Appeal No.	 EAT/787/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 20 January 1997
Judgment delivered on 31 January 1997

Before
THE HONOURABLE MR JUSTICE KIRKWOOD
LORD GLADWIN OF CLEE CBE JP
MRS J M MATTHIAS

THE NATIONAL FEDERATION OF 
SELF EMPLOYED AND SMALL BUSINESSES LTD.	APPELLANTS

MRS E PHILPOTT	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	DAPHNE ROMNEY
(of Counsel)
Messrs Wallace Robinson & Morgan
Solicitors
4 Drury Lane
Solihull
West Midlands
B91 3BD	
For the Respondent	MICHAEL FORD
(of Counsel)
Messrs Harman & Harman
Solicitors
10 Station Road West
Canterbury
Kent
CT2 8AN	

	MR JUSTICE KIRKWOOD:   This appeal was heard on 20th January 1997 and, having had the opportunity to deliberate upon the arguments, we now hand down this judgment.

	By a decision upon a preliminary hearing, registered on 5th June 1996, an Industrial Tribunal at Ashford found as a fact and decided that the National Federation of Self Employed and Small Businesses Ltd is an “organisation of employers” within the meaning of section 12 of the Sex Discrimination Act 1975.

	The National Federation appeals against that finding and decision.

	The issue came before the Industrial Tribunal in this way. Mrs Philpott and her husband were members of the National Federation for 20 years. In 1995, the National Council of the Federation conducted some disciplinary process against Mrs Philpott’s husband and made a determination against which he appealed. Mrs Philpott was not in any way implicated in the allegations that led to that disciplinary process. She represented her husband in it; but for herself she says that she was a member in good standing and with an unblemished record.

	In January 1996 the National Council of the Federation decided not to renew the membership of Mrs Philpott or her husband and notified them of that.

	Mrs Philpott maintains that she has been discriminated against on the ground of her sex and marital status. Accordingly, on 26th March 1996 she made a complaint to the Central Office of Industrial Tribunals under section 12 of the Sex Discrimination Act 1975.

	The relevant provisions of section 12 are in these terms:

“(1)	This section applies to an organisation of workers, an organisation of employers, or any other organisation whose members carry on a particular profession or trade for the purposes of which the organisation exists.
	(2)	...
	(3)	It is unlawful for an organisation to which this section applies, in the case of a woman who is a member of the organisation, to discriminate against her -
		(a)	...
		(b)	by depriving her of membership, ...”

	In response, the National Federation took the preliminary point that it is not an organisation to which section 12 applies. The consequence of that contention, if correct, is that the National Federation of Self Employed and Small Businesses Ltd falls outside the scope of the Sex Discrimination Act 1975. Also, incidentally and analogously, it falls outside the scope of the Race Relations Act 1976 since section 11(1) of that Act is in terms identical to that section 12(1) of the Sex Discrimination Act 1975.

	The appellants’ two-fold argument may be summarised in this way. First, that whilst a majority of its members are in fact employers, a minority are self-employed people who have no employees. Thus, it fails to qualify as an organisation of employers on a “membership test”. Secondly, the purpose of formation of the organisation was not primarily to do with the interests of members as employers but with their interests as business people. Accordingly, the National Federation fails to qualify on a “purpose test”.

	The National Federation of Self Employed and Small Businesses Ltd was formed in 1974 as a protest and lobby organisation and its establishment at that time was precipitated by a collective desire to protest about Class 4 National Insurance contributions which its members saw as an extra tax on the self-employed.

	Its declared objects are, however, wider than that. The first listed in the Memorandum of Association was “To protect, promote and further the interests of persons who are self-employed or direct or control small businesses and to provide a national voice and platform for such persons”.

	Eligibility for membership to the National Federation is provided for in its Rules in these terms:

“Eligibility. Membership of the Federation shall be open to any person who is self employed or who otherwise directs or controls a small business or who is otherwise acceptable to the Council.”

	We were told that the National Federation has a membership of 200,000 and we were further told that the majority of members are, in fact, employers although most of those employ 10 or fewer persons.

	There is no current statutory definition of an “organisation of employers”. 

	The phrase “employers association” is defined in section 122(1) of the Trade Union and Labour Relations (Consolidation) Act 1992. That is a separate and distinct Act of Parliament with quite different purposes than the Sex Discrimination Act 1975; and the National Federation is not, we understand, an “employers association” within the meaning of the 1992 Act. Nevertheless, it is worthy of note that an “employers association” within the meaning of that Act means:

 “... an organisation (whether temporary or permanent)-
(a)	which consists wholly or mainly [our emphasis] of employers or individual owners of undertakings of one or more descriptions ...”

The analogy becomes more interesting still when that definition is traced back through a very similar definition in section 28(2) Trade Union and Labour Relations Act 1974 and then further back to the Industrial Relations Act 1971 which was repealed by the 1974 Act. In section 62(1) of the 1971 Act the phrase defined is “organisation of employers”. 

“In this Act ‘organisation of employers’ means an organisation (whether to permanent or temporary) ... 
(a)	Consists wholly or mainly [our emphasis] of employers or individual proprietors of one or more descriptions ...”

