Who could have imagined that a case about the height at which electricity meters were fixed in Bulgaria might transform UK employment law? The judgement of the European Court of Justice ("ECJ") in CHEZ Razpredelenie Bulgaria AD v Komisia za zashita ot diskriminatsias concerns the supply of goods and services rather than employment, yet has profound implications for protection against indirect discrimination in the workplace.

Indirect discrimination is where an apparent neutral practice has an effect that particularly disadvantages people with a particular protected characteristic (e.g. sex, race, age, disability). Under the Equality Act 2010, an indirect discrimination claim is possible only if the claimant has the same characteristics as the protected group. In essence, the ECJ's judgement seems to remove this requirement, so that individuals who suffer alongside a disadvantaged group without sharing the relevant protected characteristic now fall within the scope of indirect discrimination.

The case concerned an electricity supplier which placed electricity meters at an inaccessible height (six metres) in a particular district of a Bulgarian town (the normal height being 1.7 metres). The company's ostensible purpose was to prevent crime, on account of high levels of meter tampering and unlawful connections to the network in this area. The district in question was populated mainly by people of Roma ethnic origin.

Pausing there, this does at first blush appear to be an instance of indirect discrimination - a policy applied in the same way to everybody in the district, so they could not readily check their electricity usage, but which put Roma people at a particular disadvantage. Reading between the lines, however, there appear strong grounds for asserting that the electricity supplier's action in fact amounted to direct discrimination.

In particular, it appears the company only applied the six-metre policy in this and other "Roma districts". This was the principal factor in applying the policy and it was clear the company thought it was mainly Roma people who were making unlawful connnections. It had failed to adduce evidence of the alleged damage and tampering and had apparently carried out no objective analysis of the extent of the problem in the various districts to which it supplied electricity. Accordingly, there are quite strong indications that the company's approach was tainted by racial stereotyping, which would normally indicate direct discrimination.

Nonetheless, indirect discrimination is the principal way in which this case has been pursued and provides the focus of the ECJ's judgement. The important factor here is the claimant, Ms Nikolova, was a woman of non-Roma origin who ran a shop in the district. She brought a race discrimination claim asserting that she suffered the same disadvantage as her Roma neighbours.

Earlier this year, the Advocate General ("AG") of the ECJ gave her advisory opinion that the indirect discrimination provisions of the EU Race Discrimination Directive apply irrespective of the racial or ethnic origin of the person suffering the particular disadvantage. She referred to a previous ECJ ruling (Coleman v Attridge Law [2008] IRLR 722) establishing that "associative discrimination" was prohibited by EU law, which meant in that case that a mother of a disabled child could claim direct discrimination on grounds of her child's disability. The AG considered that this approach could be extended to indirect discrimination, where a practice has a disparate impact on a protected group but also causes "collateral damage". Other persons disadvantaged by association with the protected characteristics could potentially claim indirect discrimnation.

Perhaps surprisingly, the ECJ has now broadly agreed with the AG's approach, albeit not using the same terminology. It ruled that the Race Discrimination Directive extends to persons who, although not themselves a member of the racial or ethnic group concerned, nevertheless suffer "less favourable treatment" (i.e. direct discrimination) or a "particular disadvantage" (i.e. indirect discrimination) on the ground of that race or ethnic origin.

Crucially the ECJ observed that the wording of the Directive permitted this wide interpretation. It defines indirect discrimination as coming where an apparently neutral provision, criterion or practice ("PCP") would put persons of a racial or ethnic origin at a particular disadvantage compared with other persons (unless that PCP is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary). There is nothing in this wording stating that a victim of indirect discrimination must share the race or ethnic origin of the protected group.

While this case was concerned with the Race Discrimination Directive, a very similar definition of indirect discrimination is used in EU equality directives. Accordingly, it is very likely that the ECJ's ruling will apply in relation to other protected characteristics.

Going back to whether the facts of this case could give rise to a claim of direct discrimination, the AG's opinion had poured cold water on this possibility, regarding direct discrimination as not relevant. In contrast, the ECJ ruled that direct discrimination could be established if there was evidence before the national court that the measure was introduced and/or maintained for reasons relating to the ethnic origin of most of the inhabitants of the district. As noted above, this may be a more appropriate basis for the national court to decide this particular case than indirect discrimination.

Implications for UK discrimination law

The concept of indirect discrimination is implemented in the UK by section 19 of the Equality Act, which plainly requires the claimant to share the relevant protected characteristic. It explicitly rules out a claim of indirect discrimination by way of "collateral damage" (as the AG memorably put it).

