitous or short term phenomena, and whether, in general, they appear to be significant: see Enderby v. Frenchay Health Authority (Case C-127/92) [1994] I.C.R. 112, 161, para. 17. It is, in particular, for the national court to establish whether, given the answer to the fourth question, the 1985 statistics concerning the respective percentages of men and women fulfilling the requirement of two years' employment under the disputed rule are relevant and sufficient for the purposes of resolving the case before it."

"63. In this case, it appears from the order for reference that in 1985, the year in which the requirement of two years' employment was introduced, 77.4 per cent. of men and 68.9 per cent. of women fulfilled that condition."

"64. Such statistics do not appear, on the face of it, to show that a considerably smaller percentage of women than men is able to fulfil the requirement imposed by the disputed rule."

"65. Accordingly, the answer to the third question must be that, in order to establish whether a measure adopted by a member state has disparate effect as between men and women to such a degree as to amount to indirect discrimination for the purposes of article 119 of the Treaty, the national court must verify whether the statistics available indicate that a considerably smaller percentage of women than men is able to fulfil the requirement imposed by that measure. If that is the case, there is indirect sex discrimination, unless that measure is justified by objective factors unrelated to any discrimination based on sex."

    As to the fourth question the Court replied that Community law must be complied with at all times but "the point in time at which the legality of a rule of the kind at issue in this case is to be assessed by the national Court may depend on various circumstances, both legal and factual." It is for the national Court to determine the point in time at which the legality is to be assessed (p. 596, paragraphs 46 and 50). The Court said:

"47. Thus, where the authority which adopted the act is alleged to have acted ultra vires, the legality of that act must, in principle, be assessed at the point in time at which it was adopted."

"48. On the other hand, in circumstances involving the application to an individual situation of a national measure which was lawfully adopted, it may be appropriate to examine whether, at the time of its application, the measure is still in conformity with Community law."

"49. With regard, in particular, to statistics, it may be appropriate to take into account not only the statistics available at the point in time at which the act was adopted, but also statistics compiled subsequently which are likely to provide an indication of its impact on men and on women."

    If regard is had first to the validity of the Order when made and brought into force in 1985, it is to be noted that the Divisional Court, on an analysis of the evidence, found that the percentage of men working for 16 or more hours a week, who had been employed for two years or more (i.e. a man who qualified to claim for unfair dismissal) was 77.4 per cent and the percentage of women who qualified was 68.9 per cent. Of the workforce of 18.73 million persons, 61 per cent were men, 39 per cent were women. In the Divisional Court, Balcombe L.J. [1995] I. C.R. 889, 904-905 took the view that it was right first to look at those who can qualify and to see whether the proportion of women was "considerably smaller". If the proportions of men and women who can qualify was very small, then it would be right to go on to consider whether the proportion of those who could not qualify showed that the percentage of women was considerably smaller. The figures showed that the proportion of women who qualified in comparison with men was 89:100. If one began the other way round by asking the percentages of men and women who did not qualify, the figure for women was 31.1 per cent and for men was 22.6 per cent. This gave a ratio of women to men of 3:2.

    When Balcombe L.J. looked at the figures between 1985 and 1993 (the latest available) the range was between 72.5 to 78.4 per cent for men and from 63.8 to 74.1 per cent for women. He found that the ratio of the proportion of men to women who qualified between 1985 and 1991 was about 10:9, reducing by 1993 to 20:19. Balcombe L.J., thus found that the figures did not show that the proportion of women qualifying is "considerably smaller" than the proportion of qualifying men.

    McCullough J., at pp. 915-916, found that the percentages who could not qualify ranged from 22.7 to 28.8 per cent, average 26.0 per cent, for men and 32.5 to 38.3, average 35.6 per cent, for women. The female percentage as a percentage of the male percentage varied from 68.5 to 75.2, giving an average of 72.8 per cent. After a detailed analysis of the figures, McCullough J. concluded that "this degree of disparity is less than considerable and, whether objectively justifiable or not, is compatible with the requirements of [the Directive], and this is so whatever year or period is taken".

    This conclusion of the Divisional Court was rejected by the Court of Appeal, though they found the matter "a most difficult issue to resolve" (page 952(g)). The conclusion was:

"We are impressed by the persistency and consistency of the figures from 1985 to 1991 inclusive. It is true that there was some narrowing of the gap for the year 1992 and a more marked narrowing of the gap in the year 1993, but no reason has been given for this narrowing, and in the absence of a reason the cumulative effect of the figures is striking. We are also impressed by the fact that, to take the year 1985 for which a figure is available, there were 370,000 fewer women in the advantaged group than predicted; this represents five per cent of the total female working population."

