R v Secretary of State for Employment, Ex p Seymour-Smith (Seymour-Smith, Ex parte)

A directive cannot of itself alter legal relations between private individuals or impose obligations on an individual. Accordingly, European Communities Act 1972, section 2(4), does not permit domestic legislation to be disapplied in private litigation by reliance on a directive lacking horizontal direct effect.

A declaration of incompatibility should serve a practical public-law purpose. A declaration confined to incompatibility at a historical date is inappropriate where it neither affects the parties’ private rights nor establishes a present need to amend the law. It should not be granted merely as a possible foundation for a damages claim against the state.

A private employment claim ordinarily belongs in an industrial tribunal. An appellate court may nevertheless determine a Community-law issue exceptionally where it overlaps with issues already tried and the parties are prepared to address it.

Two employees were dismissed after more than one but less than two years’ employment. They challenged the Unfair Dismissal (Variation of Qualifying Period) Order 1985, which had extended the qualifying period for unfair-dismissal protection from one year to two years. They alleged that the requirement had a disproportionately adverse effect on women.

The Divisional Court, reported at [1995] ICR 889, found that discrimination had not been established and would not have quashed the Order. The Court of Appeal held that the Order was discriminatory and declared that it had been incompatible with the Equal Treatment Directive at the dates of the dismissals. It also permitted reliance on article 119 of the E.C. Treaty but granted no relief on that ground.

The Secretary of State appealed. The preliminary issues were whether the Directive could affect private unfair-dismissal claims, whether the declaration served any proper purpose, and whether the article 119 issues should be entertained in judicial-review proceedings or left to an industrial tribunal.

1. The Court of Appeal’s declaration was discharged, and further consideration of the appeal was adjourned pending a preliminary ruling from the European Court of Justice. Lord Hoffmann delivered the substantive speech. Lord Mustill, Lord Jauncey of Tullichettle, Lord Slynn of Hadley and Lord Nicholls of Birkenhead agreed.

2. Per Lord Hoffmann, it was acte clair that a directive, as such, cannot affect legal relations between private parties or impose obligations upon an individual. The employees could not use article 5 of the Equal Treatment Directive to disapply the two-year qualifying period in proceedings against their private employers. The distinction between relying on a directive as a source of rights and using it negatively to remove a restriction was unworkable. Under section 2 of the European Communities Act 1972, domestic legislation is affected only by Community rights and restrictions which are, in accordance with the Treaties, to be given legal effect without further enactment.

3. Per Lord Hoffmann, Marshall and Faccini Dori established the absence of horizontal direct effect. CIA Security International was distinguishable. It concerned whether domestic regulations which the state itself could not enforce could nevertheless be treated as law in private unfair-trade-practice litigation. It did not depart from the established jurisprudence.

4. Per Lord Hoffmann, the historical declaration made by the Court of Appeal served no proper purpose. It neither enabled the employees to pursue unfair-dismissal claims nor established that the legislation remained incompatible when judgment was given. The House, as an appellate court, could not make fresh findings about later conditions to support a declaration not sought below. Nor was such a declaration appropriate merely to provide a foundation for a state-liability claim under the Francovich principle.

5. Per Lord Hoffmann, a private claim for unfair-dismissal compensation should ordinarily be brought before an industrial tribunal, even where incompatibility between domestic and Community law arises. This case was exceptional. The article 119 issue had been introduced with leave in the Court of Appeal, substantially overlapped with issues already tried, could be resolved on the existing evidence, and had been fully prepared for argument before the House.

6. The House unanimously referred five questions concerning article 119: whether unfair-dismissal compensation was “pay”; whether qualifying conditions fell within article 119 or the Directive; the test for disparate effect; the relevant time for applying that test; and the conditions and evidence required for objective justification.

1. House of Lords: Unanimously discharged the Court of Appeal’s declaration and adjourned further consideration of the appeal pending answers from the European Court of Justice to five questions concerning article 119.

2. Court of Appeal: Held that the two-year qualifying period was discriminatory and declared that it was incompatible with the Equal Treatment Directive at the dates of the employees’ dismissals. It allowed article 119 to be added but made no reference and granted no relief under that article.

3. Divisional Court: Reported at [1995] ICR 889. Held that discrimination had not been established and indicated that it would not in any event have quashed the Unfair Dismissal (Variation of Qualifying Period) Order 1985.