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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Spicer v Government of Spain [2004] EWCA Civ 1046 (29 July 2004) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2004/1046.html Cite as: [2005] ICR 213, [2004] EWCA Civ 1046

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
EAT/0516/03/RN

		Royal Courts of Justice Strand, London, WC2A 2LL
		29/07/2004

Lord Justice Wall :

Background

1. In a reserved decision promulgated on 8 May 2003, the Employment Tribunal held at London Central (the Tribunal), chaired by Mrs A.M. Lewzey, dismissed claims of direct discrimination, indirect discrimination and victimisation made by Mr Roger Spicer (the Appellant) under the Race Relations Act 1976 (RRA 1976) against his former employer, the Government of Spain (the Respondent). The Tribunal upheld the Appellant's claim that he had been unfairly dismissed by the Respondent, but because the Appellant was over the age of 65 when he was dismissed and, at first blush, thereby caught by the upper age limit provisions of section 109 of the Employment Rights Act 1996 (ERA 1996) the Tribunal stayed this part of its order pending the outcome of the decision of the Employment Appeal Tribunal (EAT) in Rutherford v Town Circle (No 2) in which the lawfulness of ERA 1996 section 109 was under challenge. A decision in that case is now awaited from a different division of this court. We are, therefore, not concerned with that aspect of the order on this appeal.
2. The Appellant appealed the Tribunal's decision to the EAT and in a judgment delivered on 25 November 2003, the EAT allowed the appeal in part. The Appellant, with permission granted by Maurice Kay LJ, now brings this appeal against the dismissal by the EAT of that part of the Tribunal's decision the EAT did not disturb, which addressed the question of indirect discrimination in relation to his pay.

The Statutory Provisions and the Tribunal's order striking out the Respondent's defence of objective justification

3. We are, in this case, only concerned with indirect discrimination. The Appellant's case of direct discrimination in relation to pay and promotion was withdrawn before the case reached the EAT. Thus the relevant provisions of RRA 1976 for our purposes are the following: -

1 Racial discrimination

(1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if –

……….

(b) he applies to that other a requirement or condition which he applies or would apply to persons not of the same racial group as that other but –

(i) which is such that the proportion of persons of the same racial group as that other who can comply with it is considerably smaller than the proportion of persons not of that racial group who can comply with it; and

(ii) which he cannot show to be justifiable irrespective of the colour, race, nationality or ethnic or national origins of the person to whom it is applied; and

(iii) which is to the detriment of that other because he cannot comply with it

4. RRA 1976, section 1 has recently been amended (with effect from 19 July 2003) to add a further form of indirect discrimination, which is not material for our purposes. In the instant case, however, Miss Heather Williams, for the Respondent, relies on RRA 1976, section 3(4), which reads: -

A comparison of the case of a person of a particular racial group with that of a person not of that group under section 1(1)…. must be such that the relevant circumstances in the one case are the same, or not materially different, in the other.

5. In legal shorthand, an applicant who is seeking to make out a case of indirect race discrimination must establish (1) the existence of a requirement or condition as identified by RRA 1976 section 1(1) (b); (2) that the requirement or condition has a disproportionate impact on those of his racial group. (section 1(1)(b)(i)); and (3) that he has suffered a detriment (section 1(1(b)(iii)). It is for the Respondent to the application to show, if he / it can, that the requirement or condition can be objectively justified.
6. The highly unusual feature of this case is that the Respondent was precluded before the Tribunal from relying on an objective justification defence. This arose because the Respondent disobeyed an interlocutory order for directions made by a Chairman on 22 November 2002 that it should plead a full defence of objective justification. by 20 December 2002. Thus, when the application came on for hearing before the Tribunal on 7 March 2003, Mr. Jason Coppel, for the Appellant, applied to strike out the Respondent's defence of objective justification. The Tribunal acceded to that application and struck the defence out.
7. In my judgment, that order has a profound effect on the outcome of these proceedings. The failure to appreciate its impact vitiates both the conclusions reached by the Tribunal and the EAT, and is not cured by Miss Williams valiant efforts to ride to the EAT's rescue on the back of RRA 1976 section 3(4). However, to explain how I reach this conclusion, I need to summarise the facts. I can, I think, do so quite shortly.