	Whilst a comparison with analogous or earlier definitions is of only limited value, it lends no weight to the exclusivity of membership argument, that unless all are employers it cannot be an organisation of employers. Nor would it make practical sense if the status of the National Federation within the sex discrimination and race relations legislation from time to time were dependent upon whether a minority of members in fact had an employee or employees at the moment. The National Federation is not an organisation of employees nor is it an organisation whose members carry on a particular profession or trade. It is an organisation the majority of whose members are employers. It is an organisation whose members are in the field of employing labour.

	In its skeleton argument, the appellant contended that the definition of “employers association” in the Trade Union and Labour Relations (Consolidation) Act 1992 made clear that it was necessary to look both at membership and at purpose. In that Act the definition in section 122(1) to which I referred above continues with these words:

“... of one or more descriptions and whose principal purposes include the regulation of relations between employers of that description or those descriptions and workers or trade unions.”

	The argument that it was a necessary characteristic of an organisation of workers that its purposes should include regulation of relations between employers and workers has not been pursued.

	Instead, Counsel for the appellant based the “purpose test” on a reading of section 12(1) of the Sex Discrimination Act 1975, I have set it out above. It is argued that “organisation of workers” and “organisation of employers” are to be qualified by the words appearing later in the subsection “for the purpose of which the organisation exists”. It is thus argued that the subsection, in its application to this instant case, should be read in this way:

“This section applies to ... an organisation of employers ... for the purposes of which the organisation exists.”

	The argument goes on that the organisation exists “to protect, to promote and further the interests of persons who are self-employed or direct or control small businesses” and to do those things for its members in their capacity as self-employed people or people directing or controlling small business and not in their capacity as employers.

	We do not accept that that is the proper way to read section 12(1). Both the punctuation and the sense of section 12(1) make clear that the words “for the purposes of which the organisation exists” relates solely to those words immediately preceding, namely “any other organisation whose members carry on a particular profession or trade”.

	Nor do we accept that the appellants are right in contending for the narrow and restrictive meaning of “organisation of employers”. It is a phrase without statutory definition and is to be given its ordinary and natural meaning in the context in which it appears.

	Part II Sex Discrimination Act 1975 is headed “Discrimination in the Employment Field”. Section 6 deals with discrimination in dealing with employment applications and opportunities for promotion and the like. Section 9 deals with contract workers. Section 10 is concerned with partnerships. Section 12 deals with membership of organisations of workers, employers, and other professionals. Section 13 covers qualifying bodies. Section 14 addresses persons concerned with provision of vocational training, and section 15, employment agencies. This is legislation making unlawful sex discrimination across the broad employment field.

	The National Federation protects, promotes and furthers the interests of its members in many ways. The Industrial Tribunal heard of some of them. They include the arrangement of insurance against a range of risks including “disruption arising out of the dismissal of employees”. The National Federation also concerns itself with employment matters through its Employment Affairs Committee.

	In 1989 the Secretary of State for Employment, who had responsibility for the appointment to Industrial Tribunals of members representing both employers and employees included the National Federation in the list of organisations to be consulted on the employers’ side.

	The provision for that, presently carried forward to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations 1993, Regulation 5(1) is in these terms:

“5.(1)	There shall be three panels of members of the Industrial Tribunals (England and Wales), namely-
...
(c)	a panel of persons appointed by the Secretary of State after consultation with such organisations or associations of organisations representative of employers as he sees fit.”

 	It was argued by Mrs Philpott before the Industrial Tribunal that the National Federation in fact put forward the names of members for the ‘employers panel’ in 1989 and subsequently; and that, having accepted that it was an organisation representative of employers, the National Federation could not argue that it was not an employers’ organisation. The two phrases, said Mrs Philpott, amount to the same thing. Furthermore it would be anomalous if the National Federation could put forward its own members to adjudicate on matters of sex and ethnic discrimination if it did not accept itself bound by that legislation. That argument was substantially accepted by the Industrial Tribunal. In its extended reasons, the Chairman said:

“17 ... It seems to me an indefensible anomaly that a body can accept the status of being an organisation representative of employers, for the purpose of nominating members to these Tribunals, and not accept that it is an organisation of employers for the purposes of section 12 of the Sex Discrimination Act 1975. I think that Miss Romney, in her valiant argument, was attempting to draw a distinction between the expressions “an organisation representative of employers” and “an organisation of employers” which is altogether too fine, and which seems to me to be a distinction without a difference.”

	We differ from that only to the very limited extent that we do see a possible difference between an organisation representative of employers and organisation of employers. But what is important is that the National Federation undoubtedly and admittedly has as one of its important characteristics that it is representative of employers.

	We reject the importance attached by Counsel for the National Federation to the “membership test”. That the members, though mainly, are not exclusively employers does not prevent the National Federation being an organisation of employers within the meaning of section 12. The “purpose test” that has been formulated is too narrow an approach. It is perhaps more helpful to look at characteristics. The National Federation represents its members, who are predominantly employers, specifically as employers as well as across a range of other matters that interest them as business people.

	We have reached the unanimous conclusion that the Industrial Tribunal did not misdirect itself in any relevant way or reach a decision that was perverse. For the avoidance of any doubt, we add that we would reach exactly the same conclusion as the Industrial Tribunal, that the National Federation of Self Employed and Small Businesses Ltd is an organisation of employers within the meaning of section 12 of the Sex Discrimination Act 1975.

	We hold that the decision of the Industrial Tribunal cannot be impugned and the appeal is dismissed.