Appeal No. EAT/407/93

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 24th November 1993
	Judgment delivered on 15th February 1994

	Before

	THE HONOURABLE MR JUSTICE MUMMERY (P)

	MRS R CHAPMAN

	MRS T MARSLAND

MRS J BHUDI & ORS	APPELLANTS

IMI REFINERS LTD	RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MISS L CHUDLEIGH
	(of Counsel)
	Messrs Robin Thompson & 	Partners
	McLaren Buildings
	2 Masshouse Circus
	Queensway
	BIRMINGHAM B4 7NR

For the Respondent	MR ADRIAN LYNCH
(of Counsel)
Messrs Highways
26 Highfield Road
Edgbaston
BIRMINGHAM B15 3DR

MR JUSTICE MUMMERY (PRESIDENT)       This is an appeal from the decision of the Industrial Tribunal held at Birmingham on 27th and 28th January and 9th February 1993.  The Tribunal dismissed complaints by six women applicants of indirect discrimination and victimisation contrary to the Sex Discrimination Act 1975.  The appeal, which is confined to the issue of indirect discrimination, raises a novel question on the impact, if any, of the recent decision of the European Court of Justice in Enderby v. Frenchay Health Authority [1993] IRLR 591 on the law of the United Kingdom relating to indirect discrimination on the grounds of sex.

	The European Court of Justice gave judgment in the Enderby case on 27th October 1993. Dr Enderby made her complaint under Article 119 of the Treaty of Rome which enshrines the principle of equal pay in the following terms:
		"Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work."

	The principal point of law argued on this appeal concerns the relevance of the reasoning and ruling of the European Court of Justice, regarding indirect discrimination in the context of an equal pay case brought under Article 119, to a case of indirect discrimination brought under the 1975 Act.

	Argument on that point necessarily involves an examination of the issues raised in the Enderby case both before this Tribunal ([1991] ICR 382) and before the Court of Appeal which made the reference to the European Court of Justice under Article 177 ([1992] IRLR 15.)

The Facts
	The facts of the case relevant to the complaint of indirect discrimination are simple.  Mrs Bhudi and the five other Applicants worked as part-time cleaners in the offices of IMI Refiners Ltd at Pleck, Walsall, West Midlands until 28th February 1992 when they were all dismissed.  Their hours of work were outside normal office hours, namely from 5.30 p.m. to 8.30 p.m., Mondays to Fridays.  The part-time cleaners were administered by a Personnel Manager, Miss Grainger, in a separate department.  She spent three hours a week administering their work arrangements.  The male general service cleaners, who all worked full time and during normal office hours, were in a different department.

	On 30th September 1991 IMI Refiners announced a "major restructuring programme" under which up to 170 employees would be made redundant.  On 11th October the Company called for volunteers for redundancy to come forward by 25th October.  The original decision was to reduce the numbers roughly by the same proportion in each department.  The scheme of redundancy was, therefore, to be done department by department.   However, an excess of volunteers from among the part-time women cleaners coming forward for voluntary redundancy prompted IMI Refiners to review the situation.

	Some time between 28th October and 5th November it was decided that the Company would contract out the part-time office cleaning function.  It was explained at a meeting with the part-time cleaners that there were problems with working outside normal office hours, recruitment and arranging cover.  Another consideration was the cost of maintaining the in-house service.  The Company considered that these cleaning services could be more efficiently organised if they were contracted out.  The Company claims that that was a commercial decision made by reference to reduction of demand on management resources in supervising and administering the service.  The position taken by the Company was that the "amount of administration required was disproportionate in terms of management resource in relation to the services provided" and that "difficulties were experienced with the fact that the cleaners' hours of work by necessity fell outside of normal office working hours". 

	There were further discussions, but no agreement was reached.

	On 14th February 1992 notice was given terminating the Applicants' employment with the Company on 28th February 1992 "due to redundancy."

	On 15th May 1992 complaints were made by the six Applicants to the Industrial Tribunal that, inter alia, their employer had acted in breach of S.1(1)(a) and (b) and S.6 of the 1975 Act. 

