Eweida: what it all means

I’ve been trying to work out what the ECtHR’s judgment in Eweida and others v United Kingdom means for UK discrimination law. I won’t spend time dissecting the judgment itself or the facts that have led up to it. This has been done by some very erudite and learned writers elsewhere, including Darren Newman (A Range of Reasonable Responses), Rosalind English (UK Human Rights Blog), and Carl Gardner (Head of Legal), all of which should be required reading. However, here are some of my thoughts on what the decision means for the future of workplace religious rights in the UK.

This is a momentous decision in my view. It will lead to human rights arguments taking a much more prominent role in employment cases on religious freedom. Human rights arguments in this field have hitherto failed because the prevailing orthodoxy at Strasbourg was that, if your employer won’t let you manifest your faith at work you are free to go and manifest it elsewhere, even to the extent of getting another job with a more accommodating employer. As such, arguments based on article 9 of the ECHR have always taken a back seat to the far more useful law of indirect discrimination which is now set out in the Equality Act 2010. Indirect discrimination law says that if your employer’s practices put you and other people of your belief at a disadvantage, the employer must change its ways unless it can justify the practice in question by showing it is a proportionate means of achieving a legitimate aim.

This decision turns the tables, and makes human rights law stronger than indirect discrimination law (as currently interpreted by the courts). Under the Eweida ruling, if an employer prevents an employee manifesting their religious belief, the employer must justify it. You are “manifesting” your belief if there is “a sufficiently close and direct nexus between the act and the underlying belief”. Your actions do not have to be required or mandated by the religion in question. By way of contrast, in indirect discrimination cases the focus is not on the individual so much as the group. The law requires you to show a group disadvantage, In other words, that people sharing your belief are put at a particular disadvantage by the employer’s practices. Ms Eweida fell foul of this requirement in her case against BA. She was unable to show that any other Christians at BA felt disadvantaged by the dress code, and the Court commented that since Christians were not required to wear a cross (even though many of them do) there was no disadvantage on them as a group.

I have previously argued that the way the Court of Appeal assessed group disadvantage in Eweida was wrong. However, the ECtHR’s decision now calls into question the whole concept of group disadvantage as a gateway to the law’s protection. Now, arguably any interference with the way you manifest your own personal beliefs, regardless of whether anyone else feels the same way, triggers article 9 and the employer should be required to show justification.

I think we will have to wait and see what impact this has on UK law. There are really two alternatives. The first is that the government chooses to legislate to change the law and implement the ECtHR’s ruling. I have been wrong in my predictions before, but I’m going to risk it again and say that they won’t (despite the Prime Minister having suggested last summer that he would). Largely because it would go contrary to their current war on “red tape” but also because I think they would prefer to see what the courts do, and then blame the judges if it all goes wrong.

The second alternative is that judges will now attempt to interpret indirect discrimination law in a manner which is compatible with the ECHR’s ruling. As a public authority, courts and tribunals have a duty to do this under section 3 of the Human Rights Act 1998. Case law from the House of Lords gives judges the power to read extra wording into statutes if that is necessary in order to give effect to our international obligations under the ECHR as well as EU law, even if that changes the meaning of the UK statute ( Ghaidan v Godin-Mendoza). Arguably this is what they must now do in respect of the Equality Act. Quite how they will do it is another matter, but I am sure we can expect some creative arguments from counsel in an appropriate case some time soon.

Of course, if your employer is a public authority, they are themselves bound by the Human Rights Act, and you can sue them in the civil courts (but not the employment tribunals) for breach of your article 9 rights without even mentioning indirect discrimination. You couldn’t have done this before Eweida. (Or rather, you could, but you would have lost.)

Another interesting point about Eweida is that the ECHR has given the UK courts a rather heavy-handed steer as to how they ought to be looking at objective justification arguments in relation to dress codes. The Court of Appeal had, they said, put far too much emphasis on BA’s desire to project a corporate image, and far too little weight on the fact that BA allowed Muslims and Sikhs a certain amount of latitude over their dress. Although it was legitimate to want a corporate uniform, the court felt that the stipulation in relation to jewellery was hardly of “crucial importance”. In future, courts and tribunals will find themselves presented with arguments that where a disputed item of clothing or jewellery has religious significance, a ban on grounds of “corporate image” will not be justified if the item is discreet and could not detract from professional appearance or harm the brand (see Eweida, paragraph 94).