    The European Court has, as I read it, accepted that the starting point is to look at the percentage of those who do qualify and to ask, do these figures cover enough individuals, are they purely fortuitous or significant or are the figures "relevant and sufficient for the purposes of resolving the case before [the national Court]." If these figures are not sufficient or significant, it may be necessary to look elsewhere, including, as the Divisional Court accepted, the figures of those who do not qualify.

    If the question is then asked whether in 1985 the percentage of women who could qualify was considerably smaller (the test used in this case, and in earlier cases, which rejects the tests proposed to the Court to which I have referred) one has the guidance of the European Court of Justice, though the decision applying the appropriate test is ultimately in the national Court to decide. In paragraph 64, the Court said:

"Such statistics [i.e. for 1985] do not appear, on the face of it, to show that a considerably smaller percentage of women than men is able to fulfil the requirement": [1999] 2 A.C. 554, 598

    As far as 1985 is concerned, I do not consider that it has been established that these statistics are insufficient or fortuitous; on the contrary, I accept, as the Divisional Court accepted, that these figures were appropriate. In my view, these figures are "relevant and sufficient for the purposes of resolving the case" (paragraph 62). They do not show that in 1985 a considerably smaller percentage of women than men was able to fulfil the requirement.

    The European Court contemplates that a percentage which is "lesser" than "considerably smaller" may yet be evidence of indirect discrimination if it is "persistent and relatively constant". There thus remains the important question as to whether "the statistical evidence revealed a lesser but persistent and relatively constant disparity over a long period between men and women". The European Court did not give guidance on this question as it had on the 1985 figures.

    Starting from the basis that the 1985 percentage for women was not in itself "considerably smaller" for the purposes of the rule, it must thus be asked whether it was such that if it continued, it could be said to be "consistent and relatively constant"? This is no doubt the most difficult aspect of this part of the case, in view of the numbers (rather than the percentage) of women involved. As has been seen, the Divisional Court was satisfied that, looking at the period from 1985 to 1993 as a whole, the figures were not "considerably smaller". They do not expressly consider whether, although less than considerably smaller, the figures were sufficiently persistent and constant as to indicate indirect discrimination.

    The Court of Appeal, on the other hand, were impressed by the "persistency and consistency" of the figures from 1985 to 1991, though they accepted that there was a narrowing of the gap in 1992 and a "more marked narrowing of the gap in 1993." They concluded that it had been shown that "for the period leading up to the dismissals of the two applicants, there had been and continued to be a considerable and persistent difference between the numbers and percentages of men and women in the group" who did and did not qualify.

    It seems to me clear from their conclusion that in the period "there had been" a considerable difference that the Court of Appeal were proceeding on the basis that the percentage of women who qualified in the beginning was considerably smaller; that considerable difference "continued".

    If the starting point is, on the other hand, that the percentage of women qualifying in 1985 was not "considerably smaller", the conclusion does not necessarily follow. Accordingly, although your Lordships are reluctant to interfere with the assessment of the Court of Appeal on issues of fact, it seems to me that the matter has to be looked at from the different starting point indicated in the European Court's judgment. Since the figures are agreed, it seems to me open to your Lordships to resolve this issue without the matter being referred back to the Court of Appeal or the Divisional Court.

    The figures which are agreed between the parties are as follows:



Unqualified Unqualified Qualified Qualified

Year % Males with less than 2 Years % Females with less than 2 years % Males with more than 2 Years % Females with more than 2 Years

1985 22.6 31 77.4 68.9

1986 22.9 31.6 77.2 68.4

1987 24.7 32.9 75.3 67.1

1988 26.6 34.5 73.4 65.6
1989 28 36.2 72 63.8

1990 27.6 35.8 72.5 64.1

1991 25.5 32.6 74.5 67.4

1992 22.1 27.9 77.9 72.1

1993 21.6 25.9 78.4 74.1

    Although the percentage of women who can comply may be "less" than "considerably smaller" than the percentage of men who can comply if the percentage is persistent and relatively constant, I do not read the Court as saying that any difference between men and women which continues over a period itself establishes discrimination contrary to Article 119. The difference is evidence that "could" establish such discrimination, but it is "for the national Court to determine the conclusion to be drawn from such statistics". It seems to me that the disparity, even if not establishing a "considerably smaller" percentage of women able to qualify must still be significant so as to satisfy the Court that it would be right to find indirect sex discrimination.