	Further facts were found by the Industrial Tribunal.

	(1)  Some of those made redundant were in fact prepared to be full time workers and to retrain, if necessary.
	(2)  No competitive tenders were obtained by the Company from contractors for cleaning services on 14th February 1992, but the Company had good reason to believe at that time that the cost of contracting out would be less than the direct costs of continuing to employ the part-time cleaners.
	(3)  The primary reason for contracting out was the saving of management administrative time.  In particular, it was perceived that there was considerably increased pressure on Miss Grainger.  She was a new Personnel Officer and relatively inexperienced.  The personnel function had previously been undertaken by first three and then two individuals.
	(4)  The Applicants were "cleaners who worked outside normal hours, giving rise to administrative difficulties whose work could be contracted out and thus substantially reducing the administrative inconvenience."

The Decision of the Industrial Tribunal
	On those findings of fact the Industrial Tribunal came to the following conclusions on the complaint of indirect discrimination:
	(1)  The Tribunal considered whether the Company had applied to the women Applicants a "requirement or condition" which it applied or would apply equally to a man within the meaning of S.1(1)(b) of the 1975 Act.  The Tribunal rejected the contention of the Applicants that the Company had applied a requirement or condition 		(a) relating to hours of work, in that only part-time employees were made compulsorily redundant, or
		(b) that, in order to be retained, the cleaners had to be full time workers.
	(2)  The Applicants were "not dismissed because they were part-time workers, but because they were office cleaners who worked outside normal hours, administered by the Personnel Department."
	(3)  There was no requirement or condition applied relating to the Applicants or their hours of work which was imposed on them and which was not imposed or would not have been imposed on a male employee.  It so happened that all the cleaners affected were female part-time workers, but part-time work was not a requirement or condition applied by the Company and the Company did not impose or insist on full time work.

	In view of the Industrial Tribunal's finding that there was no prima facie case of indirect discrimination, it did not deal with the issue of objective justification.  If this appeal is allowed and objective justification becomes a live issue, that is a matter which will have to be determined by the Industrial Tribunal.

The Sex Discrimination Act 1975
	The conclusions of the Tribunal must be examined by reference to the statutory language of S.1 and S.6 of the 1975 Act.

	Section 1 of the 1975 Act provides:
		"(1)  A person discriminates against a woman in any circumstances relevant for the purposes of this Act if -

			(a)  on the ground of her sex he treats her less favourably than he treats or would treat a man, or

			(b)  he applies to her a requirement or condition which he applies or would apply equally to a man but -

				(i)  which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and

				(ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and

				(iii) which is to her detriment because she cannot comply with it."
The relevant part of S.6 of the Act provides that:
		"(2)  It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her -

			(a)  ...

			(b)  by dismissing her, or subjecting her to any other detriment."

The Applicants' Submissions
	In outline the Applicants' case under S.1(1)(b) of the 1975 Act, on the facts found by the Industrial Tribunal, is as follows: 
	(1)  The Company applied a requirement or condition to the Applicants, namely hours of work.  In order to be retained in employment, the employees had to be employed full time, working during normal office hours and administered by a department, other than the Personnel Department.
	(2)  At the time of redundancy none of the Applicants could comply with that requirement or condition: they were all part-time employees working out of normal hours and were administered by the Personnel Department.
	(3)  The requirement or condition applied or would have applied equally to a man, but was such that the proportion of women who could comply with it was considerably smaller than the proportion of men who could comply with it.
	(4)  The application of the requirement or condition was to the detriment of the Applicants.  As they could not comply with the requirement or condition, they were made compulsorily redundant.

	These broad submissions were amplified by reference to the decision in the Enderby case which was given by the European Court of Justice after the decision of the Industrial Tribunal in this case.  The Applicants rely strongly on certain passages in Enderby from which they derive a number of points.  It is submitted that, although Enderby  is an equal pay case, it is also an example of indirect discrimination on grounds of sex.  Although the burden of proving facts in support of a claim of indirect discrimination is usually on the person alleging them, that burden may shift if there is a prima facie face of sex discrimination made out on the basis of valid statistics: for example, when a measure distinguishing between employees on the basis of their hours of work has in practice an adverse impact on substantially more members of one or other sex, this measure must be regarded as contrary to the objective pursued by Article 119.  In such a case it will be for the respondent to show that the difference in pay is based on objectively justified factors unrelated to any discrimination on the grounds of sex.

