Judgments - St Helens Borough Council (Respondents) v. Derbyshire and others (Appellants)

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    51.  Section 4 of the 1975 Act is one of a number of statutory so called "victimisation provisions", which include Section 2 of the Race Relations Act 1976, Section 55 of the Disability Discrimination Act 1995, Regulation 4 of the Employment Equality (Religion or Belief) Regulations 2003, Regulation 4 of the Employment Equality (Sexual Orientation) Regulations 2003 and Regulation 4 of the Employment Equality (Age) Regulations 2006. All these other provisions are expressed in very similar or nearly identical language, and have precisely the same purpose in their respective areas as Section 4 of the 1975 Act has in relation to the employment area.

    52.  The purpose of such victimisation provisions was admirably and succinctly summarised by Lord Nicholls of Birkenhead in Chief Constable of the West Yorkshire Police v Khan [2001] ICR 1065 at paragraph 16, where he said that the "primary object of the victimisation provisions…is to ensure that persons are not penalised or prejudiced because they have taken steps to exercise their statutory rights or are intending to do so".

    The decision of the Tribunal

    53.  The instant applications were initially dismissed by the Tribunal but that dismissal was overturned by a decision of the EAT. The applications then were reheard on 11 July 2003 following which the Tribunal (Mr Lloyd Parry, Chairman, and Mrs Pegg and Mr Partington) gave its decision on 25 September 2003. In that decision, the Tribunal unanimously decided that each of the appellants had made out her case. In paragraph 2 of its decision ("the Decision") the Tribunal summarised the respective cases. Each of the appellants contended that the two letters were "trying to intimidate her into abandoning, or at least modifying, her contention" in the equal pay proceedings. The Council contended that the letters merely "contained a clear statement of their viewpoint, and a needful warning of the harmful consequences of pursuing the claims for bonus" and that it was "more responsible…than not" for the Council to tell their employees the truth.

    54.  Paragraph 3 of the Decision, which ran to eight subparagraphs, contained the Tribunal's findings of fact. In paragraph 3 (c) the Tribunal said that the two letters had a "tone [that] is rational and [that] they contain[ed] much (at least) that is sensible". Paragraph 3 (g) was in these terms:

    "The letters caused distress to at least some of the applicants, and incurred for them some odium. People spoke of the danger that they could not, if the bid for equality succeeded, afford school meals for their children. The families of road sweepers feared the loss of their bonus. Such was the reaction to the letters. Doubtless they conveyed it to the applicants in terms of reproach".

    55.  In paragraph 4 of the Decision, the Tribunal set out its conclusions. It is necessary to set them out in full:

    "4. (a) Here was a complaint of victimisation pursuant to section 4 of the Sex Discrimination Act 1975. The complaint was that the respondents discriminated against each applicant in circumstances relevant for the purposes of this Act by treating her less favourably than in those circumstances they treated other persons, and that they did so by reason that she had brought proceedings against them under the Equal Pay Act 1970.

    (b)  There was no issue whether the circumstances were relevant for the purposes of the Act. What happened was in the circumstances of an employment relationship between the parties.

    (c)  Who is the proper comparator? Happily, EAT (in their judgement on the appeal from the earlier decision of our colleagues) have provided us with the answer. The question is whether the 2 letters amounted to treating the applicants less favourably than a person who had not brought and continued equal pay proceedings.

