Santosh Alexander Thukalil & Anor v Kamalammal Poonnamamnal Kattuvila Puthenveettil & Anor

The Employment Appeal Tribunal dismissed the appellants' challenge to a tribunal decision disapplying regulation 2(2) of the National Minimum Wage Regulations 1999. The tribunal had found that the family and domestic worker exception (regulation 2(2)) produced unjustified indirect discrimination against women and was therefore incompatible with directly effective EU law rights under article 157 TFEU. The EAT held that article 157 applies to unjustified indirect discrimination producing unequal pay, that the respondents' "single source" and comparator arguments did not prevent article 157 applying to a statutory measure, and that the tribunal was entitled to disapply the regulation under the then-operative European Communities Act 1972. The tribunal's factual findings on disparate impact and the failure of justification were not disturbed.

Background and procedural posture. The claimant, a domestic worker employed in the respondents' home from 2005 to 2013, brought claims including unauthorised deductions from wages, relying on entitlement to the national minimum wage. The respondents relied on the family and domestic worker exception in regulation 2(2) of the National Minimum Wage Regulations 1999 to deny minimum wage entitlement. After initial determinations and a remittal, a newly constituted Employment Tribunal (London South) heard a full challenge to regulation 2(2) and disapplied it, declaring the claimant entitled to the national minimum wage for the relevant period. The respondents appealed to the Employment Appeal Tribunal on a limited ground questioning whether article 157 TFEU applied.

Nature of the claim / relief sought. The claim below sought payment to the national minimum wage (unauthorised deduction claim) and a declaration that regulation 2(2) should be disapplied for incompatibility with directly effective EU law.

Issues framed by the tribunal and EAT. The principal issues were (i) whether regulation 2(2) had a prima facie indirectly discriminatory adverse impact on women, (ii) whether any legitimate aims advanced by the Secretary of State justified the measure and, if so, whether the measure was proportionate, (iii) whether unjustified indirect discrimination was incompatible with article 157 TFEU and/or EU non-discrimination principles and the Directive, and (iv) remedy including disapplication and a declaration of entitlement.

Court’s reasoning and conclusions. The tribunal found on evidence that regulation 2(2) had a strong adverse disparate impact on women and that the Secretary of State had not shown that the measure was a proportionate means of achieving legitimate aims; that unjustified indirect discrimination therefore existed. The EAT concluded that article 157 TFEU (previously article 119/141) applies to cases of unequal pay caused by indirectly discriminatory measures and is directly effective; consequently the tribunal was bound under the then-operative section 2(1) of the European Communities Act 1972 to disapply regulation 2(2). The EAT rejected the respondents' argument that article 157 required a male comparator or a "single source" employer capable of remedying the inequality, holding that where the statutory source of inequality is the regulation itself the remedy may lie against that statutory measure. The EAT noted but did not decide the separate argument based on general principles or the EU Charter, preferring to resolve the appeal on article 157. The EAT observed that the decision was made during the Brexit implementation period when tribunals retained power to disapply domestic provisions incompatible with directly effective EU rights; it noted that that power no longer exists for fresh cases after IP completion day.

Appeal dismissed. The EAT held that the Employment Tribunal was correct to disapply regulation 2(2) of the National Minimum Wage Regulations 1999 because it produced unjustified indirect discrimination against women and was incompatible with the claimant’s directly effective EU law right under article 157 TFEU. The tribunal’s findings on disparate impact and failure of justification were upheld, and the respondents’ "single source" and comparator arguments were rejected.

Originated in the Employment Tribunal (London South). An earlier Employment Appeal Tribunal remitted aspects of the case to a newly constituted tribunal. The present appeal was decided by the Employment Appeal Tribunal, neutral citation [2023] EAT 47.