	Reliance was placed by the Applicants on particular passages in the Opinion of the Advocate-General under the heading "Indirect Discrimination".  The Advocate-General dealt with the contention that
		"Amongst the factual ingredients of indirect discrimination there must be a requirement or hurdle which is more difficult for women to meet or to overcome and therefore results in women being disadvantaged," (p.598)
He said that that was "only partly applicable to the nature of indirect discrimination" and added
		"In cases in which it is established that a group of women is being disadvantaged in comparison with a group of male workers, (doing work which is the same or of equal value in the same plant or undertaking) no additional factor, whereby unequal treatment is applied, need be required."
Later in his Opinion (at paragraph 34) the Advocate-General made some "basic comments" on the nature of indirect discrimination -
		"Attention should be directed less to the existence of a requirement or a hurdle by means of which women suffer a disadvantage, and more to the discriminatory result.  Against that background, it is part of the nature of indirect discrimination that a comparison between the sexual groups is carried out in order to determine the alleged discriminatory effect."

	On the basis of those particular observations the Applicants submit that the Industrial Tribunal did not approach the question of indirect discrimination correctly.

	The Applicants submitted that the Industrial Tribunal had erred in law in three respects. 
	 (1)  The Tribunal erred in failing to find that there was a requirement or condition applied in breach of S.1(1)(b) to the Applicants as out of hours workers administered by the Personnel Department.   The requirement or condition was that, in order to avoid selection for redundancy, employees should work during normal hours and not be administered by the Personnel Department.  That requirement or condition was an absolute bar which had an adverse impact on the Applicants who were all women and were the only cleaners selected for compulsory redundancy.
	(2)  Alternatively,  the Tribunal erred in law by applying the wrong test of indirect discrimination, namely whether a "requirement or condition" was applied to the Applicants.  The approach laid down in Enderby was that, in order to establish a case of indirect discrimination, it was not necessary for a requirement or condition to be identified and applied.  All of the part-time cleaners working out of normal hours were women who were made compulsorily redundant, whereas none of the full time cleaners working in normal hours, who were men, were made compulsorily redundant.  For a case of indirect discrimination to be made out it would be sufficient to show, as a fact, women generally were more likely than men to work out of normal hours as cleaners. 
	(3)  In any case, the Industrial Tribunal erred in law in indicating that there is no discrimination when the relevant requirement or condition would also have been imposed on a man.  The 1975 Act makes clear that indirect discrimination may occur where a requirement or condition is applied to both women and men, but with disproportionate impact.

The Company's Submissions
	It was submitted on behalf of the Company that the Industrial Tribunal had not erred in law in rejecting the Applicants complaints of indirect discrimination.
	(1)  As to the Applicants' submissions on the Enderby case, the observations of the Advocate-General on the nature of indirect discrimination were coloured both by the fact that Dr Enderby's claim was for equal pay based on the direct effect of Article 119 and by the particular argument advanced by the Respondents in that case; an argument that was accepted by the Employment Appeal Tribunal, but led the Court of Appeal to make a reference under Article 177.  In brief, the crucial argument of the Respondents was that, although Article 119 itself makes no mention of a requirement or condition being applied to the complainant, indirect discrimination involves the application of some criterion or the erection of some barrier which a considerably smaller percentage of women than men can meet or surmount.  The contention was that indirect discrimination could not be established merely by proof of valid statistics.  No criterion or barrier had been applied by the Respondent Health Authority in that case to cause an imbalance between men and women and therefore there was no claim under Article 119.  Those submissions were rejected both by the Advocate-General and by the Court.  The general comments relied on by the Applicants were made in the context of rejecting the Health Authority's submission.

