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Employment and Law Tribunals

Volume 757: debated on Thursday 27 November 2014

Question for Short Debate

Asked by

To ask Her Majesty’s Government how they define the word “discrimination” with particular reference to employment law and tribunals.

My Lords, up until about 10 years ago the word “discrimination” had no derogatory implications. It simply meant a choice based on relevant information. You chose one thing or one person in preference to another because you had convinced yourself that that thing or person better suited your purposes. You discriminate when you buy a packet of cereal in the supermarket or when you choose a new car and, if there is any choice in the matter, you discriminate when you choose a wife, husband or partner, and he or she has the opportunity to discriminate back.

However, now it seems that the word discrimination has come to mean one thing: “unfair” discrimination, or, in the case of employment tribunals, “unlawful” discrimination. The law attempts to define discrimination by combining the deliberations of a number of Acts—the Sex Discrimination Act 1975, the Race Relations Act 1976, the Disability Discrimination Act 1995 and the Equality Act 2010.

We all accept the necessity and desirability of laws to prevent unfair or prejudiced racial, sex or disability discrimination but, as time has gone by, the definition of discrimination has got wider and wider and now encompasses almost anything or anybody who, for whatever reason, has a grievance and feels they have been unfairly treated. I contend that the laws on discrimination actually go against common sense.

For instance, no employer of a small business who is in his right mind is going to take on as a new employee a girl who is pregnant, and yet, as the law now stands, the girl who is refused the job for that reason can take her potential employer to a tribunal for unfair discrimination. She would be right—it was discrimination: but not unfair, simply sensible. That is not the same as an employer firing a girl who becomes pregnant after working for the company for two years or more. In that case she would expect to keep her job and the law would rightly back her up on this.

My interest in this question of discrimination stems from a recent personal experience. I am the owner of a visitor attraction in Scotland, which provides a number of entertainments for the public and employs up to 40 people during the height of the season. It has been running for nearly 40 years now and I had always believed that staff relations were pretty good. However, in 2011, after a series of bad years and trading losses, I was compelled, with pressure from the bank, to cut down on staff during the quieter winter months.

There were two people working on the accounts, and I decided that I could manage with only one. I wrote to the bookkeeper to explain that I was going to lay her off for four months in the winter. At the time I did not appreciate, as I do now, that under employment law laying someone off is the same as making someone redundant. I had therefore not followed the correct procedures. The bookkeeper decided to take me to a tribunal. I was successful in agreeing a settlement with her union representative, but she refused to accept it. She wanted to charge me with discrimination. Another thing I did not appreciate at the time was that if you win a case of discrimination against your employer, you can be awarded at least 10 times the amount you are likely to receive as a result of him not following the proper procedures.

The case went to the tribunal. Her no-win no-fee lawyer was determined to prove that his client had been discriminated against. She had been employed for longer than the accountant, who by the way happened to be a heavy drinker, and therefore he should have been laid off instead of her. She had a disabled son who needed special care, and she asserted that we had not taken this circumstance into sufficient consideration. She also claimed that my manager favoured another female member of our staff over her, and that she should have been offered her job instead of being laid off.

Many of the staff were called in as witnesses and nine full days were spent on the case. Indeed, it took two years to be concluded. The result was that she failed to convince the tribunal or anyone else that she had been discriminated against and, as I expected, I had to pay a fine for not complying with the proper procedures. The tribunal had spent nine days attempting to disentangle a charge of discrimination which was always more than questionable.

After the case was over, I learnt from my lawyer, who specialises in employment law, that almost half of his cases are concerned with defending employers like myself against charges of discrimination brought by disgruntled former employees, and that the majority of discrimination claims are thrown out by the tribunals. As the law stands at present, no-win no-fee lawyers stand to gain a lot more if they can establish discrimination against their client. That is why they encourage them to go for that charge, even if the odds are stacked against them.

Speaking as a small businessman, and based on my recent experience, discrimination laws are the ones we fear the most because they are so broadly based. They offer a disgruntled or troublemaking employee a great deal of opportunity to hold their employer to ransom. Of course an employer is going to favour a hardworking and loyal member of staff over a lazy and difficult one, but as the law stands, that is already a discrimination. Discrimination has come to mean “unfair”, which is neither rational nor sensible. So we employers, who must discriminate sensibly in order to run our businesses, must be careful not to look as though we are being discriminatory. Unsuitable employees who fear for their future must build up a history of incidents so that, if need be, they can be read at a later date as being discriminating against them.

