Case No: A1/2000/0227/EATRF
A1/201/6021/FC3
Neutral Citation Number: [2001] EWCA Civ 385
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Royal Courts of Justice
Strand, London, WC2A 2LL

Wednesday 21st March 2001

B e f o r e :

LORD JUSTICE HENRY
LORD JUSTICE BUXTON
and
SIR SWINTON THOMAS
(Sitting as a Judge of the Court of Appeal, Civil Division)

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	WHIFFEN	Appellant	
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	MILHAM FORD GIRLS’ SCHOOL
And
OXFORDSHIRE COUNTY COUNCIL	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
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Ms Laura Cox QC and Ms Louise Brooks
(instructed by Messrs Graham Clayton for the Applicant)
Martin Kurrein Esq 
(instructed by Oxfordshire County Council for the Respondent)
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Judgment
Lord Justice Henry: 
1.	Mrs Whiffen, the applicant, taught modern languages at Milham Ford Girls’ School for 5½ years between April 1991 and 31st August 1996.  She was employed part-time by a series of fixed term contracts - initially for two terms, thereafter by a series of fixed term contracts from year to year.  In April 1996 there was a question of redundancies at the school.  Her existing contract came to an end and was not renewed.  She now appeals against the Employment Appeals Tribunals (“EAT”) decision of 28th October 1999 to dismiss her appeal against the order of the Employment Tribunal (at that the Industrial Tribunal) of 21st July 1998, dismissing her claim that her employer’s rule in a redundancy situation of first dismissing staff on fixed term contracts amounted to indirect sex discrimination.  For the terms of that contract and the school’s redundancy policy we must look to the finding of the Employment Tribunal upheld by the EAT, presided over by Mr Justice Kirkwood, at their preliminary hearing as to the size of the pool for the purposes of discrimination.
2.	We get, from the extended reasons of that decision, the following facts:
i)	because the school is run by a governing body with a delegated budget, and this is a sex discrimination matter, the governors are the employers, and the appropriate respondents to this application are the governors of the school, and not the County Council.
ii)	But the governors appear to have followed the County Council Education Committee’s model redundancy policy and their policy on the use of fixed term contracts.
iii)	That latter policy had been revised in November 1993 and read:
"Why Use a Fixed-term Contract?
A.1	There are six reasons which the County Council and the teacher unions have agreed as being valid and which should stand up to challenge at an industrial tribunal.
(i)	To cover for maternity of sick leave.
(ii)	To cover for secondment or leave of absence.
(iii)	Interim arrangements pending the arrival of permanent staff.
(iv)	Temporary increase in pupils.
(v)	Projected fall in pupil numbers (leading to a budget reduction within the next 12 months.
(vi)	Posts dependent on external funding.
A.2	It is not advisable or appropriate to use them in the following circumstances:
(i)	In order to create a ‘trial period’.  This can be dealt with adequately under existing procedures.
(ii)	Because of anxiety about future budgets which is not clearly well founded.
(iii)	As a matter of course for all part-timers simply because their are part-timers (to do so could constitute indirect sex discrimination).
A.3	Creating fixed term contracts may be an attractive option if a governing body is genuinely concerned about its budget.  However, there are several disadvantages to recruiting staff on a temporary basis.
(i)	It narrows the field of applicants to those not already in a permanent post.
(ii)	It can affect adversely the morale and commitment of the employee concerned, particularly as the end of contract approaches.
(iii)	It can limit flexibility if staff reductions become necessary.  Those employees on fixed-term contract will be the first to go, in order to prevent redundancies, regardless of their length of service or expertise, if the LEA model redundancy procedure has been adopted.  Permanent contract-holders have a right to expect greater security of employment than temporary staff.
However, if the Governors do consider it to be appropriate to appoint on a fixed term basis they should consult their Divisional Office about the best way to proceed."
1.	
1.	It is difficult to see why a fixed term contract was used in Mrs Whiffen’s case, given the overall length of her employment.  It is difficult to attribute any one of the A.1 reasons for using a fixed term contract.  It looks as though the reason is to be found either in A.2(ii) or (iii), but that is not found as a fact.  Of the disadvantages listed in A.3 (iii) certainly applied here.
2.	As to the redundancy policy, Mr Justice Kirkwood encapsulated it as follows:
	"There was also in place in the County, and adopted by the majority of its delegated budget schools, a model redundancy policy applicable to school employees. That policy contemplated [first] ... the non-renewal of temporary fixed term contracts."