The facts

8. The Appellant was employed by the Respondent at the Colegio Español Vicente Cañada Blanch (the school). The school is a Spanish State School in London run under the regulation of the Spanish Ministry of Education. No question of State immunity arises.
9. In 2001 the school had approximately 35 teaching members of staff. These were divided into three categories. Approximately 22 were Spanish civil servants who had qualified in Spain and who were seconded on overseas postings to London. Approximately 7 of the teachers (of whom the Appellant was one) were British, and the remaining 6 were Spanish nationals living in London who had been recruited locally.
10. So far as pay was concerned, the Tribunal found that the Appellant was paid on a salary scale with London weighting and incentive allowances equivalent to a teacher working in the English State sector of education (with equivalent annual increases in his salary and allowances). The locally recruited Spanish teachers, the Tribunal found, were paid less than their British counterparts. However, the Spanish civil servants who had been seconded from Spain, whose basic salaries were less than the British teachers, received substantial relocation allowances, with the consequence that the combination of their salaries and relocation allowances meant that each was receiving a substantially greater income than their British counterparts (and possibly as much as double).
11. The Tribunal was also called upon to deal with two other particular aspects of the Appellant's employment apart from his pay and his dismissal. These were (1) the fact that his salary was not pensionable, whereas the Spanish civil servants were members of what was said to be a generous Spanish State scheme; and (2) the fact that nobody who was not a Spanish civil servant was eligible for promotion to the post of Head of Department, Deputy Head or Head Teacher.
12. As to the latter, the Tribunal found that the Appellant had not suffered a detriment because he had never applied to be a head of Department. The EAT was plainly right to regard this reasoning as circular, and to remit this aspect to the Tribunal for reconsideration. As to pension, the EAT was, in my view, once again correct to find that the Tribunal had simply overlooked the need to make appropriate findings and conclusions, and likewise to remit the issue. Neither finding is challenged by the Respondent in this court. We are, accordingly, only concerned with the question of pay, and our task is rendered easier by the fact that Mr. Coppel has abandoned any argument based on direct discrimination under RRA section 1(1)(a) and puts all his eggs in the indirect RRA section 1(1)(b) basket.

How the Tribunal dealt with the pay issue

13. The Tribunal made the following findings of fact in relation to RRA section 1(1)(b) on the pay issue: -

59 ….. The requirement or condition here is that in order to receive a higher pay package, involving a large monthly payment in respect of living expenses, an individual required to be a Spanish civil servant recruited in and posted from Spain.

60. It is not disputed that there was such a requirement or condition. The Spanish civil servants received their salary plus relocation allowance. The requirement or condition did have a disparate impact on the British staff who were recruited locally and were not Spanish civil servants recruited locally and were not Spanish civil servants recruited in and posted from Spain.

14. Although there was some demur from Miss Williams as to whether or not the first sentence of paragraph 60 accurately reflected the parties' position at the hearing, paragraphs 59 and 60 of the Tribunal's reasons seem to me unshakeable both as findings of fact and in their application of the statute. It is, accordingly, all the more surprising when, in my judgment, the Tribunal goes off the rails in paragraphs 61 and 62 – viz.

61. The issue for the Tribunal is whether the requirement or condition was to (the Appellant's) detriment as he could not comply with it. The evidence before the Tribunal is that (the Appellant's) basic pay was greater than that of Spanish Civil Servants and he has therefore failed to demonstrate a detriment.

62. It is therefore the unanimous decision of the Tribunal that the complaint of indirect race discrimination fails.

15. As Ward LJ indicated during the course of argument, paragraph 61 is simply unreal. Two teachers are doing exactly the same job. One is a Spanish civil servant, the other is British. The simple reality is that the pay package for one is substantially great than for the other. If A is being paid substantially less than B for doing the same job in circumstances where RRA 1976 section 1(1)(b)(i) is satisfied, A has, in my judgment, suffered a detriment.
16. The Respondent's answer to this would normally, of course, be section 1(b)(ii). The relocation allowance, it would say, is wholly justified. The Tribunal would then have to decide if that defence was made out. But that defence is not open here.

How the EAT dealt with the pay issue

17. The EAT recorded what to my mind is Mr. Coppel's unanswerable submission that, since objective justification was not open to the Respondent, it was perverse of the Tribunal to have found no detriment. The judgment then continues: -

14. Miss Williams, denied any opportunity of following what on the face of it might seem a more promising defence of justification, has submitted an argument based on (RRA section 3(4) …..

