Supreme Court rules on breadth of employment discrimination law
27 July 2011
A Supreme Court ruling in Jivraj v Hashwani has given much needed clarification on the breadth of application of employment discrimination law.
In particular, the judgment affirms that the genuinely self-employed are unlikely (without more on the facts) to fall within the broad definitions of employee found within the discrimination legislation. This decision overturns a unanimous Court of Appeal decision which concluded that, although it conceded that the conclusion was rather surprising, the self-employed tradesman or professional who provided a service to a customer or client was, in fact, an employee. In the context of this case, the unsettling result was that arbitrators constituted employees to the individuals who instructed them to mediate a settlement on their behalf.
Mr Jivraj and Mr Hashwani had turned to arbitration in order to dissolve a business arrangement. Under a Joint Venture Agreement made in 1981, they agreed a clause which stipulated that in the event of arbitration, the arbitrators should be respected members of the Ismaili community and holders of high office within the community.
However in 2008, long after the relationship had dissolved between the parties, Mr Hashwani sought to appoint an arbitrator who was not a member of the Ismaili community, on the basis that such a stipulation fell foul of the Human Rights Act and the Employment Equality (Religion or Belief) Regulations 2003, now found within the Equality Act 2010. Although the Human Rights Act point was lost by Mr Hashwani at first instance, he was given permission to appeal on the equality point and he succeeded before the Court of Appeal. Mr Jivraj's lawyers argued that the extension of employment discrimination law in this manner went far beyond what either domestic or European law had ever conceived or permitted.
In its ruling, the Supreme Court agreed with Mr Jivraj. In particular, the Court noted that the relationship between arbitrators and those who instructed them did not resemble an employment relationship in any fashion, and moreover, it accepted that the broad European definition of worker, set out in the ECJ cases of Allonby and Lawrie-Blum, required for the purposes of equal pay law would also be the same definition for equality law pursuant to the Regulations, and of course now the Equality Act 2010. This definition requires that a worker must be, a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration. The Court considered that there was "a clear distinction between those who are, in substance, employed and those who are "independent providers of services who are not in a relationship of subordination with the person who receives the services". This could simply not be said in respect of the appointment of an arbitrator. In reaffirming the Allonby approach to employment definitions in an equality context, the path is now much clearer domestically as to the distinction to be applied by the courts between the employed and the self-employed.
Rachel Crasnow, a discrimination specialist from Cloisters, said:
"The Court of Appeal ruling pointed us in the bizarre direction that ordinary consumer decisions as to their choice of tradesmen and service providers in fact engaged the full arena of employment discrimination law, making people liable in their private choices in the same way as employers, ordinarily understood as employers, are held to be liable. Taken to its logical extreme, this represented an extensive broadening of employment law and equality law, seemingly without the matter having been properly discussed by Parliament or before the EU. The clarity and common sense approach now endorsed by the Supreme Court judgment means that there is further clarity in the approach to be taken when considering whether an individual can really be an employee, even adopting a broad definition of that label, when in fact he or she is genuinely self-employed. The judgment also reinforced the freedom that minority communities have to arbitrate commercial disputes, which will be a welcome confirmation of the position that previously had been acceptable and encouraged."
The Supreme Court discussed the distinction between the role which arbitrators and judges in its judgment and referred to the case of O'Brien v MOJ [2010] 4 All ER 62 which is going to the Court of Justice of the European Union in September 2011. Mr O'Brien is represented by Rachel Crasnow and Robin Allen QC of Cloisters.
Mr Jivraj was represented by Rhodri Davies QC and also by Schona Jolly from Cloisters. Instructing solicitors were Hill Dickinson LLP 2. A copy of the judgment can be found here
Coverage in The Lawyer and Legal Week