3.	The school had its own redundancy policy.  Under this policy, the applicant’s 5½ years’ service would count for nothing. The reason for this was that, under the Oxfordshire County Council Model Redundancy Policy for School Employees (December 1995 Edition) (“the Policy”), the first place to look for those to be made redundant is to those like Mrs Whiffen who were not on permanent contracts, but were on temporary fixed term contracts.  Only after the staff on fixed term contracts (however long they had been employed) had been dismissed (and so eliminated from the selection process without being heard) would the school embark on that selection process, which the December 1995 Edition described as follows:
	"If there are no appropriate temporary staff, and insufficient volunteers are forthcoming and compulsory measures are required then [emphasis added] employees will be selected on a fair, consistent, objective and non-discriminatory basis."
4.	The applicant did not qualify for that highly praised selection process, because, as all her service had been under fixed term contracts, she did not have tenure.  Her services were dispensed with simply by not renewing her contract.  She was replaced by a teacher whom she regarded as being less qualified than her.  As the redundancy policy envisaged, she never got as far as the selection process described above.  She believed that such a selection policy indirectly discriminated against women.  The reason for that belief is clear, and is familiar in discrimination law.  I quote from Kirkwood J in the EAT:
	"The argument is two-fold.  First, that recruitment of fixed-term or temporary employment is generally limited to those seeking employment from a position of not being employed;  that group will be made up of (a) newly qualified potential recruits, and (b) women returning to work after raising children.  Thus, the requirement or condition applied (S.1(1)(b)) - namely being in permanent employment - such that the proportion of women who can comply is considerably smaller than the proportion of men who can comply."
5.	Accordingly she brought proceedings under section 1(1)(b) of the Sexual Discrimination Act, 1965 (“the Act”) which reads:
"(1)	A person discriminates against a woman in any circumstances relevant for the purposes of any provision of this Act if:
	(a)	...
(b)	he applies to her a condition or requirement which he applies or would apply equally to a man but-
(i)	which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and
(ii)	which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and
		(iii)	which is to her detriment because she 	cannot comply with it."
3.	
3.	The scheme of the section is this:  Mrs Whiffen has to show three things, to mount a prima facie case of discrimination, and then the burden passes to the respondents to justify their position.  I consider each of those three.
4.	First, that her employers have applied to her a requirement or condition which he applies or would apply equally to a man.  The Employment Tribunal correctly identified that first condition as the requirement or condition that her employers obliged her to satisfy before she could qualify, in a redundancy situation, for the selection process, that is to say:
	"... in order not to have her employment terminated at an early stage, but to progress to take her chances in a redundancy selection exercise."
	The requirement was that she had to be employed under a permanent contract.  And she had never succeeded in persuading her employers to give her a permanent contract.  They relied on the Policy mentioned above:  I quote from Rule 2:
	"The following measures will be used to avoid or minimise redundancy ...
	Reducing the use of temporary staff including non-renewal of temporary fixed term contracts."
	It was common ground that that was the requirement or condition referred to in section 1(1)(b) of the Act.
5.	Next, she has to show that the proportion of women who can comply with that condition are considerably smaller than the proportion of men.  To calculate those proportions, a pool of teachers had to be identified.  The applicant had sought at a preliminary hearing to persuade the Employment Tribunal that the pool should be all the teachers employed by the Oxfordshire County Council who taught at basic grade (as the applicant did).  The respondents resisted that application, suggesting a much smaller pool, namely of all teachers teaching at Milham Ford Girls’ School at basic grade.  The applicant appealed that finding to the EAT - the appeal was dismissed, there was no appeal to this Court, and the size of the pool was determined.
6.	Mr Kurrein for the respondents wished to file a Respondent’s Notice, ten months out of time complaining (as we understood him) of the EAT preference for the smaller pool on the basis that the numbers were too small to be reliable.  We refused leave to file that notice.  First, it was much too late.  Second, the respondents had successfully persuaded the EAT that that small pool for comparison “... meets both the requirements of the Act and the justice of the case”.  The respondents cannot blow hot and cold.  Further, it is too late now to say that the numbers involved are too small to be reliable.  It would not be fair to Mrs Whiffen.
7.	At the relevant time, May 1996, there were 33 staff at the school, the majority of whom were full time employees.  There were a number of part-time staff who were working on fixed term temporary contracts like the applicant.  The presence of three of those part-time temporary staff on the payroll reflected particular requirements such as temporarily replacing those who were on secondment, leave of absence or illness.  There were in all eleven basic grade teachers. Two were men, both full time, permanent employees. Of the remaining nine, all women, seven of them were permanent employees.  So only seven of nine women from the pool could meet the permanent employment condition, which all of the men could meet.  That is to say, the “small pool” snap-shot shows that 100% of men satisfied the condition, and only 77.7% of women.  So, on a literal construction, the third and final matter which the applicant has to prove is satisfied.