I tried to bring up the issue of discrimination and tribunals during consideration of the Enterprise and Regulatory Reform Bill, which became law in 2013. However, I was discouraged from doing so. I was told that it was too complicated, and besides it was all tied up with the European law. I got the feeling that discrimination was regarded as too much of a hot potato and that it was the duty of tribunals to deal with it. That is all very well, but these are long tribunal hearings which usually end with the charges of discrimination being thrown out. This is costing the country millions of pounds every year. Surely we are trying to make savings across all government departments.

Measures against discrimination on the grounds of race, sex and physical disability are clearly necessary and, if anything, the law should be strengthened in these areas. Obviously, there must be laws to redress and compensate employees who have been dismissed or treated unfairly, but charges of discrimination are much too subjective and open to interpretation. For instance, as regards age, I am over 70 and in many situations I expect to be discriminated against. Who would want to employ me if a vigorous, enterprising man of 40 was the alternative?

Employment law, as it stands, is quite hard enough for small businesses to comply with. Will the Government consider dismantling or at least revisiting the laws on discrimination to at least make them more sensible? It could save the country a lot of money.

My Lords, I welcome the opportunity to look at the legislation which underpins our equality practices in the UK. I would say to the noble Earl that I see myself as discriminating. I do not see that there is a problem with the use of the word, and I am not quite sure what other word one would use in these circumstances.

It is against the law to discriminate against anyone because of their age, being or becoming a transsexual person, being married or in a civil partnership, being pregnant or having a child, disability, race, including colour, nationality, ethnicity or national origin—and, I hope, caste at some point—religion, belief or lack of religion or belief, sex and sexual orientation. These are called protected characteristics. You are protected from discrimination at work, in education, as a consumer, when using public services, when buying or renting property or as a member or guest of a private club or association. These protections from discrimination are covered by the Equality Act 2010. I cannot think which of those the noble Earl would suggest that we should get rid of because it seems to me that all of them can be justified in different ways.

Discrimination can be direct or indirect, which involves putting rules or arrangements in place that apply to everyone but which put some people at an unfair disadvantage, or it can come in the form of harassment or victimisation. It seems to me that those anti-discrimination provisions are all perfectly legitimate.

The law protects you against discrimination at work, including discrimination in dismissal, employment terms and conditions, pay and benefits, promotion, training, recruitment and redundancy. If you are disabled, you have to have the same rights as other workers. It seems to me that in a civilised society one needs these provisions to underpin the rights of employees. You are also protected from being treated unfairly because of trade union membership or the provisions of a fixed-term contract or as a part-time worker.

I had a small business for about eight or nine years before I became a Minister in the previous Administration. Running that business was a very happy period of my life. I never employed more than nine or 10 people, quite a few of whom were young women, so I did deal with two lots of maternity leave and with disciplinary issues from time to time, and I even parted company with one of my employees over that period. All of that was done in accordance with the legislative framework covering employment, maternity rights and so on. I did not find any of that difficult. A lot of advice is available from different sources, including government agencies, telling employers how to deal with these issues.

If you are going to employ people, it seems to me that you have to make sure that you understand what your responsibilities as an employer are. I suggest that good and sensible employers have nothing to fear and, indeed, should take pride in the good staff relations that being a good employer brings, as well as benefits to the bottom line such as lack of staff turnover and harmony within the workplace. It is obviously very difficult to part company with an employee, but there are clear procedures and steps that you take in doing that. So long as you follow the procedure, the outcome is usually the one that you are seeking as an employer. I am not quite sure what the noble Earl wishes would happen. None of these things is easy but they are all quite doable.

I have some questions about employment tribunals for the Minister, which I have warned her about. In a way, I am returning to the issues that I raised yesterday in Question Time. Since July 2013, workers who have been sexually harassed, sacked because of their race or bullied because of their sexuality are forced to pay £1,200 for their claim to be heard by an employment tribunal. Those seeking to recover unpaid wages or holiday pay have to pay £390. The introduction of these fees has had a devastating impact on people’s access to justice in employment tribunals. It is slightly ironic that the noble Earl has raised the issue of the waste of money and the use of employment tribunals. I am not happy about this, but he might be happy to hear that the latest figures show that there has been an 84% drop in the number of people going to employment tribunals. That is not good because it means that lots of people are being deterred from seeking justice in unfair situations by these fees. I asked the Minister yesterday whether the Government will recognise that this is inherently unfair and discriminatory and that it is a policy they should think about reversing.