    (d)  Did the respondents subject any applicant to a detriment? The answer was the same for all, since they all alleged the same detriment. We found that each applicant did suffer a detriment. Mr Gorton, for the respondents, asked pertinently: "How can it be victimization to merely point out what a reasonably held belief of a party is in connexion with the prosecution of a claim?" (he was considering particularly the question of detriment). Here is our answer. The letter of 19 January 2001 contained what was effectively a threat. It spelt out a danger that the applicants might deprive children of school dinners, and that they might cause redundancies among their colleagues. It amounted to an attempt to induce the acquiescence of individuals despite the view of their union. It was more than a matter-of-fact reminder of what might happen if they went on with a complaint. A professional representative can be expected to respond calmly to such a letter. But here was a direct approach to each individual. A letter pointing to the likelihood of dire, unpopular consequences is likely to frighten one not accustomed to legal controversy. It will provoke, not a dispassionate balancing of strengths and weaknesses, but fear and perhaps panic. It is directed against people who were in no position to debate the accuracy of the respondents' pessimistic prognostications. The reaction to such a letter may be, even where there is a well-justified belief in the justice of one's case, surrender induced by fear, fear of public odium or the reproaches of colleagues. Such a reaction, although prompted by emotion, is reasonable in the sense that it is a normal, sane human response to the prospect of an unpleasant consequence realistically perceived. Thus the letter was intimidating. The intimidation was such as to affect the applicants but not the others who had settled their complaints (not in the same way at any rate): the respondents treated the applicants less favourably than they treated those others.

    (e)  Here was a claim by women to be treated equally with men. Were the Tribunal proceedings the occasion of the less favourable treatment? They were. Here is how we reasoned that conclusion. We observed the distinction between, on the one hand, the respondents' right to protect themselves in litigation, and, on the other, detrimental treatment as a response to the commencement of proceedings. That distinction is made in Chief Constable of the West Yorkshire Police v Khan [2001] ICR 1065. Here, the respondents did not, as they did in Khan's case, merely seek to avoid prejudicing their position in the litigation. They wanted the applicants to abandon their claims. They were reacting, if not to the commencement of proceedings, certainly to their continuance: they did not want to abide the event; they wanted to prevent adjudication. The Tribunal case was not simply the setting for the detriment: its continuance was the efficient cause."

    The decisions of the EAT and of the Court of Appeal

    56.  On the Council's appeal from the Tribunal, the EAT (Cox J, Mr Lewis and Mrs Prosser) upheld the Decision. In paragraph 24 of its reasoned decision, the EAT observed that the case "turns on its own particular facts and the Employment Tribunal's decision upon them". In paragraph 26, the EAT said this:

    "The combined experience of all members of this Appeal Tribunal leads us to recognise, as the context for these victimisation complaints, the particular sensitivities which can arise in public sector equal pay claims…and the potential vulnerability in the workplace of women pursuing such claims, particularly as regards their relationships with workplace colleagues in both applicant and comparative groups."

    The EAT then went on to reject the suggestion that the consequence of upholding the Decision would be that employers facing discrimination claims "will inevitably be unreasonably constrained and unable properly to defend themselves from victimisation complaints", on the basis, in effect, that each case in this area inevitably turned on its own particular facts.

    57.  The Council appealed to the Court of Appeal who by a majority allowed the appeal and remitted the matter to the Tribunal for reconsideration. In very summary form, both Jonathan Parker LJ and Lloyd LJ considered that the Tribunal had misdirected itself in paragraph 4 (e) of the Decision. This was essentially on the basis that the Tribunal had wrongly concluded that the two letters represented victimisation under Section 4 of the 1975 Act because, in writing them, the Council had wanted the appellants to abandon their equal pay claims, whereas the correct test, which the Tribunal ought to have applied, was whether the two letters simply represented "an honest and reasonable attempt by the Council to compromise the proceedings". (In this connection, see paragraph 51-54 in the judgment of Jonathan Parker LJ and paragraphs 77-80 in the judgment of Lloyd LJ.)

    58.  Mummery LJ took a different view. At paragraph 32, he said that the reasons of the Tribunal should be "read as a whole", and "an appellate court should not be over-critical in its treatment of the reasons given by the Employment Tribunal". He then concluded that, on a "fair and reasonable reading of the reasons as a whole", the Decision contained "no error of law".

