Charities and the Equality Act 2010.pdf348kB - Farrer & Co
Charities and the Equality Act 2010.pdf348kB - Farrer & Co
Charities and the Equality Act 2010.pdf348kB - Farrer & Co
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<strong>Charities</strong> <strong>and</strong> <strong>the</strong> <strong>Equality</strong> <strong>Act</strong> 2010<br />
Julian Smith <strong>and</strong> Ewa Holender | April 2010<br />
The long-awaited <strong>Equality</strong> <strong>Act</strong> received Royal Assent on 8 April 2010 <strong>and</strong> is likely to be implemented in October 2010.<br />
It is <strong>the</strong>refore important that charities take this opportunity to consider <strong>the</strong> (often underestimated) impact <strong>the</strong> <strong>Equality</strong><br />
<strong>Act</strong> 2010 may have on <strong>the</strong>ir operations.<br />
Background<br />
The <strong>Act</strong> consolidates <strong>the</strong> existing multitude of national equality legislation (see <strong>the</strong> boxed text “Existing Legislation”),<br />
which prohibits discrimination on grounds of a number of “protected characteristics” (see <strong>the</strong> boxed text “Protected<br />
Characteristics”) in particular fields, including <strong>the</strong> provision of goods, facilities <strong>and</strong> services. The aim of <strong>the</strong> <strong>Act</strong> is<br />
to simplify <strong>the</strong> law across all <strong>the</strong> protected characteristics <strong>and</strong> make <strong>the</strong> legislation more accessible. However, <strong>the</strong><br />
<strong>Act</strong> also makes some significant changes that will affect charities, for example in <strong>the</strong> services <strong>the</strong>y provide, <strong>the</strong>ir<br />
employment practices <strong>and</strong> <strong>the</strong>ir interaction with public authorities.<br />
Importantly, <strong>the</strong> <strong>Act</strong> also alters <strong>the</strong> terms of <strong>the</strong> exemptions available to charities under existing anti-discrimination<br />
legislation in terms of restrictions on beneficiaries.<br />
The charitable instrument exemption<br />
Most of <strong>the</strong> existing anti-discrimination legislation (marked with a * in <strong>the</strong> Existing Legislation box) contains an<br />
exemption for acts carried out in pursuance of a charitable instrument.<br />
These exemptions have been relied on by many charities to prevent a breach of <strong>the</strong> legislation where benefits are<br />
provided to groups defined by reference to one or more protected characteristics. With <strong>the</strong> exception of <strong>the</strong> Sex<br />
Discrimination <strong>Act</strong> 1975 (where <strong>the</strong>re is an additional requirement, as discussed below) <strong>the</strong> exemptions require only<br />
that <strong>the</strong> relevant restriction is set out in a charitable instrument (normally <strong>the</strong> charity’s governing document or an<br />
instrument that records a restricted gift to <strong>the</strong> charity).<br />
This interpretation has, however, been thrown into doubt by a recent High <strong>Co</strong>urt case (see fur<strong>the</strong>r below). Fur<strong>the</strong>r,<br />
<strong>the</strong> wording of <strong>the</strong> exemptions <strong>and</strong> <strong>the</strong>refore <strong>the</strong> scope available to charities to select beneficiaries on grounds of<br />
protected characteristics, will change significantly with <strong>the</strong> implementation of <strong>the</strong> <strong>Act</strong>.<br />
The Sex Discrimination <strong>Act</strong> 1975 (“SDA”)<br />
The charitable instrument exemption is already different under <strong>the</strong> SDA for discrimination in <strong>the</strong> provision of goods,<br />
facilities <strong>and</strong> services. There is an additional requirement that <strong>the</strong> conferral of benefits by reference to a protected<br />
characteristic is:<br />
(a) a proportionate means of achieving a legitimate aim, or<br />
(b) for <strong>the</strong> purpose of preventing or compensating for a disadvantage linked to sex.<br />
The High <strong>Co</strong>urt decision in <strong>the</strong> Catholic Care case<br />