8.	Now clearly, whenever dealing with numbers that small, the movement of just one teacher from temporary to permanent employment can have a large impact on the figures.  But that was the consequence of the interlocutory hearing where the respondents were successful.
9.	The Employment Tribunal had to choose whether to approve the snap-shot given by the small figures.  The selection of the small pool satisfied the narrow construction of the Act, making it clear that it related to this individual applicant and her treatment in the actual redundancy situation. The use of the statutory words “... in any circumstances ...” means just that, including the actual circumstances of the school at the time.  In my judgment the Employment Tribunal was entitled to arrive at that view.  The respondents had succeeded in their “small pool” argument, once the EAT had ordered that, a small numbers result was always on the cards.  But the actual result was not surprising, and the EAT would have been quite wrong to reject it as not properly showing:
	"... that the proportion of women could can comply with it is considerably smaller than the proportion of men."
That was the second point that the applicant had to establish.
10.	Lastly, she must show that the requirement operated to her detriment - it clearly did.  As she was limited to a fixed term contract, so she had no chance of saving her job.
11.	The applicant has therefore raised a prima facie case of discrimination under the Act.  The onus then shifts to the respondents to satisfy us that the condition or requirement (ie permanent employment) which operated to the detriment of the applicant was nonetheless justifiable irrespective of the sex of the employee.
12.	The generally accepted test for justification is set out in Bilka-Kaufhaus GmbH -v- Weber van Harty [1987] ICR 110, the ratio of which is set out in Staffordshire County Council -v- Black [1995] IRLR 234 at 237:
	"... the test is that set out in Bilka-Kaufhaus GmbH:  namely is the difference in treatment based on objectively justifiable grounds:  are the measures chosen appropriate to achieve the aims of the undertaking and are they necessary to achieve those aims."
13.	Subsequent authorities have stressed the desirability (if not quite necessity) of there being evidence to establish these matters.
14.	What the respondents had to show was why it was important that only permanent employees were permitted to take part in the selection procedure to avoid redundancy, and why that was necessary.  Given the school’s policy as to fixed term contracts, and the matters raised in paragraphs 2 and 3 of this judgment, the respondents would have met considerable difficulties.  It is not immediately clear why it is “appropriate” to the running of a good school to ensure that, in the event of redundancies, even those on fixed term contracts who have served the school for upwards of five years should be automatically discharged and not even be allowed to take part in the redundancy selection competition, nor why such a requirement was necessary to achieve the aims of the school.
15.	But the answer to this appeal does turn on those speculations.  It is much more fundamental.  The respondents simply did not call evidence that went to the statutory question, because they had not properly focused on the right question.
16.	To demonstrate this it is necessary to analyse the ET’s Extended Reasons.  By paragraph 9 they have correctly identified the “... requirement or condition” that the employer has imposed and which he must justify.  That is the rule that those on fixed term contracts cannot take part in the redundancy avoidance selection process, that only permanent staff can apply;  that consequently those on fixed term contracts are debarred from the redundancy avoidance selection process, and long service on a series of fixed term contracts counts for nothing.
17.	That is what the respondents had to justify, and there was no attempt so to do.  What in fact they set out to justify was the need for the employer’s to have some sort of redundancy policy.  What they should have tried to justify was not the general policy, but the specific requirement.  The point is made clear at paragraph 12 of the Extended Reasons:
	"Good industrial relations require that there shall be a policy put in place hopefully with the approval and agreement of the work force and its representatives, whereby the procedure for addressing redundancies is clear and certain.  No such policy is likely to be able to give universal comfort to all members of staff, but it should have the virtue of certainty so that when this unpleasant spectre looms both sides of the equation will know how the matter is to be addressed.  In our view that is a need which an employer has to address either in anticipation of an actual redundancy situation or against the day when it may arise.  In our view, to put in place such a policy is a need and this particular policy, which the respondents adopted, is an appropriate one.  We are reminded that it is one which has the blessing of ACAS.  It is one which runs to a pattern which is familiar to us.  It may not necessarily be the only policy, other employers may set in place a different policy, but in our view it is an appropriate one and it is sufficient to justify the imposition of the requirement or condition.  It is a policy which is of its nature gender neutral.  It may produce one result today according to the gender make-up of a particular school’s teaching staff and another result tomorrow.  Therein, it seems to us, lies its strength and negates the suggestion that it is inherently discriminatory.  We find that the imposition of the policy was justifiable and for those reasons we have come to the conclusion, sadly for Mrs Whiffen, that this application must therefore fail."