    59.  A number of other points raised by the Council were unanimously rejected by the Court of Appeal, and it is right briefly to mention them before turning to the issue upon which your Lordships have to rule. First, the Tribunal correctly determined that the appropriate comparators, namely the "other persons" for the purposes of section 4 (1), were the employees who had not brought or continued equal pay claims. Although Mr Jeans QC, who appeared for the Council, suggested that another comparator group might have been more appropriate, he did not push the point, at least in part, I think, because he accepted that it would not affect the outcome of this appeal. Nonetheless, it is right to record that I consider that the Tribunal proceeded on the right basis. Secondly, the Tribunal was entitled to find that the sending of the two letters constituted "less favourabl[e]" treatment of the appellants: as Mummery LJ pointed out in paragraph 27 of his judgment, the fact that the appellants were proceeding with their equal pay applications meant that the result of the receipt of the letters was that they were likely to be subject to pressures which the comparator employees would not undergo. Thirdly, as to "detriment", it is clear that the sense of upset or distress described in paragraphs 3 (g) and 4 (d) of the Decision was capable of amounting to detriment for the purposes of section 6(2)(b) of the 1975 Act.

    60.  In these circumstances, the two questions which have to be considered are (a) whether the Tribunal was entitled to conclude that the sending of the two letters, coupled with the distress they caused to the appellants, was capable of amounting to an to victimisation falling within section 4 of the 1975 Act, and (b) whether in reaching the conclusion that it was, the Tribunal made an error of law which vitiated its decision. The first point is one of some general significance; the second point is rather more specific to this case.

    The reasoning of the House in Khan

    61.  Mr Hendy QC who appeared for the appellants, and Ms Gill who appeared for the interveners (the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission), accepted that, where an employee was mounting an equal pay claim, section 4 of the 1975 Act would not prevent the employer sending a letter with a view to pointing out to the employee the possible consequences of the claim succeeding, or indeed, with a view to settling the claim. That must be right. The question that arises, however, is how one construes the provision of sections 4 and 6 of the 1975 Act in order to arrive at such a conclusion. In that connection, the Court of Appeal approached the matter on the basis suggested in the speeches in Khan: hence the reference to an "honest and reasonable" employer in the judgments.

    62.  The facts of Khan were as follows. Sergeant Khan had had brought proceedings based on an allegation of unlawful racial discrimination in the course of his employment, against his employer, the Chief Constable. Before those proceedings ended, he applied for another job and asked for a reference. The Chief Constable refused to provide it, on the basis that it would prejudice his position in the proceedings. Sergeant Khan then brought a new claim under section 2 (1) (a) of the Race Relations 1976 which is, to all intents and purposes, identical to section 4 (1) (a) of the 1975 Act. In your Lordships' House, the claim failed.

    63.  The reasoning of the House of Lords centred on the words "by reason that" (as found in this case in section 4(1) of the 1975 Act), as discussed, for instance in paragraphs 29 to 34 in the speech of Lord Nicholls. At paragraph 31, Lord Nicholls said:

    "Employers, acting honestly and reasonably, ought to be able to take steps to preserve their position in pending discrimination proceedings without laying themselves open to a charge of victimisation. This accords with the spirit and purpose of the Act. Moreover, the statute accommodates this approach without any straining of language. An employer who conducts himself in this way is not doing so because of the fact that the complainant has brought discrimination proceedings. He is doing so because, currently and temporarily, he needs to take steps to preserve his position in the outstanding proceedings. Protected act (a) ("by reason that the person victimised has - (a) brought proceedings against the discriminator… under this Act") cannot have been intended to prejudice an employer's proper conduct of his defence, so long as he acts honestly and reasonably. Acting within this limit, he cannot be regarded as discriminating by way of victimisation against the employee who bought the proceedings" (emphasis supplied).

    The other members of your Lordships House who heard the appeal in Khan (Lord Mackay of Clashfern, Lord Hoffmann, Lord Hutton and Lord Scott of Foscote) all gave reasoned speeches. I mean no disrespect to them by suggesting that, at least for present purposes, the passage I have referred to in the speech of Lord Nicholls can fairly be taken as encapsulating the reasoning.