    As can be seen, the percentage of both men and women qualifying between 1985 and 1989 fell (so that necessarily the percentage of both men and women who did not qualify rose in the same period). In 1990, the percentage of both men and women qualifying rose and it rose again more sharply in 1991 (men 72.5 to 74.5 and women 64.1 to 67.4 per cent - a marginally higher increase for women), and again in 1992 (a sharp increase for both) and again in 1993.

    Although the percentage figures of both men and women qualifying has fallen between 1985 and 1991, it still remains a fact that the ratio of women to men qualifying had slightly increased from 89:100 to 90.5:100.

    I leave aside the 1992 and 1993 figures, as they relate to the period after the dismissals, though they confirm the trend already begun in 1989 to 1990 and 1991, and, to that extent, but only to that extent, may be of some relevance in considering whether there is a persistent and constant disparity which is evidence of sex discrimination.

    For the purposes of this issue, it is right in my view to leave out of account that before 1985, the qualifying period had been one year and that it has since the relevant period in this case been reduced again to one year. The question is whether, at the relevant times, the discrimination is established on the relevant figures.

    The Court of Appeal [1995] I. C.R. 889, 952 were impressed by the fact that in 1985 "there were 370,000 fewer women in the advantaged group than predicted", though no figures are relied on by the Court of Appeal for later years and they do not say whether there were less men in the advantaged group than "predicted". In any event, the European Court of Justice knew of this figure from the Court of Appeal judgment and did not suggest that it was sufficient "on the face of it" to require a finding in respect of 1985 that there was a considerably smaller percentage of women who qualify. In my view, in the light of the numbers quoted by the Divisional Court on which the percentages are based, it is clear that the percentages can be relied on for the purposes of considering this issue in accordance with the judgment of the European Court.

    In all the circumstances in the light of the European Court's judgment, I am satisfied that the percentages of those qualifying in 1985 do not establish discrimination, contrary to Article 119 and that the percentages of those qualifying in and leading up to 1991 do not establish discrimination at the time of dismissal. Although the 1985 Order did prevent a higher percentage of women than men from claiming compensation, it cannot be said that it "actually affects a considerably higher percentage of women than men" (paragraph 67 of the European Court's judgment). It would in any event, however much the result could be justified logically, be odd if there was no discrimination in 1985, but in 1991 on a slightly higher percentage of women qualifying (and one as part of a rising trend) there was discrimination.

    On these percentages it does not seem to me to be necessary or helpful to consider separately the figures for those who did not qualify.

    The fifth question asked what, for the purposes of indirect discrimination, were the legal conditions for establishing the objective justification for a measure adopted by a Member State in pursuance of its social policy and what material a Member State needed to adduce in support of its grounds for justification.

    On the basis of my opinion that there was here no indirect discrimination, this question does not fall to be answered. I would accordingly on the indirect discrimination ground allow the appeal, dismiss the cross appeal and restore the Order of the Divisional Court dismissing the application.

LORD GOFF OF CHIEVELEY

My Lords,
I have had the opportunity of reading in draft the opinions of my noble and learned friends Lord Slynn of Hadley and Lord Nicholls of Birkenhead. For the reasons given by Lord Nicholls, I too would allow the appeals.
    It is on the first issue in the case, viz. whether the available statistics indicated that a considerably smaller percentage of women than men was able to satisfy the condition of two years' employment, that a difference of opinion has developed between my noble and learned friends; and I think it only right to explain why, on this issue, I prefer the reasoning of Lord Nicholls. It is plain that, having regard to the view expressed by the European Court of Justice (see para. 64 of the judgment of the Court) that the relevant statistics as at 1985, the date when the two-year period was established, did "not appear, on the face of it, to show that a considerably smaller percentage of women than men [was] able to fulfil the requirement", it would not be open to your Lordships now to hold to the contrary. In your Lordships' House, however, it was accepted that the relevant date for present purposes is 1991, and that the central question is therefore whether by that date the statistical evidence had revealed "a lesser but persistent and relatively constant disparity over a long period" between men and women who satisfy the two years' requirement sufficient to satisfy the test that a considerably smaller percentage of women than men satisfied the condition. This test (as to which, see para. 61 of the judgment of the European Court) presupposes that, in the specified circumstances, a lesser disparity is sufficient to establish that a "considerably smaller percentage of women than men" satisfied the two-year requirement. My noble and learned friend Lord Nicholls considers, like the Court of Appeal, that on the statistics in the present case this test is fulfilled.

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