Summary Description:

No indirect discrimination found when agency workers were not paid the London Living Wage yet those directly employed were.   The issue was a matter of their contract with the agency and not with the principal.

Background:

The respondent had engaged part of its workforce directly, known as ‘directly employed, and others through an agency known as ‘indirectly employed’.   The directly employed workers were civil servants until their employment transferred to the respondent.  They are mainly office workers and predominantly white.  The indirectly employed workers take on functions such as cleaning and maintenance, gate locking and repairs.  The size of the indirectly employed workers was much greater than the directly employed workers but there were no findings about its ethnic composition.

The claimants brought a claim on the basis that the directly employed were paid the London Living Wage whereas those who were indirectly employed were not.  The basis of the claim was indirect race discrimination.

Outcome:

The claimants succeeded at first instance with the Tribunal finding that the respondent had applied a provision, criterion or practice that its own employees should be paid the London Living Wage yet the indirectly employed were not paid the London Living Wage.   This was regarded as being indirectly discriminatory on the basis of race as there was a higher proportion of black or minority ethnic workforce in the indirectly employed.   They also found that there was no justification for the provision, as cost was not sufficient.   The EAT overturned this decision stating that the Tribunal ought to have looked at the provision across all employees including others who were indirectly employed.  Additionally, there was no evidence about the racial makeup of the workers generally so the claim had to fail.

The claimants appealed to the Court of Appeal.   The decision of the EAT was upheld.  The Court of Appeal cited Section 41(1)(a) of the Equality Act which prohibits discrimination in the ‘terms on which the principal allows the worker to do the work’.  The Court stated that this meant the legislation was not concerned with detriments from the worker’s contract but only those imposed by the principal.  As the alleged discrimination concerned the contractual terms between the claimant and their employer, the agency the case could not succeed. The only affect that the respondent had was in negotiating and agreeing a contract with the agency which would be regarded as contracting-out rather than taking on such liability.

Practical Guidance for Employers:

An interesting decision by the Court of Appeal which creates a separation for agency workers between their contract with the agency and the place in which they work.  This decision seems to provide a degree of protection for the place in which they work on the basis that the principal cannot be liable for the contract the worker has with the agency.   This is especially so when there is a comparator element and the comparator is someone who is employed by a different organisation meaning that it does not derive from a single source.
https://www.casemine.com/judgement/uk/66537fae8cdb19280920dce8