It is not only to do with employment, but also with other claims of discrimination. These are figures from the Ministry of Justice. During the first three months of 2014, the number of race discrimination and sexual orientation claims fell by 60% compared with the same period in 2013. Disability claims have experienced a 46% year-on-year reduction. That means that there are hundreds of people with disabilities and people of colour who think they have been discriminated against or harassed at their place of work who are deterred from taking action because of the charges. I ask the Minister what the Government are going to do about that.

I am not against employment law, which I think is quite sensible. I was wrong, because it was a bit of employment law that I did not understand. I now understand it and I will never do that again. That is not what I was saying. It is the fact that someone can make claims for discrimination, as the person in my case did. Her lawyer was advising her to get more money, because she could get a lot more money from me if she claimed that she had been discriminated against. I thought the way that that was handled was extremely unpleasant. It was a very nasty episode in my life.

I absolutely accept that it is unpleasant, but if somebody feels that they have been discriminated against, it is their right to seek redress. The fact that the case was not proved means that the law is working.

My Lords, I thank my noble friend Lord Glasgow for calling today’s debate on discrimination, with particular reference to employment law and tribunals. Eradication of discrimination in this country remains a priority for this Government, as I shall set out.

First, I would like to explain for the benefit of the Committee that, subject to certain exceptions, discrimination is prohibited in the Equality Act 2010 where it occurs because of a person’s protected characteristic. The protected characteristics are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. As my noble friend pointed out, the 2010 Act brought together and strengthened a raft of equality legislation that had built up over time, beginning with the race and sex discrimination Acts of the 1960s and 1970s. Protection generally applies across a number of fields, notably employment, the provision of services, and the exercise of public functions, schools and transport.

The Government have added further protections since 2010, chief among them the introduction of provisions for the marriage of same-sex couples. In October 2012 we also brought in the prohibition on age discrimination in the provision of goods, facilities and services. Unusually, neither of these initiatives was required under EU law, but most of the protections in the 2010 Act are and implement either an equal treatment directive or a decision of the Court of Justice of the European Union.

As with other employment laws, the 2010 Act’s provisions, as they relate to the field of employment, are enforceable at an employment tribunal where attempts at non-judicial settlement have failed. I note my noble friend’s attempt to settle his case through non-judicial means. A party losing at a tribunal has the option to appeal the decision to the Employment Appeal Tribunal. Fees are now charged for lodging cases at a tribunal but if an appeal succeeds, the tribunal may order the employer to refund the fees as well as pay compensation to the claimant.

My noble friend mentioned a suggested award of 10 times the claim if discrimination had been proven, but while that might have been the claim it would have been fairly exceptional for a discrimination award. Most awards are still in the hundreds or very low thousands of pounds. Nevertheless, the level of compensation in discrimination cases is in theory unlimited. This is a requirement under EU law, since any statutory capping of compensation means that victims of discrimination do not have an effective remedy.

When considering cases of alleged discrimination, employment tribunals will therefore have regard to the Equality Act 2010. The Act includes a number of key provisions which together define “discrimination” for the purposes of that legislation. For the purpose of this debate, I will talk briefly about the definition of “direct discrimination” in the 2010 Act. Section 13 defines direct discrimination as the “less favourable treatment” of a person because they have one or more protected characteristics.

Following EU directives and a ruling by the European Court of Justice, this definition of direct discrimination is now broad enough to cover cases where the less favourable treatment happens because of a person’s association with someone who has one or more protected characteristics; for example, where a person is treated less favourably because they are associated with someone who has a disability. This definition also covers situations where people are wrongly thought to have a protected characteristic; for example, where a person is not offered a job because they are wrongly thought to be gay.

I appreciate that my noble friend might have concerns about the breadth of the legal definitions of discrimination, but I have to say that the Government fully support the approach of the 2010 Act, since a narrower definition would exclude from protection people who really ought to be protected. We have, however, been discriminating—as opposed to discriminatory—in our approach to the Act. As I have mentioned, we have implemented most of the Act, including one or two key protections, such as that against age discrimination in the provision of goods and services, in the past couple of years. At the same time, we have sought to protect employers and businesses from excessive regulation by repealing or leaving uncommenced some unnecessary, outdated or otherwise unsatisfactory provisions in our drive for better regulation.

