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

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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.
Telephone: +44 (0)20 3375 7000 Email: enquiries@farrer.co.uk Web: www.farrer.co.uk