The law of unintended consequences

Sarah Lamont | Employment, Bevan Brittan

The Supreme Court has provided a clear and important ruling on indirect discrimination and how it works.

The background

The concept of direct discrimination is relatively straightforward: a person is treated less favourably, because of a ‘protected characteristic’ (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex; and sexual orientation). A simple example would be where an employer refused to employ women – the link between the less favourable treatment and the protected characteristic is clear.

The concept of indirect discrimination is more complex, and is intended to deal with the more common ‘hidden’ obstacles which affect those with a protected characteristic. Indirect discrimination covers situations where apparently ‘innocent’ non-discriminatory rules and practices have a detrimental impact on those with a protected characteristic. For example, a minimum height requirement for employees would indirectly discriminate against women, because most women are shorter than men.

The definition of indirect discrimination is found in section 19 of the Equality Act 2010. This sets out that an employer indirectly discriminates against an employee where:

  • the employer applies to the employee a ‘provision, criterion or practice’ (PCP)
  • the employee has a protected characteristic
  • the PCP in question applies across the board, including those who do not share the employee’s protected characteristic
  • the PCP puts those with whom the employee shares the protected characteristic at a particular disadvantage compared to others
  • the PCP does actually put the employee to that disadvantage; and
  • the employer cannot justify the PCP, i.e. it cannot show that it is a proportionate means of achieving a legitimate aim.

So, indirect discrimination applies where an apparently neutral PCP has:

  • an adverse impact on a group;
  • the person in question is actually affected by that PCP; and
  • the employer cannot justify its PCP.

This apparently clear formulation has, unfortunately, lead to a series of complexities and unanswered questions around issues such as whether a claimant needs to show why the PCP affects them; whether the PCP must affect the whole group to which the claimant belongs and whether there needs to be any causal link between the PCP and the disadvantage suffered by the individual as well as the group.

In the joined cases of Essop v Home Office; Naeem v Secretary of State for Justice, Lady Hale has provided clarity on these and other complexities.

The facts


The Home Office required that staff pass a Core Skills Assessment (CSA) in order to be eligible for promotion. For reasons which are unclear, statistical evidence showed that candidates for the CSA who are from black and minority ethnic (BME) backgrounds and aged over 35, are more likely to fail the CSA. The claimants failed the CSA and brought indirect race and age discrimination claims against the Home Office, arguing that the requirement to pass the CSA was a PCP and there was a statistically greater chance that they would fail because of their racial and age profile.

An employment tribunal found that there was no indirect discrimination because the claimants failed to show that there was a link between the reason why they had failed the test and the disadvantage suffered by the group. This decision was overturned by the Employment Appeal Tribunal (EAT), which in turn was overturned by the Court of Appeal.

Mr Essop appealed to the Supreme Court for a final ruling on whether the reason for the group disadvantage had to be the same as the reason why the individual suffered a disadvantage.


Mr Naeem’s claim related to pay scales for prison chaplains. Under the Prison Service’s pay scheme, pay increases are linked to length of service. The Prison Service only began employing Muslim chaplains from 2002, so Christian chaplains were more likely to reach the upper end of the pay scale.

Mr Naeem brought indirect religious and race discrimination claims, arguing that he had been disadvantaged as a Muslim and Asian chaplain by the application of the length-of-service criterion.  An employment tribunal rejected Mr Naeem’s claims, finding that although the pay scheme was indirectly discriminatory, it was justified: it was wholly legitimate to seek to retain and reward those who had served as chaplains over time and built up experience and knowledge.  On the question of whether the pay scheme placed Muslim chaplains at a ‘particular disadvantage’, the tribunal defined the appropriate pool for comparison as all prison chaplains. Mr Naeem appealed to the EAT on the justification point. The Prison Service also appealed, arguing that the tribunal’s identification of the disadvantaged group was wrong.

