LAW REPORT : Unfair dismissal rule contrary to EC law

Regina v Secretary of State for Employment, ex parte Seymour-Smith and another; Court of Appeal (Lord Justice Neill, Lord Justice Roch and Lord Justice Schiemann) 31 July 1995

Employees in private employment had the standing to rely on the European Directive on Equal Treatment as the basis for challenging by judicial review rules which set a threshold of two years' continuous employment before a claim for unfair dismissal could be made. On the evidence before the court relating to 1985-91 the employees had demonstrated that the two-year period indirectly discriminated against women without justification.

The Court of Appeal allowed an appeal by the applicants from the Queen's Bench Divisional Court's dismissal [1994] IRLR 448 of their application for judicial review of the Unfair Dismissal (Variation of Qualifying Period) Order 1985 (SI no 782).

The applicants, who had been employed for 15 months and then dismissed in 1991, were unable to complain of unfair dismissal to an industrial tribunal because the right not to be unfairly dismissed did not apply to employees who had not been continuously employed for two years within the 1985 Order.

The applicants applied for judicial review of the 1985 Order on the ground that making the Order was beyond the powers of the Secretary of State and that it was contrary to the European Communities Act 1972 and the Equal Treatment Directive 72/207/EC. The applicants contended that the proportion of women who could comply with the two-year qualifying period was smaller than the proportion of men and argued that the two-year period indirectly discriminated against women.

The Divisional Court refused the application on the grounds of lack of jurisdiction on the basis that it was inappropriate to grant relief against the Order and that on the merits the degree of disparity between men and women was less than considerable.

Robin Allen QC (Camden Community Law Centre) for the applicants; Stephen Richards (Treasury Solicitor) for the Secretary of State.

Lord Justice Neill, giving the court's judgment, said that the first issue was the applicants' standing in relation to the Equal Treatment Directive. As a general rule, directives did not have direct effect under domestic law. However there were exceptions to the general rule. The court had been persuaded that persons in private employment had sufficient standing to bring judicial review proceedings in reliance on the directive.

There was now a substantial body of judicial opinion, if not authority, that compensation for unfair dismissal was "pay" within article 119 of the EC Treaty. However the matter was not acte clair, but the court would not refer the matter to the European Court and would not grant any relief in relation to article 119.

Turning to the form of relief in relation to the Equal Treatment Directive, it would be inappropriate to quash the 1985 Order. However if the applicants established that the 1985 Order was indirectly discriminatory and there was no objective justification for that discrimination, they would be entitled to a declaration to that effect.

Before a presumption of indirect discrimination on the ground of sex arose there must be a considerable difference in the number or percentage of one sex in the advantaged or disadvantaged ground as against the other sex. Having considered the figures in the present case for years from 1985 to 1991, it had been demonstrated that, for the period leading to the applications, there had been a considerable and persistent difference between the numbers and percentages of men and women in the groups that did comply and the groups that did not comply with the two-year period.

As to whether the 1985 Order could be justified, although the policy of maximising employment opportunities was a necessary aim of social policy, on the evidence the threshold of two years was neither suitable nor requisite for attaining the aim of increased employment and the discriminatory measure had not been justified.

The court's conclusions were based on the present evidence. It might be that statistics relating to a different period would demonstrate a disparity that was less than considerable.