    64.  As the printed cases for both parties in this appeal show, this reasoning has been interpreted as meaning that there is, as it were, an "honest and reasonable" exception or defence open to a defendant to a claim brought under the victimisation provisions.

    65.  My Lords, it is with some diffidence that I suggest that, while the conclusion as expressed in paragraph 31 in Khan is correct, both its juridical analysis, founded as it no doubt was, on the arguments addressed to the House, and its subsequent interpretation, are not entirely satisfactory. There are two reasons for my concern, apart from the fact that, as pointed out by Lloyd LJ in paragraph 66 in the Court of Appeal, "the point which has been called the 'honest and reasonable employer' defence is not found in the legislation itself". First, the reasoning in Khan seems to me to place a somewhat uncomfortable and unclear meaning on the words "by reason that".

    66.  Secondly, under the victimisation provisions, it is primarily from the perspective of the alleged victim that one determines the question whether or not any "detriment" (in this case, in section 6(2)(b) of the 1975 Act) has been suffered. However, the reasoning in Khan suggests that the question whether a particular act can be said to amount to victimisation must be judged from the point of view of the alleged discriminator. Of course, the words "by reason that" require one to consider why the employer has taken the particular act (in this case the sending of the two letters) and to that extent one must assess the alleged act of victimisation from the employer's point of view. However, in considering whether the act has caused detriment, one must view the issue from the point of view of the alleged victim.

    67.  In that connection, Brightman LJ said in Ministry of Defence v Jeremiah [1980] ICR 13 at 31 that "a detriment exists if a reasonable worker would or might take the view that the [treatment] was in all the circumstances to his detriment". That observation was cited with apparent approval by Lord Hoffmann in Khan at paragraph 53. More recently it has been cited with approved in your Lordships' House in Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] IRLR 285. At paragraph 35, my noble and learned friend, Lord Hope of Craighead, after referring to the observation and describing the test as being one of "materiality", also said that "an unjustified sense of grievance cannot amount to 'detriment'". In the same case, at paragraph 105, Lord Scott of Foscote, after quoting Brightman LJ's observation, added "if the victim's opinion that the treatment was to his or her detriment is a reasonable one to hold, that ought, in my opinion, to suffice".

    68.  In my judgment, a more satisfactory conclusion, which in practice would almost always involve identical considerations, and produce a result identical, to that in Khan, involves focussing on the word "detriment" rather than on the words "by reason that". If, in the course of equal pay proceedings, the employer's solicitor were to write to the employee's solicitor setting out, in appropriately measured and accurate terms, the financial or employment consequences of the claim succeeding, or the risks to the employee if the claim fails, or terms of settlement which are unattractive to the employee, I do not see how any distress thereby induced in the employee could be said to constitute "detriment" for the purposes of sections 4 and 6 of the 1975 Act, as it would not satisfy the test as formulated by Brightman LJ in Jeremiah, as considered and approved in your Lordships' House. An alleged victim cannot establish "detriment" merely by showing that she had suffered mental distress: before she could succeed, it would have to be objectively reasonable in all the circumstances. The bringing of an equal pay claim, however strong the claim may be, carries with it, like any other litigation inevitable distress and worry. Distress and worry which may be induced by the employer's honest and reasonable conduct in the course of his defence or in the conduct of any settlement negotiations, cannot (save, possibly, in the most unusual circumstances) constitute "detriment" for the purposes of sections 4 and 6 of the 1975 Act.

    69.  As already mentioned, it seems to me that in practice, the "honest and reasonable" test suggested by Lord Nicholls in paragraph 31 of Khan would, at least in any case I can conceive of, be very likely to yield precisely the same result as the approach, having had the benefit of argument in support from Mr Hendy and Ms Gill focusing on the word "detriment" in the present appeal, I would prefer. It is hard to imagine circumstances where an "honest and reasonable" action by an employer, in the context or conduct of an employee's equal pay claim, could lead to "detriment", as that term has been considered and explained in the cases to which I referred, on the part of the employee. In this case, at any rate, I am content to proceed on the basis that the Council would succeed in defeating the claims if it could establish that, in sending the two letters, it had acted as an honest and reasonable employer in the circumstances.