Nonetheless, as we have seen in several employment contexts, Employment Tribunals are obliged to interpret UK statutory provisions consistently with any underlying EU directive so far as possible. It is surely only a matter of time before we start to see claims arguing that the Equality Act should be interpreted "purposively" in line with the ECJ's ruling in CHEZ Razpredelenie so as to remove the requirement for a claimant to have the relevant protected characteristic.

UK case law on indirect discrimination is also inconsistent with the ECJ's approach. For example, in Home Office v Essop [2015] IRLR 724, the Court of Appeal recently ruled that in order to establish indirect discrimination claimants have to show both why the PCP in question disadvantages the group sharing the protected characteristic and that they suffered the same disadvantage. Claimants will now argue that cases such as Essop are wrong in principle and should not be followed.

The ECJ's judgement certainly allows plentiful scope for creative indirect discrimination claims based on employees suffering alongside an actual or hypothetical protected group while not having the relevant protected characteristic. A couple of examples:

  1. Suppose an employer has a PCP that staff are required to work on Saturdays. This is indirectly discriminatory against Jewish employees who observe the Sabbath (and so unlawful unless objectively justified). It seems that other employees disaffected by Saturday working could potentially pursue an indirect discrimination claim.
  2. A company has a full-time working requirement and so rejects a male employee's request to work part time for childcare reasons. The disadvantaged group for indirect discrimination purposes is women, because statistically they have a greater role than men in raising children. Yet the male employee in question is detrimentally affected in exactly the same way by the full-time-working requirement and so could now pursue a claim.

It is not difficult to think of other examples. Employers may find themselves facing indirect discrimination claims from unexpected quarters, which may require them to objectively justify particular PCPs in unpredictable contexts.

Will the UK Governmnent do anything to resolve the apparent inconsistency between UK law and EU law on this point? In theory, it could itself face claims for damages if Tribunals decide that section 19 of the Equality Act cannot be interpreted so as to allow an indirect discrimination claim in these circumstances. But on previous form, the Government is unliekly to take steps to amend the legislation and will simply wait and see how the issue pans out in the Employment Tribunals.

What about direct Discrimination?

As already mentioned, the ECJ acknowledged that the facts of CHEZ Razpredelenie could be categorised as direct discrimination, depending on the evidence before the national court. It is quite clear that UK law would allow for such a claim in this type of case if direct discrimination could be established - on this point there is no discrepancy between the UK position and the ECJ's judgement. The definition of direct discrimination in section 13 of the Equality Act merely requires claimants to show that they have suffered less favourable treatment "because of a protected characteristic". They do not need to share the characteristic in question.

A key advantage for claimants in framing their case as direct discrimination is that the employer has no defence of ojective justification. In many situations, of course, employees may decide to plead direct and indirect discrimination in the alternative. Interestingly, there is UK Supreme Court authority that direct and indirect discrimination are "mutually exclusive". It is not open to an Employment tribunal to find that the same factual matrix gives rise to both types of discrimination simultaneously (R (on the application of E) v Governing Body of JFS and the admission appeals panel of JFS [2010] IRLR 136). Arguably, though, it is implicit in the ECJ's judgement in Chez Razpredelenie that the Bulgarian court could potentially uphold Ms Nikolova's claim on both grounds - so this may be another area in which UK law and EU law are inconsistent.

How should employers respond?

This case marks a potentially significant extension of the scope of indirect discrimination, which in turn means that employers' policies, rules, decisions and practices will be more vulnerable to legal challenge. This suggests a need for heightened scrutiny of any practice which might be alleged to operate to the disadvantage of employees with a particular characteristic - bearing in mind that a challenge could come from someone not possessing that characteristic. It will now be  more important than ever for employers to consider whether PCPs can be objectively justified and the evidence that would be required to establsih that defence.

Predicting where claims mights arise is especially problematic given that the definition of indirect discrimination applies where a PCP puts "or would put" persons with the characteristic at a disadvantage. This enables a claimant to assert indirect discrimination on the basis of a hypothetical protected group to which he or she would not even belong.

Pending further clarification from case law, however, it is probably premature for employers to consider reviewing their equality training and policies to indicate the potentially wider scope of indirect discrimination and the novel circumstances in which challenges and claims might arise. 

The full ramifications of the ECJ's judgement will only become apparent over time. But for anyone concerned about the future development of discrimination law, it's electrifying stuff.

About the author

Richard Lister is a barrister and an employment law specialist with Lewis Silkin LLP. Prior to joining Lewis Silkin, he was editor of two of the UK's leading employment law journals.