My noble friend may also be concerned about legal costs and a burgeoning legal industry around discrimination claims, but I have to say that this is not borne out by the recent statistics, which show that disability discrimination claims in the first quarter of the current year fell by 31% compared with the first quarter of last year. Indeed, as the noble Baroness, Lady Thornton, pointed out, a general and significant fall in claims of 59% since 2012-13 for all employment claims, including discrimination, has clearly been one of the key developments in this area of litigation during this Parliament. It is attributable to a number of factors; namely, better compliance by employers and a major drive towards encouraging pre-hearing settlements through the involvement of ACAS in every claim—as well as, no doubt, the introduction of a fee structure.

I hear what the noble Baroness says about her concerns that fees are pricing claimants out of the justice system. The Government believe that it is reasonable to move away from employment tribunal funding being largely provided by the taxpayer towards a more balanced process, where the £74 million cost of administering claims to the employment tribunal system are met in part by those who use and benefit from the system. However, the Government are being very careful in ensuring that fee waivers are available for people of limited means so that they are not excluded from seeking redress in tribunals. The Government have committed to reviewing the introduction of fees and are currently considering the scope and timing of the review, and we will bring forward our plans in due course. I hope that provides some reassurance to the noble Baroness.

Whatever weight one gives to each of these factors, it can no longer be claimed that employers are being subjected to an ever-increasing volume and array of discrimination claims to the benefit of lawyers. The nature of the law has remained the same but the litigation arising from it and the claims confronting employers as a result of it have been substantially reduced.

I turn now to some of my noble friend’s specific questions. Why cannot discrimination be more precisely defined? The UK definition of discrimination is largely dictated by European measures such as the treaties and various directives. It is not for the Government to define discrimination. This has already been done by Parliament and it is now for the courts and employment tribunals to apply the statutory definition of discrimination to the facts of the different cases they hear. It sounds as though that was done in my noble friend’s case, but obviously not until after a quite long and lengthy business.

My noble friend asked about employees abusing the discrimination laws by making vexatious and frivolous discrimination claims. Anyone who feels that they have been wronged is entitled to make a claim. Whether they will be successful is a matter for tribunal judges to decide. However, as I have mentioned, the latest statistics show that there has been a sharp decrease in the volume of cases brought before employment tribunals. Among other factors, this fall can be attributed to the impact of mandatory conciliation. This was introduced in May 2014 and will probably help a great number of small employers in the position that my noble friend found himself in.

My noble friend also mentioned the hiring or firing of pregnant women. In the case he quoted, surely the outcome for the woman is the same. Whether she is taken on or whether she is fired, the result is that she is deemed not to be employable when she is pregnant. That is one of the things we have tried to move away from in the laws that have been introduced.

My noble friend claims that the compensation award for successful discrimination cases is too high.

The noble Baroness is absolutely right on the point she has just made. Many years ago I was in charge of the CABs in north London and I was looking for a Spanish speaker to work in the Paddington law centre. The best candidate was a six-month pregnant Chilean woman. I gave her the job because she was the best candidate and I believed that she would not have put herself forward if she did not think she could manage that job and having a baby. You know what? She was brilliant.

There we are. Thank you very much for that. My noble friend and I are both Liberal Democrats, a party with a long-standing commitment to equality, a proud record of tackling inequality and of trying to face up to discrimination in the past. We strongly support the need for the law to defend the rights of all citizens to play a full part in an increasingly global society, whether or not they are pregnant, as the noble Baroness said.

My noble friend has raised a difficult case which merits airing. I hope this clarifies for him, to some extent, the Government’s position on the definition of discrimination. If he had a similar case again now, the mediation and the other factors would perhaps result in a happier conclusion at an earlier stage for him.

It was a happy conclusion but it was not a happy process. I hope the process has now been improved.

The operation of employment tribunals which hear discrimination cases is of great importance and the Government seek always to strike the right balance between the rights of claimants on the one hand and those of employers such as my noble friend on the other.

I again thank my noble friend for bringing this debate forward and the noble Baroness, Lady Thornton, for her contribution. I hope we have brought clarity to this matter.

Committee adjourned at 4.19 pm.