    70.  It is right to mention that the decision of the European Court of Justice in Coote v Granada Hospitality Limited (Case-185/97) [1999] ICR 100 was not cited in Khan. If it had been, it might well have caused the House to reconsider the precise juridical basis for its conclusion, but not the conclusion itself. In particular, it seems to me significant that the European Court focused in paragraph 27 on the purpose of the relevant Directive (76/207/EEC) as being to require victimisation legislation not to be limited merely to dismissal. This was on the basis that that was "not the only measure which may effectively deter a worker from making use of the right to judicial protection". In other words, the European Court focused on the effect of the relevant act on the alleged victim, rather than the purpose of the alleged discriminator when carrying out the act. One finds similar emphasis in paragraph 24 of the judgment.

    71.  I should add that I have had the benefit of reading in draft the opinion of Lord Hope, with which I respectfully agree.

    Did the Tribunal go wrong?

    72.  I turn now to the second point, namely whether the Tribunal erred as the majority of the Court of Appeal concluded. It seems to me that the decision of the Tribunal is clear, accurate and concise in its analysis of the law, its description of the facts and, in paragraph 4 which I have quoted in full, its reasoned conclusions.

    73.  Mr Jeans, no doubt reflecting the Council's strong feelings on the matter, mounted a very strong defence of the two letters. An employer in the position of the Council, facing potentially severe consequences if the appellants' equal pay claims succeeded, would, he said, have been under a duty to draw the financial and employment consequences to the attention, not only of the employees who were pursuing the claims, but also to all the other employees who would be affected. The only way of taking that course was, he said, to approach the employees directly, because the Union was backing the appellants. Mr Jeans also drew attention to the praise that the Tribunal gave to the terms of the letters.

    74.  I fully appreciate the force of the point. However, the Council cannot, in my judgment, suggest that no reasonable tribunal could have concluded that the two letters would not have been sent, in the circumstances, to the people to whom they were sent, by an honest and reasonable employer (and in this connection, it is fair to record that there is no suggestion of a lack of honesty on the part of the Council). The Tribunal and the EAT in this case were each chaired by someone experienced in this field, and had, in the normal way, a representative of the employers and of the employees. It seems to me quite clear that each tribunal carefully considered the contents of the two letters, the identity of the people to whom they were sent, and the circumstances in which they were sent, and had no real hesitation in concluding that they did not satisfy the "honest and reasonable" employer test. In this connection, the contents of paragraph 4(d) of the Decision and paragraph 26 of the EAT's reasons speak for themselves.

    75.  It is true that the Tribunal did not expressly in terms address the "honest and reasonable" employer defence. However, it is quite clear that the Tribunal considered Khan, and no fair minded person reading paragraph 4 (d) could be in any doubt whatever as to the view of the Tribunal on this issue. Quite apart from this, with what might be characterised as uncanny prescience, it seems to me that the Tribunal actually approached that issue on the juridical basis that I would prefer, namely by considering whether the two letters could fairly be said to have given rise to "detriment" within the meaning of sections 4 and 6 of the 1975 Act - see the opening sentence of paragraph 4(d). Accordingly, whether the Tribunal approached the central question by reference to what Lord Nicholls said in Khan or on what I would have thought would be a slightly more appropriate basis, it reached an eminently justifiable answer for unassailable reasons, subject at least to the point to which I now turn, namely the concern which Jonathan Parker and Lloyd LJJ had about paragraph 4(e) of the Decision.