If anyone has any other thoughts I’d love to hear them.

Actually, Eweida has a point but she’ll still lose today

Nadia Eweida has a point.

I’m not saying I agree with the way she has handled all this, nor with the “persecution of Christians” narrative with which she (and the religious groups that have funded her case) is now associated.

But the EAT and the Court of Appeal made a hash job of deciding her case. I have explained why in detail in my post, Making sense of the EHRC’s stance on religion. But essentially, rather than looking at whether the requirement not to wear visible jewellery had an impact on people sharing Ms Eweida’s belief, the court looked at the impact on Christians as a whole – most of whom, it appeared from the evidence, would not have minded BA’s dress code at all. The further problem was that Eweida’s legal team had failed to come up with any evidence of Christians at BA objecting to it at all. My point is that it is up to the claimant to define what her belief is. In her case it was a belief that she should wear a cross visibly as a message to other people. Was that belief “religious”? Certainly. Would people sharing that belief find themselves disadvantaged by BA’s policy? Definitely. The question would then have turned to justification – i.e. was BA’s dress code proportionate?

It may be that the legal team got so caught up in the persecution of Christians narrative that they failed to realise that they should have been focusing less on Christianity as a whole (which encompasses a whole range of different and often differing beliefs) and more on the specific belief that Ms Eweida herself was trying to manifest.

Be that as it may the Court of Appeal’s decision created bad law. The more so as it was followed in the Chaplin decision (which also features before the EHRC today). Today’s judgment, when it comes out, may prompt a re-examining of the case law. What I think it should not do, is result in a need to re-legislate.

Why not?

I think she’ll lose. That’s my prediction, for several reasons.

First, she has to get past the existing Strasbourg case law. In particular,  Stedman v United Kingdom [1997] 23 EHRR CD 168, in which the applicant had been dismissed for refusing to work on Sundays, that day being a day of rest under her religion. The European Commission on Human Rights decided that Article 9 was not engaged. It observed that, if an employee finds that their work conflicts with their religious beliefs, they are free to hand in their notice.

Stedman was followed in numerous cases in the ECtHR and in our domestic courts. The court may well re-examine it and decide it does not adequately protect religious freedom at all.  This would be a major departure from existing Human Rights thinking. This would be the sort of thing that one might genuinely use the word “landmark” to describe, without fear of hyperbole.

But would that make a difference to the existing case?

Assuming Ms Eweida manages to persuade the court her Article 9 rights have been interfered with, the UK government would have to show that the interference met the proportionality test. Not entirely coincidentally, our indirect discrimination law (which is based on the EU Equal Treatment Framework Directive) contains a proportionality test. Prima facie indirect discrimination is unlawful unless it is justified as being a proportionate means of achieving a legitimate aim. No one has yet, to my knowledge, managed to argue successfully that the way the EU/UK proportionality test works is out of step with the Convention. To my mind they are virtually the same for the most part.

In any case, I don’t believe the ECtHR’s role is to decide whether the dress code in this case was  proportionate, in the same way that a UK tribunal would do. The Convention allows states a “margin of appreciation” in implementing Convention rights. In other words, a certain latitude. To my mind, the proportionality test in our Equality Act 2010 (and the Religion and Belief Regulations that preceded it) are for the most part well within the margin of appreciation.  To say otherwise would be to call into question the EU Equal Treatment Directive as well. Provided the legal test is adequate, domestic courts and tribunals should be trusted to apply that test on the facts before them, without interference from the ECtHR (which does not decide questions of fact or even hear any evidence).