	As was observed by the Court of Appeal in Enderby, cases which involve work of equal value pose special problems which are not present in the usual run of cases of indirect discrimination.  In equal pay cases it is very likely that the complainant will not wish even to be qualified to become a member of the advantaged group, so that the absence of a barrier preventing or hindering access may well be irrelevant in such cases.

	(2)  Even if Enderby supports the proposition that there is no need to establish discrimination by the application of a requirement or condition in other cases of indirect discrimination, the present state of the authorities in the House of Lords prevents the English courts from disregarding or eliminating from S.1(1)(b) of the 1975 Act the need to establish the requirement or condition mentioned in that provision.  The Industrial Tribunal had adopted the correct approach in insisting on the need to establish the application of a requirement or condition under S.1(1)(b); and the Industrial Tribunal correctly directed itself as to the terms of the definition of indirect discrimination in S.1(1)(b).
	(3)  The Tribunal rightly rejected the Applicants' case that they had suffered the detriment of dismissal as a result of being part-time workers, as opposed to full time workers, and that women generally (as opposed to men) could not comply with a requirement or condition of full time work.  That conclusion was one of fact and was not appealable.

	     The Tribunal correctly applied the statutory definition to the relevant facts found by it.  The rationale for the reorganisation of the work done by the Applicants, for contracting out the work and for consequential redundancies lay in the fact that the Applicants all worked outside normal office hours.  The fact that those hours happen to be part-time was wholly unconnected with the decision to dismiss the Applicants for redundancy.  The Applicants had failed to establish that the cause of their being made redundant was that they were part-time workers: the cause of their dismissal was that they worked outside normal office hours with resultant administrative problems faced by the Company.  The distinction between full time and part-time work was not relevant to those redundancies.  It was not a case of applying, as a criterion for redundancy, selection of part-time staff before full time staff.

	     The Tribunal correctly held that the Company had not applied any indirect discriminatory requirement or condition.  It simply decided that the administrative problem created by the work performed out of hours could be solved by contracting out that work.  That was a question of fact for the Industrial Tribunal to decide and there is no appeal on that point to the Employment Appeal Tribunal.

	(4)  The Applicants did not put any case before the Industrial Tribunal on the application of a requirement or condition relating to working outside normal office hours.  The Applicants' case was that part-time workers had suffered discriminatory detriment.  There was no evidence adduced on the issue of employment outside normal office hours, as to whether women, as opposed to men, find it more difficult to work during office hours, as opposed to outside normal office hours.  Indeed, it is inherently unlikely that women generally cannot work even part-time within normal office hours.  The Tribunal had therefore dealt with the only issue before it.  It was no part of the Tribunal's function to decide an issue or introduce an argument which was not relied upon by the parties.  It was now too late to introduce this issue for the first time on the appeal.  It would be wrong to remit the matter to the Industrial Tribunal for a new case to be based on out of hours work.
CONCLUSIONS       