15. Mr. Coppel submits that that is an attempt to introduce a line of argument not advanced before the Tribunal, but that in any event section 3(4) has no application to indirect discrimination other than ascertaining the correct pool – see Hanly v. Norinchukin International plc (EAT 13 May 2003, unreported). However, we agree with Miss Williams that, although perhaps not expressed as clearly as it might have been, the Tribunal found as a fact that there was no like for like comparison in the pay situation. Furthermore, we are not able to accept the restricted view of section 3(4) advanced by Mr. Coppel. It covers section 1(1) generally and the weight of authority is against him. Indeed, it may well be a safeguard against fitting into the wording of the legislation what in common sense terms are really non-comparative situations.

16. That, we feel, is the situation here and one recognised by the Tribunal. There was no suggestion that the overseas allowance, albeit perhaps a generous one, was a sham to provide the Spanish nationals with a higher level of pay than that afforded to their British counterparts. It was paid to them as a consequence of their being posted overseas, a situation for which there was no proper comparison with the British teachers who were not required to relocate and consequently suffered no detriment. It was quite different to the promotion situation. Consequently we dismiss this part of the appeal.

18. Speaking for myself, I am unable to accept this reasoning. The simple answer to it, I think, is that it is re-introducing through the back door the objective justification defence, which had been shut out at the front. I acknowledge at once, however, that such a robust / unsubtle analysis does not do justice to Miss Williams' argument, which I must attempt to address.

The argument based on section RRA 1976 section 3(4)

19. Miss Williams submitted that on the Tribunal's findings of fact they were entitled to find no detriment. She accepted that the correct definition of detriment was that contained in the speech of Lord Hope of Craighead in Shamoon v Chief Constable of the RUC [2003] IRLR 285 at paragraph 35 namely:

This is a test of materiality. Is the treatment of such a kind that a reasonable worker would or might take the view that in all the circumstances it was to his detriment?

20. Miss Williams argued, however, that the Tribunal was entitled to find both that the Appellant received a greater basic salary and that he was not in a comparable position with the Spanish civil servant in relation to secondment abroad. Although the objective justification defence was not open, the Tribunal could not close its eyes to the obvious – namely that a relocation allowance was paid and the Spanish civil servants had relocated. The correct approach was a wide ranging, common sense, objective factual inquiry to see if the requirement / condition in question put the Appellant at a disadvantage. The conclusion of no detriment had, accordingly, been open to the Tribunal and the EAT had been right not to interfere.
21. Miss Williams then prayed section 3(4) in aid. The Spanish civil servant teachers were not appropriate comparators. The relocation allowance was paid simply to reflect the Spanish civil servants' secondment from Spain: there was no comparable element in relation to the Appellant and other British teachers so that the proposed comparison was not on a like for like basis. RRA section 3(4) was expressed to apply to section 1(1) not just to section 1(1)(a). In so far as Hanly v. Norinchukin Internatonal plc states the contrary, it was wrong: alternatively, if RRA section 3(4) is only apt to define the scope of the pool used to determine whether the proportion of those from the same racial group as the Appellant who can properly comply with the requirement / condition is considerably smaller than the proportion of those from the comparator racial group who can apply, this is a distinction without a difference. The pool in respect of which the statutory comparison exercise is undertaken must be one that complies with section 3(4); it must equally follow that where the applicant fails to identify a like for like comparator group to go into the pool, the indirect discrimination claim breaks down.
22. This led Miss Williams into a learned analysis of the authorities relating to the identification of the "pool" in race and sex discrimination cases. Her conclusion was that the weight of authority led to the conclusion that section 3(4) required that the pool should only include those in each racial group whose relevant circumstances meet the like for like requirement. It followed, she submitted, that where an applicant's claim of indirect discrimination was founded upon a comparison where the relevant circumstances of those in his racial group as against those in the comparator racial group were not the same / not materially different, the claim broke down.
23. In the present case, Miss Williams argued, the Appellant sought to base the indirect discrimination pay claim – which is a complaint that he and his British colleagues did not get the relocation allowance paid to Spanish civil servants – on a pool comprised – as she described it - on the one hand of British teachers at the School (as representing his racial group) and, on the other hand, Spanish civil servant teachers and locally recruited Spanish teachers (in other words, a pool comprising all the teachers in the school). This was not, she argued, a comparison exercise that satisfied section 3(4) as the relevant circumstances (her emphasis) of the two groups were not the same / not materially different. The Spanish group was substantially made up of secondees, who, by their nature, of course obtain the allowance. If the Spanish secondees should not be in the pool, the Appellant's claim of indirect discrimination inevitably broke down, as he and the other British teachers were paid more than the locally recruited Spanish teachers.