Mr Justice Briggs in <strong>the</strong> recent High <strong>Co</strong>urt Catholic Care decision (available at http://www.bailii.org/ew/cases/<br />
EWHC/Ch/2010/520.html), stated that existing anti-discrimination legislation must be interpreted in <strong>the</strong> light of <strong>the</strong><br />
European <strong>Co</strong>nvention on Human Rights, <strong>and</strong> in particular <strong>the</strong> Article 14 right to enjoy <strong>the</strong> rights <strong>and</strong> freedoms set forth<br />
in <strong>the</strong> <strong>Co</strong>nvention without discrimination.<br />
Telephone: +44 (0)20 3375 7000 Email: enquiries@farrer.co.uk Web: www.farrer.co.uk
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His view is that this means that all existing charitable instrument exemptions must be interpreted (<strong>and</strong> should<br />
have been interpreted since <strong>the</strong> implementation of <strong>the</strong> Human Rights <strong>Act</strong> 1998) as if <strong>the</strong>y contained <strong>the</strong> additional<br />
requirement set out in <strong>the</strong> SDA.<br />
The <strong>Act</strong><br />
The charitable instrument exemption in section 193 of <strong>the</strong> <strong>Act</strong> is worded as follows:<br />
(1) A person does not contravene this <strong>Act</strong> only by restricting <strong>the</strong> provision of benefits to persons who share a protected<br />
characteristic if –<br />
(a) <strong>the</strong> person acts in pursuance of a charitable instrument, <strong>and</strong><br />
(b) <strong>the</strong> provision of <strong>the</strong> benefits is within subsection (2).<br />
(2) The provision of benefits is within this subsection if it is –<br />
(a) a proportionate means of achieving a legitimate aim, or<br />
(b) for <strong>the</strong> purpose of preventing or compensating for a disadvantage linked to <strong>the</strong> protected characteristic.<br />
Once <strong>the</strong> <strong>Act</strong> is implemented, any charity that restricts its beneficiaries by reference to any of <strong>the</strong> protected grounds<br />
will need to show that it meets <strong>the</strong> additional test in paragraph (2) above.<br />
What this means for charities<br />
The effect of this test, derived from European law, is unclear <strong>and</strong> it is difficult to predict with certainty how <strong>the</strong> new<br />
exemption will be interpreted by <strong>the</strong> British courts. The concept of a ‘legitimate aim’ is not defined by <strong>the</strong> <strong>Act</strong>, but<br />
<strong>the</strong> aim must be legal, must not be discriminatory in itself <strong>and</strong> must represent a real, objective consideration. The<br />
means chosen must be capable of achieving <strong>the</strong> stated aim. Fur<strong>the</strong>r, charities will need to show that any restriction is<br />
necessary <strong>and</strong> that less discriminatory measures could not achieve that same aim. It is likely that statistical evidence<br />
will be required to support such arguments.<br />
We are aware that <strong>the</strong>re are a number of charities that currently rely, not always consciously, upon <strong>the</strong> existing<br />
exemptions. This includes charities set up to benefit individuals of a particular religion or nationality, charities that<br />
provide targeted scholarships <strong>and</strong> many service providing charities. The change may also affect grant-makers whose<br />
grant criteria refer to protected characteristics <strong>and</strong> charities that receive or have received donations with restrictions<br />
based on protected characteristics. It may also have an impact, not only on charities already registered with objects<br />
restricted on protected grounds, but also charities applying for registration with <strong>the</strong> Charity <strong>Co</strong>mmission in <strong>the</strong> future.<br />
Affected charities will need to be able to show whe<strong>the</strong>r <strong>and</strong> how <strong>the</strong>y can meet <strong>and</strong> evidence <strong>the</strong> additional<br />
requirements in <strong>the</strong> <strong>Act</strong>, or potentially consider changes to <strong>the</strong>ir governing documents, fundraising documents, grant<br />