What is really up for grabs here is whether the initial hurdle is too high – in other words whether it is ok for our law to require claimants to show that they form part of a disadvantaged group (whether in the sense I have advocated, or the much harder test the Court of Appeal has set) or whether they ought to be able to jump straight to the proportionality part of the argument if they can show that they themselves have suffered a disadvantage based on their own personal belief. This is one of the things the EHRC has explored in their submissions.

Watch this space.

“Beecroft by the back door”: a practical guide to using the government’s “shares for rights” scheme to totally screw over your employees

The government’s “shares for rights” idea has been widely reported over the last few weeks and its fair to say I haven’t read a great many articles in favour of it. Employee ownership, yes. The Nuttall review earlier this year was all in favour of the government encouraging greater employee ownership, producing some toolkits (off-the-shelf template documents etc) and simplifying some company law rules on share buybacks. Even a statutory right for employees to request shares has been mooted, although the government have put that on the back burner for at least three years.

However, nowhere in that review (or in the subsequent government call for evidence) was it suggested that employees be asked to give up their unfair dismissal and redundancy rights (plus others) in order to benefit from a financial stake in the business. This is something the Chancellor has put in at the last minute, to puff up his “deregulatory” credentials at the party conference.

Since then, the suggestion has been doing the rounds that this is “Beecroft by the back door”: in other words, an attempt to introduce Adrian Beecroft’s controversial idea of compensated no-fault dismissal, whereby employers can simply choose to dismiss their employees for a one-off not very big payment, with no comeback.

Lest anyone should think this is mere scaremongering, I have set out below a practical guide to assist Beecroft wannabes to hire new staff with no strings attached. I give you 2 options:

1. The basic plan

Just insist that new employees accept shares in the company and let them make a small tax-free profit to compensate them for being heartlessly sacked in a few years.

But where’s the fun in that?

2. The fiendish plan.

This requires a bit more strategic planning.

• The scenario: you run a company (let’s call it “The Company” for the sake of argument – and I do like a good argument). You want to take on new employees, but you don’t want them to have unfair dismissal rights. You put an advert in the jobcentre saying “Employee owners wanted: £xxxk per year plus £2,000 signing on bonus payable in shares”.

• You then stroll back to the factory, having given your chauffeur the afternoon off as a result of these pesky Working Time Regulations, and wait for the hoards of hungry unemployed proles to start beating down your reinforced factory gate. When they arrive, select the ones you want, tell them they are all capitalists now, and give them the contracts to sign. If they won’t sign, give the jobs to someone else. (That’s what Gideon means when he says that “employee owner” status is a matter of choice).

• The contracts are for employment with a subsidiary company (for the sake of another argument, let’s call that “The Subsidiary”) which they will be given shares in. The employment contract says that they must sell their shares back when they leave, “for whatever reason”.

• The Subsidiary is a new company you have just bought off the shelf, wholly-owned by The Company. The Subsidiary has no premises, no assets (except some cash – I’ll explain that in a minute) and no outgoings except the salary costs of all its employee owners, which are conveniently funded by the Company anyway.

• Onto the cash: assuming you take on 10 employees, the Subsidiary needs to be worth at least £20,000 in order to give away 10 x £2,000 worth of shares, otherwise you can’t take advantage of Gideon’s little scheme the special employee-owner status. (You will also need to have some shares yourself, otherwise who is going to run the company?). Since the Subsidiary doesn’t actually have any goodwill or make any profit, you will have to inject some cash to make the balance sheet look healthy.

• What if you can’t afford to chuck away £20,000? Don’t worry, because you can just do it on paper. You can give £20,000 to the Subsidiary, and the Subsidiary can then “lend” that money back to you (at zero interest), meaning that the Subsidiary owns £20,000 worth of debt, making the balance sheet look healthy, and you get to keep the money to spend as you will. (You might need some of it to pay off your employees when you get rid of them, but don’t worry, you won’t need it all, as you will see.)

• So, so recap: you have 10 employee owners, you have given them each £2,000 of shares in their employer, The Subsidiary, which is effectively a service company providing employee services to your business, The Company. The shares must be non-voting shares: you don’t want the buggers taking over. But somebody must have the voting shares. Your Company does. And your Company then appoints you as the sole director of the Subsidiary.