	(1)	The Enderby Point
	In our judgment, the Industrial Tribunal did not err in law in its approach to the question of indirect discrimination on the basis that it was essential for the Applicants to show that the Company had applied a requirement or condition to them.  That is the approach prescribed in S.1(1)(b) of the 1975 Act.  It is not suggested that this approach is inconsistent with any express provision of the Equal Treatment Directive or with any decision of the European Court of Justice, other than Enderby.  The crucial question is whether this Tribunal, as a court in the United Kingdom, is under an obligation to construe S.1(1)(b) in such a way as to disregard the express provision relating to a "requirement or condition"?  In our view, there are at least two reasons why there is no such obligation.
	(a)  We accept the submission of the Company that the decision in Enderby was solely concerned with the interpretation and application of Article 119 and the Equal Pay Directive (75/117/EEC).  Although the provisions relating to equal pay are an aspect of indirect discrimination, different considerations apply.  The provisions relevant to equal pay have not been drafted so as to impose expressly the onus of establishing   of a requirement or condition which a significantly smaller number of women than men can surmount.  We recognise that it may be held in a later case, at a higher level, either in the United Kingdom, or more probably, in the European Court of Justice, that the approach taken by the Advocate-General in Enderby should also apply in the case of the Equal Treatment Directive and national provisions enacted to implement the Directive.  It is not necessary for us to express a view on this now or at this level of decision.  Further, it is important to note that the Equal Treatment Directive has no direct effect in the present case.
	(b)  According to the present state of the authorities in the House of Lords, there is no obligation on a national court to distort the meaning of a statutory provision in domestic legislation in order to enforce against an individual a Community Directive which has no direct effect as between individuals.  The United Kingdom courts are under an obligation to construe legislation covered by Community Directive so as to accord with the interpretation of the Directive as laid down by the European Court, if that can be done without distorting the meaning of the domestic legislation.  This is so whether the domestic legislation came before or after the Directive.  It is, however, clear that the court should only construe domesitc legislation to accord with the Directive if it is possible to do so.  The domestic legislation must be open to an interpretation which is consistent with the Directive, whether or not it is also open to an interpretation which is inconsistent with it.  In the present case it does not appear to us that the provision in S.1(1)(b) relating to a "requirement or condition" is open to divergent interpretations.  Thus, even if, after Enderby, it is the case that under EEC law indirect discrimination can be established without the necessity for showing the application of a "requirement or condition" it is not possible to construe S.1(1)(b) so as to accord with the EEC position.  On this point we apply the principles laid down by the House of Lords in Duke v. GEC Reliance Ltd [1988] ICR 339 at 352; Finnegan v. Clowney Youth Training Programme Ltd [1990] ICR 462; and Webb v. Emo Air Cargo Ltd [1993] ICR 175 at 186 and 187.
	
	(2)  The "requirement or condition" point
	We have, however, reached the conclusion that the Industrial Tribunal did err in law in holding that no relevant "requirement or condition" was applied to the Applicants.  The Tribunal correctly stated that it first had to consider the nature of the requirement or condition.  It rejected the contention that there was a requirement or condition applied in the redundancy exercise in relation to part-time employment as against full time employment.  In relation to the redundancy exercise the Tribunal held that the Applicants were not dismissed or retained, as the case may be, in consequence of the application of a requirement or condition relating to part-time or full time employment.  Having rejected that contention the Tribunal held that the Applicants were dismissed, not because they were part-time, but "because they were office cleaners who worked outside normal hours".  This finding was expanded in paragraph 15 of the Decision to refer to the administrative inconvenience in working outside normal hours and to the perceived advantages in contracting out such work.
	It does not appear, however, that the Tribunal addressed itself to the further questions which arose out of the finding of the reasons for dismissal.  The further questions are -
		(1)  Was a requirement or condition applied by the Company relating to employees working out of normal hours and administered by the Personnel Department?
		(2)  If so, was that requirement or condition such that the proportion of women who had complied with was considerably smaller than the proportion of men who complied with it?  In answering that question it might be relevant to consider whether, for social or biological reasons, women are more likely than men to find it difficult to work in normal hours of work.

	If the Industrial Tribunal answers these two questions in the affirmative, it will then have to consider also whether the Company can show that the requirement or condition was justified irrespective of the sex of the persons to whom it was applied: S.1(1)(b)(ii).

     	We are unable to accept the Company's argument that this is a new issue which should not be allowed to be raised on appeal or be remitted for further evidence and argument before the Tribunal.  It is clear from the notices of application that there was an issue before the Industrial Tribunal as to whether the Company was in breach of S.1(1)(b).  The issue relating to working outside normal hours arose from the Industrial Tribunal's own finding of fact.  Unfortunately, the consequences of those findings of fact were not followed through argument or findings.  Concentration on the part-time/full time argument seems to have led those who were arguing the case, as well as the Tribunal, to overlook the fact that, if the Applicants were, as the Tribunal held, dismissed because they were working outside normal hours, questions would arise as to whether a requirement or condition relating to working in or out of normal hours had been applied to the Applicants, with a disporportionate impact on them.

	The appeal will, therefore, be allowed and the matter will be remitted to the Industrial Tribunal to deal with the two further questions, as well as a possible question of objective justification.