    76.  In my opinion, there is simply nothing wrong with paragraph 4(e). The majority of the Court of Appeal appear to have taken the view that, when properly read, it indicates that the Tribunal considered that, by trying to settle the equal pay claims, the Council was acting illegitimately, and that therefore sending the two letters could amount to victimisation. With all due respect, that is simply not what paragraph 4 (e) is saying. The purpose of the paragraph is quite clear from the question raised in its second sentence and from the conclusion expressed in the final sentence. The Tribunal was faced with the slightly difficult problem raised by the reasoning in Khan, namely whether it could be said that the two letters were sent "by reason that" the appellants had brought their equal pay claims. Once one gives the words "by reason that" the simple meaning of "because", the answer is clear. However, because this House in Khan gave the words "by reason that" a rather restricted meaning (in order to arrive at the "honest and reasonable" defence), the words arguably presented a slight difficulty for the appellants, and it was that difficulty that the Tribunal was dealing with in paragraph 4(e), and which it resolved quite correctly.

    77.  Quite apart from this, it seems to me inconceivable that, in paragraph 4 (e), the Tribunal could have been concluding that it was impermissible for an employer to try and settle an equal pay claim in light of what was said in paragraph 4 (d). In paragraph 4 (d), the Tribunal clearly accepted the point made by means of the rhetorical question posed by counsel, namely that it should be perfectly permissible for an employer facing an equal pay claim to send a letter with a view to settling the claim and/or pointing out the consequences of its success. Furthermore, one wonders why the Tribunal would have bothered to consider the effect of the two letters, as it did so carefully in paragraph 4 (d), if it considered that the sending of any letter which sought to settle the claim or discourage an employee from pursuing an equal pay claim would constitute victimisation. It seems to me that, as my noble and learned friend Lord Hope suggested during the argument, Jonathan Parker LJ in paragraphs 51 and 52, and Lloyd LJ in paragraph 64, may have misled themselves by quoting part only of paragraph 4 (e), and in particular, not the opening two sentences or the last sentence.

    78.  In any event, even if the Tribunal went wrong in some way in paragraph 4(e), it seems to me that there can be no doubt as to its conclusion or as to the justified basis on which it was reached. In that connection I cannot improve on the way Mummery LJ, who has considerable experience in this field, expressed himself at the end of his judgment:

    "38.  The tribunal's findings on the reason for sending the letters are clear. Even though the Applicants had legal representation, the Council sent the letters direct to each individual Applicant. The letters seeking a settlement were coupled with letters sent to the Applicants' colleagues who had already settled. There was no need for the Council to communicate with them for settlement purposes. All the letters were sent shortly before the hearing. The Council's object was to get the Applicants' agreement, despite the view of their union, not to go on with the equal pay case they had brought against the Council and which their colleagues making similar equal pay claims had already settled. The tribunal concluded that the letters had an intimidating effect on those bringing the equal pay claims who had not settled. Such letters would not have had that effect on a claimant who had settled. The letters also had a different affect on the individual Applicants than they would have had on the legal representatives of the Applicants.

    39.  The critical point is that, in determining the Council's reason for sending the letters, the tribunal looked beyond the contents of the letters to all the surrounding circumstances. It was entitled to do so and to conclude from all the circumstances that the Council's reason for sending the letters was that the Applicants had brought (and were still bringing) the equal pay proceedings against them. For that purpose the Council used means aimed at persuading the Applicants to abandon the equal pay proceedings rather than have them tried by the tribunal. Settlements are, of course, intended to avoid adjudication. But the objection is not to the Council seeking a settlement of the proceedings brought by the Applicants. It is to the particular means by which it sought to achieve the settlement. It is reasonably clear from the extended reasons, when read as a whole, that the tribunal did not regard the Council's treatment of the Applicants as a reasonable means of protecting its interests in the litigation. The Council could have protected its legitimate interests in the conduct of its defence to the litigation by seeking to achieve a settlement with those bringing proceedings against them by other means that were reasonable, such as negotiations with the Applicants' union or their legal representatives. The Council went further than was reasonable as a means of protecting its interests in the existing litigation and the reason for it doing so was, the tribunal found, that the Applicants had brought the equal pay claims against the Council and were continuing to bring them".

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