The EAT upheld the Prison Service’s appeal: the tribunal was wrong to include Christian chaplains employed before 2002 in the comparison pool; Mr Naeem, who was employed in 2004, had been treated in exactly the same way as any chaplain, of whatever religion or race, appointed at the same time as him. Although it was not necessary to do so, the EAT went on to say that if there had been indirect discrimination, it would not have upheld the tribunal’s finding on objective justification, because the pay scheme could have been modified to avoid the disadvantage suffered.

The Court of Appeal dismissed Mr Naeem’s appeal, agreeing with the EAT that there was indirect discrimination but applying different reasoning.

Mr Naeem appealed to the Supreme Court.

The decision

The appeal in Essop was allowed and the appeal in Naeem was dismissed. In coming to its conclusions, the Supreme Court made the following key findings on the correct approach to indirect discrimination claims:

  • There has never been any express requirement for an explanation of the reasons why a particular PCP puts one group at a disadvantage when compared with others. It is enough that it does. The Supreme Court’s judgment cites the example of chess grades: there is no generally accepted explanation of why women usually achieve lower grades as chess players than men, but a requirement to hold a high chess grade would put women at a disadvantage.
  • The reason why one group may find it harder to comply with a PCP than others was identified by a new term: a ‘context factor’. Context factors can adopt a range of forms. For example, context factors can be genetic (strength or height), or social (the expectation that women will bear greater responsibility for caring for family) or traditional (the division between ‘men’s jobs’ and ‘women’s jobs’).  When a ‘context factor’ is amalgamated with a PCP, then indirect discrimination will arise.
  • There is no requirement that a PCP must put every member of the group with a particular protected characteristic at a disadvantage. For example, some women will be able to work full-time without difficulty, and others cannot. In the same way, in Essop, it was irrelevant that some BME or older candidates could pass the CSA.
  • The potential issue of ‘coat-tailers’ was dealt with neatly and succinctly by the Supreme Court. This is the question of whether claimants could ‘coat tail’ claims if they had been disadvantaged (e.g. failed a test) but for reasons that had nothing to do with the disparate impact – for example, by not preparing for the test or not attending on the day. Lady Hale emphasised that, in those circumstances, the claim would fail because there would be no link between the PCP and the individual disadvantage. If a candidate failed for one of those reasons, there would be a “material difference” between them and a candidate who diligently prepared, arrived on time at the right place and finished the test. There needs to be a causal link between the PCP and disadvantage suffered by the individual, as well as the group.
  • With regard to the correct identification of the pool of comparators, the EHRC Employment Statutory Code of Practice provides that all the workers affected by a PCP should be placed in the pool. As a general rule, “identifying the PCP will also identify the pool for comparison” – on the facts of the Prison Service case, the PCP was the incremental pay scale affecting all chaplains employed by the Prison Service.

What does this mean for me?

In the face of challenging legal complexities, the Supreme Court has provided welcome clarity on how employment tribunals and, by extension, employers should approach the concept of indirect discrimination.

Whilst this decision does lower the hurdle for claimants by removing the need for claimants to show why there is a group disadvantage, the Court has also highlighted (at paragraph 29) that employers should not shy away from showing that a PCP is justified:

“The requirement to justify a PCP should not be seen as placing an unreasonable burden upon respondents. Nor should it be seen as casting some sort of shadow or stigma upon them. There is no shame in it. There may well be very good reasons for the PCP in question.”

In summary, in order to consider whether any PCP you have in place, or are considering implementing, may amount to indirect discrimination, you will need to answer the following questions.

  • Is there a PCP?
  • Is there is a ‘context factor’?
  • Do the ‘context factor’ and the PCP combine to create a group disadvantage?
  • Is the group and individual disadvantage caused by the PCP?
  • Is the employer able to objectively justify the PCP in question?

In the light of this judgment, prudent employers will monitor how their policies and practices impact on various groups and, if indirect discrimination is found, consider whether that impact can be either modified or objectively justified.