Naeem v The Secretary of State for Justice

Where an apparently neutral provision, criterion or practice (PCP) results in a disparity between groups, an employer may rebut a prima facie claim of indirect discrimination by showing that the causal reason for the disparity is a non-discriminatory historical or structural factor rather than the PCP itself; it is not required to justify all pay differentials in the absence of an element of discrimination.

The appellant, a Muslim chaplain employed in the Prison Service, complained of indirect discrimination arising from the operation of a lengthy incremental pay band which produced lower average basic pay for Muslim chaplains than for Christian chaplains. The Employment Tribunal found prima facie indirect discrimination but justified the PCP; the Employment Appeal Tribunal dismissed the appeal on the basis that there was no prima facie indirect discrimination. The Court of Appeal considered whether the length-of-service feature of the pay system (the PCP) put Muslim chaplains at a particular disadvantage when the shorter average service of Muslim chaplains derived from a non-discriminatory historical absence of employed Muslim chaplains before 2002, and dismissed the appeal, holding that the employer may show the causal reason for the disparity is non-discriminatory.

1. Disposition: The appeal is dismissed. The Employment Tribunal’s and Employment Appeal Tribunal’s conclusions were examined, and it was unnecessary to decide justification because prima facie indirect discrimination was not made out on the correct analysis.
2. Identifying the PCP: The relevant PCP complained of is the relationship between basic pay and length of service (pay progression linked to length of service), not the whole pay-setting machinery including performance elements or band-restructuring exercises. The PCP must be the feature said to cause the disadvantage [paras 18–19].
3. Proof of particular disadvantage (s.19(2)(b)): It is necessary to consider the effect of the PCP on the actual population to which it is applied, but the enquiry does not end with the observation of a statistical disparity. The statutory inquiry is causal: the court may and should investigate why the disparity exists; an apparent disparate impact may be attributable to factors other than the PCP itself [paras 21–23, 29–31].
4. Employer’s ability to rebut: An employer can rebut a claim of prima facie indirect discrimination by showing that the real cause of the disparity is a non-discriminatory factor (for example, a historical lack of recruitment) and not the PCP. Where the disparity is shown to result from such non-discriminatory causes, the PCP does not ‘‘put’’ the protected group at a particular disadvantage within the meaning of s.19(2)(b) [paras 22–24, 27–28].
5. Interaction with section 23 and pool comparisons: Section 23 (no material difference between comparison cases) reinforces the requirement that like must be compared with like, but it is not the preferred analytical route; the correct approach is to address causation under s.19 itself. Reliance on elaborate ‘‘pool’’ jurisprudence is unnecessary where the causal analysis under s.19 provides the answer [paras 32–35].
6. Authorities: The court’s analysis is consistent with the House of Lords’ approach in Wallace and Marshall and the subsequent Armstrong/Gibson line of authorities which allow employers to show disparities arise from non-discriminatory factors. The decision in Essop (as decided by the EAT) was not followed; the Court regarded the reasoning in Essop as overtaken by subsequent appellate authorities and its own treatment of the role of reasons in proving group disadvantage [paras 21, 29–31, 37–39].
7. Application to the facts: The shorter average service of Muslim chaplains was shown by the employer to be attributable to the absence of employed Muslim chaplains before 2002, a non-discriminatory historical factor (the perceived lack of need). On that basis the length-of-service PCP did not put Muslim chaplains at a particular disadvantage for the purposes of s.19(2)(b), and the indirect discrimination claim fails [paras 6–9, 22, 36–39].
8. Order: Appeal dismissed. (It was unnecessary to decide or disturb the ET’s findings on justification.)

• Employment Appeal Tribunal: Appeal dismissed (judgment 15 January 2014). The EAT held there was no prima facie indirect discrimination on the facts before it.
• Employment Tribunal: Claimant established prima facie indirect discrimination but the tribunal held the PCP was justified; reserved judgment promulgated 12 July 2012.