• Here comes the fun bit: when you tire of your minions (as you surely will), you can cast them out onto the street without so much as a verbal warning. You ask your accountant (or your spouse, who is also your accountant and probably a shareholder in the Company too, for tax reasons) to value the Subsidiary. To your surprise, it is worth half what it was when you started; those Companies House late filing penalties are a bugger, and someone’s definitely been stealing from the stationary cupboard. A lot. Oh yes and you declared quite a big dividend last year but none of the non-voting shares carry the right to dividends so it all went straight back into your Company.

• So you send your former “employee owners” a cheque for about £1,000 each, and tell them in no uncertain terms to piss off. You then head off for champagne and oysters with your pals Adrian and Gideon, who congratulate you on your free-market attitude and your contribution to the ailing British economy.

I may have simplified things a bit. I know nothing about company valuation. But I’m sure there must be plenty of people prepared to give this sort of thing a try.

I haven’t even talked about the tax situation (which essentially is that the employees in my example pay income tax on £2,000 worth of shares when they are hired, but don’t see any money for several years, until they are dismissed, when they receive only £1,000. That’s poetry, that is.)

The government consultation (such as it is) on how to avoid “unintended consequences” of the new scheme ends tomorrow – 8 November. (Note: there was no consultation on whether “shares for rights” is a good idea. The government don’t like being told their ideas aren’t good ones, they just like to carry out a consultation to work out how best to minimise the collateral damage.) Now it could be that the government will realise the potential for abuse, and legislate to stop this happening (ie to stop employers benefiting from the relaxation of employment rights for employee owners if all they give out are worthless shares in service companies). But frankly, that’s just the sort of complex regulatory red tape that is bound to create satellite litigation in our already over-burdened tribunal system, and would get you drummed out of Whitehall in no time.

Protected conversations: all gone quiet

Amid the flurry of employment law announcements made by Vince Cable on Friday, Nick Clegg’s grand plan for workplace “protected conversations” was quietly laid to rest. To recap, this idea came out of the government’s (or was it the CBI’s?) fear that employers were basically letting poor performers and the over 65s carry on in their jobs too long because managers were scared of saying anything to them, for fear of being taken to a tribunal. Nick Clegg wanted to facilitate managers having a “frank discussion” with employees about workplace matters, specifically about poor performance or retirement, without it leading to litigation.

The idea initially received what I might generously call “mixed reviews”. A few people liked it, but by and large most of the stuff I read was from people who thought it was a bully’s charter, full of holes and generally a terrible idea for both employers and employees. I also think this.

Somehow along the way, the idea has now morphed into something very different. The Enterprise and Regulatory Reform Bill does have a provision in it that would enable a manager and employee to have a conversation without it being used in an unfair dismissal case in tribunal, but this would apply only to conversations about a settlement offer – i.e. the employer saying “We’ll give you £5,000 if you go quietly” (or the employee saying “I’ll take £50k and a reference if you please”). In other words, conversations that, if there were already a legal dispute underway, would probably fall within the without prejudice rule. Laurie Anstis has examined the proposal in his Work/Life/Law blog.

This is therefore not about managing performance at all, it is just about getting rid of someone. What had happened to Nick Clegg’s idea of the protected conversation as something which “would provide a safe mechanism which builds confidence in management and helps businesses make better decisions”? (I say “Nick Clegg’s idea”, but it’s unfair to blame him entirely: David Cameron put his name to it too, and in fact the idea originated with the CBI who felt that employers had been left high and dry after the repeal of retirement age laws, unable to discuss retirement plans with older workers.)

We were left wondering whether this was going to be introduced at a later date, possibly subject to further consultation, or just quietly put to sleep.

The announcement, such as it is, that this wider concept of the protected conversation has been dropped, is sort of sneaked out in the Ending the employment relationship consultation (at paragraphs 38-39 and 43-47), one of the many employment law documents published by BIS on Friday. The best explanation of the reasons for dropping the idea is tucked away on page 16 of the Regulatory Impact Assessment.

