St Helens Borough Council v Derbyshire and others

The House of Lords allowed the appellants' appeal and restored the Employment Tribunal's finding that letters sent by the employer to pressurise equal pay claimants constituted victimisation under section 4(1)(a) read with section 6(2)(b) of the Sex Discrimination Act 1975. The tribunal had found that the letters treated the claimants less favourably than employees who had settled and caused a detriment of intimidation, distress and odium. The House held that such conduct was "by reason that" the employees had brought and continued equal pay proceedings because the continuance of the proceedings was the efficient cause of the letters.

The court emphasised that employers retain a margin to protect their legitimate interests and to seek settlement, but must not take measures that would seriously jeopardise the employee's right to pursue judicial remedies. The decision clarified the proper focus on whether an objective detriment has occurred (whether a reasonable employee might regard the treatment as detrimental) and explained the proper role of the previous "honest and reasonable" formulation from Khan, which should not displace the statutory test or European law requirements.

This appeal concerned 39 women employees who pursued equal pay claims against St Helens Borough Council. While most claimants settled, these 39 continued to tribunal proceedings. Two letters were sent by the Council shortly before hearing: a widely circulated letter to all catering staff describing the severe consequences if the claims succeeded and a separate letter sent only to the 39 appellants reiterating concerns and a settlement offer. The appellants claimed victimisation under section 4(1)(a) and section 6(2)(b) of the Sex Discrimination Act 1975, alleging that the letters constituted less favourable treatment "by reason that" they had brought or continued Equal Pay Act proceedings.

The case reached the House of Lords after decisions at first instance, a successful appeal to the Employment Appeal Tribunal and a majority reversal by the Court of Appeal ([2005] EWCA Civ 977; [2006] ICR 90). The central issues were:

• whether the letters amounted to "less favourable" treatment and caused a "detriment" within the meaning of the Act;
• whether the treatment was "by reason that" the claimants had brought or continued proceedings; and
• how earlier authorities (notably Cornelius and Chief Constable of the West Yorkshire Police v Khan) and European law (notably Coote v Granada) inform the analysis, in particular the place, if any, for an "honest and reasonable" employer test.

The House concluded that the Employment Tribunal's factual findings that the letters caused distress, odium and intimidation were open to it and capable of amounting to detriment. On causation, the tribunal reasonably found that the continuance of the claims was the efficient cause of the letters. The House explained that while employers may reasonably seek to protect their position or to settle claims, such conduct must be assessed from the standpoint of the employee's right to pursue judicial remedies and whether the employer's conduct would or might be regarded by a reasonable employee as detrimental. The House accepted that the language in Khan about employers "acting honestly and reasonably" has practical force but stressed that it should not supplant the statutory test or the emphasis given by the European Court of Justice to the employee's perspective and the need to avoid measures that would deter pursuit of claims.

Relief sought: declarations and remedies for unlawful victimisation under the Sex Discrimination Act 1975. The House allowed the appeal, restored the Employment Tribunal's decision that the letters amounted to victimisation and awarded costs in the Court of Appeal and House of Lords in favour of the appellants.

Appeal allowed. The House restored the Employment Tribunal's decision that the Council's letters constituted unlawful victimisation under section 4(1)(a) read with section 6(2)(b) of the Sex Discrimination Act 1975 because they treated the claimants less favourably and caused a detriment, and were sent because the claimants had brought and continued equal pay proceedings; employers retain scope to protect and settle but must not take steps that would seriously jeopardise an employee's right to pursue judicial remedies.

Employment Tribunal (initial decision on facts and law): found victimisation; Employment Appeal Tribunal: upheld the Tribunal; Court of Appeal ([2005] EWCA Civ 977; [2006] ICR 90): majority allowed Council's appeal and remitted the matter to the Tribunal for reconsideration; House of Lords ([2007] UKHL 16): allowed appellants' appeal and restored the Employment Tribunal decision.