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27 November 2014

Cases clarify standing to bring claims under Equality Act 2010

Recently decided cases offer useful guidance on who has standing to bring a claim before an employment tribunal under the Equality Act 2010.

Background

The Equality Act 2010 provides that employees and contract workers are protected against discrimination in the workplace. The scope of the act is sufficiently broad to cover those working under any contract whereby services must be provided personally. Two recently decided cases provide useful examples of this point.

Personal Service Companies

Ms H, had established her own personal service company (N Ltd). N ltd contracted with another company, CSA, which in turn provided staff, including Ms H, to a cosmetics concession owned and operated by WDFG at Heathrow Airport.

Although CSA paid Ms H (via N Ltd), Mrs H was obliged to seek approval to work in-store from WDFG and subscribe to its terms and conditions in order to gain a security pass enabling her to work in the concession. Ms H also had, and used, a right to change or withdraw from shifts or to provide a substitute worker, albeit one pre-approved by WDFG.

These arrangements lasted until WDFG withdrew Ms H’s security pass. Ms H claimed racial discrimination on the basis that she had been effectively dismissed by WDFG.

After hearings in the employment tribunal and Employment Appeal Tribunal (EAT) the case reached the Court of Appeal which held that the reality of the situation is capable of overriding any purported arrangements between the parties. The Court noted that Ms H had a real right of substitution (she could send someone in her place) with significant control over her own work. Accordingly the required elements of personal service and subordination were not present and Ms H could not claim protection as WDFG’s employee under the Equality Act.

Freelancers

Ms W was a freelance interpreter who worked for a number of clients including the Courts and Tribunals Service (HMCTS). Although her services to HMCTS were governed by written terms and conditions, HMCTS did not guarantee any work to Ms W and she was not obliged to accept any work that was offered; once work was accepted, however, Ms W was obliged to undertake the assignment personally. It was accepted by both parties that Ms W was self-employed.

Ms W brought a claim for racial discrimination arguing that she was treated less favourably than British sign language interpreters. An employment tribunal found that as there was no obligation to provide or accept work (i.e. that there was no mutuality of obligation), Ms W was not an employee and could not bring a claim under the Equality Act. Ms W appealed.

The EAT allowed the appeal. Even though Ms W was a freelance worker, she was obliged to personally perform those assignments she accepted, and hence covered by the Equality Act. The EAT observed that the absence of any mutual obligations between assignments is irrelevant to determining that question.

Comment

These two cases further illuminate the circumstances in which a worker can benefit from protection under the Equality Act.

In the first case, the fact that Ms H offered her services via a personal service company was not necessarily determinative. Indeed, Had Ms H been more integrated into her employer’s business and lacked the ability to appoint a substitute to undertake the work in her place, it is not inconceivable that the Court would have found differently.

In fact, the Court and the tribunal before it expressed a degree of unease that Ms H may be deprived of a remedy for racial discrimination. Ms H also claimed that she was a contract worker for CSA, but this issue was not decided in the present case. The fact remains, however, that it was WDFG that exercised the real power over Ms H’s continued ability to perform her role.

What may be problematic for other individuals supplying services through their own company is that such agreements traditionally afford the worker a high degree of autonomy in order to defeat a finding that they an employee for other employment and tax purposes.

The second case is a good example of the broader application of the Equality Act. Workers may be protected even if they work on a genuinely freelance basis provided that the work that they do undertake must be performed personally. The fact that a freelance worker has other clients need not necessarily preclude them from protection under the Equality Act provided that there exists a degree of subordination to an employer’s control and the obligation that work be performed personally.