Charities and the Equality Act 2010.pdf348kB - Farrer & Co

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