criteria or o<strong>the</strong>r internal procedures.<br />
The need for guidance<br />
The Equalities <strong>and</strong> Human Rights <strong>Co</strong>mmission (“EHRC”) recently published a number of draft statutory codes of<br />
practice <strong>and</strong> non-statutory guidance on <strong>the</strong> <strong>Act</strong> for consultation (please see our <strong>Equality</strong> <strong>Act</strong> E-Briefing). Those<br />
drafts, however, provide little guidance on <strong>the</strong> proposed charitable instrument exemption.<br />
There is <strong>the</strong>refore a clear need for guidance on <strong>the</strong> new provisions within <strong>the</strong> sector, whe<strong>the</strong>r from <strong>the</strong> EHRC or<br />
ano<strong>the</strong>r body such as <strong>the</strong> Charity <strong>Co</strong>mmission.<br />
To this end we led a Charity Law Association working group on this issue, which has now responded to <strong>the</strong> EHRC<br />
consultation to try to make sure that adequate guidance is available both to our clients <strong>and</strong> <strong>the</strong> sector as a whole.<br />
The EHRC has now published a timeline for publication of <strong>the</strong> final guidance <strong>and</strong> for codes of practice to be laid before<br />
Parliament. That timeline is summarised at <strong>the</strong> end of this article. We will be reviewing <strong>the</strong> final guidance <strong>and</strong> codes of<br />
practice once available, <strong>and</strong> will publish a fur<strong>the</strong>r update in due course.<br />
Telephone: +44 (0)20 3375 7000 Email: enquiries@farrer.co.uk Web: www.farrer.co.uk
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However if, in <strong>the</strong> meantime, you are concerned that your charity may be affected by <strong>the</strong> changes to <strong>the</strong> charitable<br />
instrument exemption please contact Julian Smith, Ewa Holender or your usual contact at <strong>Farrer</strong> & <strong>Co</strong>.<br />
EHRC timeline for publication of guidance <strong>and</strong> draft codes of practice<br />
Area<br />
Employment, Equal pay <strong>and</strong><br />
Services, public functions <strong>and</strong><br />
associations<br />
Education (fur<strong>the</strong>r <strong>and</strong> higher<br />
education)<br />
<strong>Co</strong>mes into<br />
force<br />
Guidance<br />
published<br />
Draft code<br />
of practice<br />
laid before<br />
Parliament<br />
October 2010 July 2010 June 2010<br />
October 2010 July 2010 January 2011<br />
Education (schools) October 2010 July 2010 May 2011<br />
Public sector equality duty April 2011 December 2010 January 2011<br />
Age protection outside <strong>the</strong><br />
workplace<br />
expected April<br />
2012<br />
December 2011 January 2012<br />
Existing legislation<br />
• Race Relations <strong>Act</strong> 1976*<br />
• Sex Discrimination <strong>Act</strong> 1975 (* but additional requirements for <strong>the</strong> provision<br />
of goods, facilities <strong>and</strong> services)<br />
• Employment <strong>Equality</strong> (Religion or Belief) Regulations 2003<br />
• <strong>Equality</strong> <strong>Act</strong> 2006*<br />
• Employment <strong>Equality</strong> (Age) Regulations 2006<br />
• Disability Discrimination <strong>Act</strong> 1995 (* except for <strong>the</strong> provision of goods,<br />
facilities <strong>and</strong> services)<br />
• Employment <strong>Equality</strong> (Sexual Orientation) Regulations 2003<br />
• <strong>Equality</strong> <strong>Act</strong> (Sexual Orientation) Regulations 2007*<br />
* <strong>Co</strong>ntains a charitable instrument exemption<br />
Protected characteristics<br />
• age<br />
• disability<br />
• gender reassignment<br />
• marriage <strong>and</strong> civil partnership<br />
• race (which includes nationality <strong>and</strong> ethnic origin)<br />
• religion or belief<br />
• sex<br />
• sexual orientation<br />
This publication is a general summary of <strong>the</strong> law. It should not replace legal advice tailord to your specific<br />
circumstances.<br />
Telephone: +44 (0)20 3375 7000 Email: enquiries@farrer.co.uk Web: www.farrer.co.uk