18.	It is plain from the wording that the Employment Tribunal thought that the requirement could be justified by just having a redundancy policy, when it can only be justified by showing that the particular requirement or condition of such a policy was necessary.  Secondly, it is difficult to see how the Employment Tribunal could have reached their conclusion that the redundancy policy was “... of its nature gender neutral”, and so not discriminatory.  By concluding that (paragraph 11) they should prefer the narrower option, the Employment Tribunal was accepting the truth of the snap-shot produced by the figures:
	"The figures already referred to show that 100% of the male teachers at basic grade could comply with the requirement whereas only 77.7% [of women] could do so.  Taking a narrow view and regarding that as a snap-shot of the position at that particular time, we are invited by the applicant to say that that clearly demonstrates that the proportion of women who can comply is considerably smaller than the proportion of men."
19.	The confusion here is that the Employment Tribunal had already found that
	"The proportion of women who can comply [with the requirement] is considerably smaller than the proportion of men who can comply with it."
That finding shows indirect discrimination, and not a gender neutral situation.
20.	For all these reasons, it seems to me that the ET’s conclusion that the respondents had justified “... a [redundancy] policy which is gender neutral” cannot be sustained.
21.	Second, the respondents, because they were asking themselves the wrong question, never sought to justify the condition or requirement with which they were concerned.  Instead they sought to justify the need for some sort of redundancy policy rather than seeking the justify the actual requirement that provoked this case.  Accordingly, we allow this appeal.
22.	The appeal having been allowed, we turn to the question of relief.  This matter is very stale.  The applicant started these proceedings 4½ years ago.  The respondent, in our judgment, has failed to justify the requirement that, whatever their length of service, those on fixed term contracts cannot qualify for the redundancy avoidance selection process.  There is no reason why he should now have a second bite at the cherry.
23.	In those circumstances, we do not think it right to remit this matter for the Employment Tribunal (or another constitution of that court) to rehear the issue of justification.  We are satisfied that the respondents failed to justify the condition or requirement in this case.  That has caused the applicant detriment.  Accordingly, we remit the matter to another Employment Tribunal to deal with the question of damages.
Lord Justice Buxton:
24.	I agree.
25.	The Employment Tribunal [ET] found, under s 1(1)(b)(i) of the 1975 Act, that in the case of Ms Whiffen  the condition, imposed by  the school’s redundancy policy, that she should not be a fixed term contract-holder had operated in a discriminatory manner.  The ET had then to consider whether the employer had shown, under s1(1)(b)(ii), that that condition was “justifiable irrespective of the sex of the person to whom it was applied”.  The ET correctly directed itself, in terms agreed between the parties, that in considering that question “the general approach we should adopt is to consider the reason why the requirement is put forward by the employer and the extent to which it is necessary to meet the employer’s needs.”
26.	But that issue was never in the event addressed by the ET.  That was because they accepted as relevant, and adopted, the employers’ argument on justification that “the redundancy policy itself is not inherently discriminatory”. That argument was advanced on the basis that the policy was “of itself gender neutral” and would therefore only produce discriminatory results if the gender balance within the workforce to which it was applied happened in a particular case to produce a discriminatory outcome.
27.	The argument was misconceived in two respects.  First, what had to be justified was the imposition of the in the event discriminatory condition on Ms Whiffen.  It may be one relevant factor in that enquiry, but it is certainly not a sufficient justification of a condition that has operated in a discriminatory manner, that the policy of which that condition is a part, or even indeed the condition itself, may operate in a non-discriminatory manner in other cases.  Second, that the policy is on its face “gender neutral” is the very fact that brings section 1(1)(b) of the Act into operation.  That fact loses any conclusive nature once the policy is found, under section 1(1)(b)(i), to have a discriminatory effect.
28.	What the employer had to show was that the policy of dismissing fixed-term contract holders first was necessary to meet the employer’s needs.  The evidence adduced by the employer, so far as we have been able to elicit it with the assistance of Mr Kurrein, who appeared for the employer before the ET, never addressed that question. The needs were not identified by the employer; the necessity for, as opposed to the commonplace use of, the policy was never considered.
29.	The employer accordingly wholly failed to demonstrate what section 1(1)(b)(ii) requires, and the ET should have so held.  This is not a case for remission.  There may be grounds on which the imposition of this condition can be justified, but the time for demonstrating that was in the hearing before the ET.  The employer having failed to give any evidence to discharge the burden that was on him at that stage, he should not be given what would have to be a second chance, to make a new case on different evidence. 
Sir Swinton Thomas:
30.	I agree that this appeal should be allowed for the reasons given by Henry and Buxton LJJ.  I also agree that it would be wholly unjust to remit this case for a re-hearing on the issue of justification. 

ORDER: appeal allowed with agreed costs of £8,5000 and matter remitted to another Employment Tribunal to deal with the question of damages.
(Order does not form part of approved Judgment)