Under the heading “Rejected proposals” comes the following (NB underlining is my own):

Creating a new system of off-the-record workplace conversations 

We have considered whether it would be effective and proportionate to develop a legislative framework within which a broader range of workplace discussions were outside the scope of tribunal deliberations. Under this proposal, an employer and/or an employee would be able to instigate and engage in discussions about a range of management issues, including performance, and these conversations would be off the record and not admissible in tribunal evidence. This has been considered and rejected on the basis of legal analysis and discussions with stakeholders. A number of consequences and unintended impacts were identified.

Some stakeholders have suggested that providing protection to the content of discussions on a broader range of management and workforce planning issues, such as retirement, would be very helpful. It would not, however, be possible to give a broad safeguard without some notable limitations.

Given the requirement to comply with EU legislation on discrimination, it would not be possible, (nor desirable) to protect employers from discriminatory comments or actions. This could put businesses inadvertently at greater risk of an employment tribunal than the current position if they mistakenly believe that they are no longer bound by legislative requirements to avoid potentially discriminatory comments (although efforts would be made to be clear in guidance). To give themselves more certainty that they can demonstrate, if challenged, that they have acted appropriately and had not inadvertently discriminated, it is likely that many businesses will keep records of discussions, which, outside this legislative proposal they might not have done.

There are other issues which would also need to be addressed about how the system would work in practice which have significant possibility to add increased complexity and scope for confusion. For example, setting out the parameters within which the off-the-record protection for a conversation exists requires some kind of trigger or process which would mark the start and finish of the protection. The system would also need to be flexible enough to allow employers to have conversations when they need them, but prevent an employer making all discussions off the record, or using the simple fact of repeated off-the-record discussions as a means of pressurising an employee out of the organisation.

Clearly, the system would need some underpinning rules and procedures to ensure fairness and prevent misuse by either party, but we are mindful of past experience of overly-procedural interventions, such as the 3-stage procedure for discipline and grievance.10

Given the above, there is a high risk of satellite litigation around whether a conversation, or elements of it are admissible or not, and whether the process was followed correctly which adds to uncertainty and places costs on the Exchequer and the parties involved in that litigation.

There is also a risk that this system of would encourage managers to avoid managing effectively, choosing to discuss any potentially difficult, or even run of the mill, situations in off-the-record discussions. This could undermine employee confidence, engagement, motivation and commitment. In our policy discussions, a number of stakeholders raised this risk, and if realised, such a measure would have the opposite of its intended effect. Instead of facilitating open conversations with staff it could encourage the use of regulation around off-the-record conversations in place of ordinary workplace discussions.

Also, an entirely new concept and regime would require significantly more time and effort on the parts of employers, employees and the judiciary to understand and familiarise themselves with the requirements.

Or, as they put it rather more succinctly in the consultation paper itself:

“Some experts have warned that it could create a field day for lawyers.”

Well, quite. I really don’t have much to say in response to this, except that it’s nice to see someone in government has actually been listening for once.

I wonder how long that’ll last.

Paralympics on Channel 4: a grumble about the perception of disability

A bit off my normal topics today. After the excitement of the Olympics, which I have to say the BBC covered excellently from start to finish, I was looking forward to seeing what C4 would make of the Paralympics.

Red tape

“In accordance to the principles of Doublethink, it does not matter if the war is not real, or when it is, that victory is not possible. The war is not meant to be won. It is meant to be continuous.” (Nineteen-Eighty-Four, by George Orwell.)

Woodcock: press reporting of employment law issues reaches a new low

Yesterday brought a judgment from the Court of Appeal in Woodcock v Cumbria Primary Care Trust, a case that we employment lawyers had been waiting for for a while. Mr Woodcock had been sacked by an NHS trust where he had been chief executive, just before the time when his pension benefits would have gone up significantly had he stayed in post. He sued for age discrimination, and we all wanted to know what the court would make of it.

Not because we cared about Mr Woodcock. Or the NHS trust for that matter. We are only lawyers after all, it’s not like we’re real people, with feelings.