Discussion

24. Elegantly as Miss Williams' argument was advanced, I am unable to accept it. Firstly, it does not seem to me to dent either the Tribunal's basic findings in paragraphs 59 and 60 of their reasons, set out in paragraph 13 above. Equally, I do not think it addresses the objective justification by the back door argument. Most importantly for present purposes, however, I think, it is simply wrong in its analysis of what, in the instant case, represents both the requirement / condition and the "pool".
25. The most recent authoritative analysis of the concept of "the pool" is that contained in the judgment of Sedley LJ in the decision of this court in Allonby v Accrington and Rossendale College and others [2001] ICR 1189 at 1198. The case concerned an allegation of indirect sexual discrimination in relation to the dismissal of part-time lecturers, the majority of whom were women. In the context of the instant case, it is worth citing for what Sedley LJ said both about the requirement / condition and the pool. As to the requirement / condition, he said ([2001] ICR 1189 at 1196):

12. It is for the applicant to identify the requirement or condition which she seeks to impugn. These words are not terms of art: they are overlapping concepts and are not to be narrowly construed: see Clarke v Eley (IMI) Kynoch Ltd [1983] ICR 165, 170-171. If the applicant can realistically identify a requirement or condition capable of supporting her case, as Mrs. Allonby did here to the employment tribunal's satisfaction, it is nothing to the point that her employer can with equal cogency derive from the facts a different and unobjectionable requirement or condition. The employment tribunal's focus moves directly to the question of unequal impact.

26. On the question of the "pool", I need only cite a short part of paragraph 17 of the judgment ([2001] ICR 1189 at 1198):

…. As the appeal tribunal's excellent analysis of the possible pools shows, once the impugned requirement or condition has been defined there is likely to be only one pool which serves to test its effect. I would prefer to characterise the identification of the pool as a matter neither of discretion nor of fact-finding but of logic. This was the approach adopted by this court in Barry v Midland Bank Plc [1999] ICR 319, 334 and endorsed by Lord Slynn of Hadley on further appeal [1999] ICR 859, 863. Logic may on occasion be capable of producing more than one outcome, especially if two or more conditions or requirements are in issue. But the choice of pool is not at large.

27. In my judgment, the Tribunal correctly identified the requirement or condition in paragraph 59 of their reasons, which I have set out in paragraph 13 above. Indeed, they did not think it was dispute. They did not, it is true, formally identify the "pool", but I suspect the reason they did not do so was because it was obvious. As a matter of logic, there could only be one "pool" in order to assess disparate impact – and that pool was all the teachers in the school.
28. Miss Williams' submission would, in my judgment, result in the absurd position that the only people in the pool would be either the British teachers (and the locally recruited Spanish teachers) or the Spanish civil servants. On this basis, a claim of indirect race or sex discrimination would never succeed. In the trite but apt phrase, such an approach would drive a coach and horses through the indirect discrimination provisions of both RRA 1976 and the Sex Discrimination 1975.
29. In my judgment, RRA section 3(4) is satisfied in the instant case, because the "relevant circumstances" of both the British and the Spanish groups are the same. They are all teachers at the school The requirement or condition under RRA 1(1)(b) applies to all the teachers at the school. Disproportionate impact can only be assessed by looking at all the teachers in the school. Like is therefore being compared with like. Any other analysis produces the absurd result identified in paragraph 28.
30. In these circumstances, it is unnecessary, in my judgment, to express any opinion on the decision of the EAT in Hanly v. Norinchukin Internatonal plc. In the same way that the present case is highly unusual on its facts (the objective justification defence, I anticipate, will not have been struck out in the vast majority of claims) Hanly v. Norinchukin Internatonal plc is an unusual case on its facts, as the alleged comparators for the discrimination claims were not employed by the same bank as the Applicants, and therefore could not be dismissed by it. In so far as the EAT in that case appears to have accepted a submission that RRA section 3(4) has no application "as such" in a claim for indirect race or sex discrimination it should, I think, be treated with caution, given the statutory language used in section 3(4). In any event, as I hope I have made clear, a logically selected "pool" in a race or sex indirect discrimination case is – as here – likely to satisfy the terms of RRA 1976 section 3(4).
31. If this case has any wider interest than its unusual facts, it is that Respondents to claims for indirect race or sex discrimination should have their tackle in order, and should, in particular, obey Tribunal orders to set out fully their objective justification defence
32. I would therefore allow this appeal. I would remit the pay issue to the Tribunal; not, however, for rehearing but for the assessment by the Tribunal of the compensation due to the Appellant.

Lord Justice Hooper:

33. I agree.

Lord Justice Ward:

34. I also agree.