Equality and Human Rights Commission – Written evidence

1.0              Introduction

1.1              The Draft Deregulation Bill contains a number of proposals to reduce               unnecessary bureaucracy and red tape which have an impact on equality and               human rights law and the functions of the Commission.

1.2              The Commission’s view is that there is fundamentally little or no conflict               between its goals and those of the Government in relation to the Draft Bill: the               aims of equality and growth are often linked and mutually supportive. A more               equal society, in which people’s prospects are determined by merit rather than               by other considerations, is a more productive society. Likewise, as the               economy improves, it will become easier to realise the aims of equality. The               Commission is therefore fully supportive of the need to ensure economic               growth.

1.3              The Commission shares the aspirations behind the Bill, welcoming the               opportunity to review the way it operates to understand business needs, costs               and burdens better. We have no wish to impose needless costs on business;               indeed, much of what we have done in the last two years has been aimed at               enabling the private sector to reduce the costs of complying with equality               requirements, and working with businesses to achieve that.

1.4              However, our analysis of the proposals in the Draft Bill has shown up some               significant concerns to which we draw the Joint Committee’s attention. These               require further scrutiny and re-consideration by Government. In this response               to the Joint Committee's call for evidence, we have focused on those               proposals of most concern to the Commission, which are:

• Clause 2 - the proposed removal of employment tribunals' appropriate (wider) recommendations power contained in section 124 of the Equality Act 2010

• Clauses 58 to 61 - the proposed application of the growth duty to the exercise of the Commission's regulatory powers

1.5              Although we have structured this response to address concerns about these                 clauses, rather than answering individual questions in the Joint Committee's               call for evidence, our response is most relevant to questions 7 and 17 to 22,               and may also assist the Joint Committee’s deliberations on other questions.

2.0              Summary of the Commission's overall analysis

2.1               The Commission continues to strongly disagree with the proposal to remove               employment tribunals’ wider recommendation making powers. For reasons               explained further below, it is too early to judge the effectiveness of the power               which has been in force only over the last three years. The available evidence               suggests that the power has been used proportionately, and that there are               important clear benefits for all concerned (including employers and               employees) in exercising the power to clarify necessary remedial action, and               this helps to prevent further discrimination and to reduce litigation.

2.2              After careful scrutiny, our analysis is that there are very compelling reasons why the growth duty should not apply to the Commission. First, the Commission does not have many of the functions of a non-economic regulator that the growth duty proposals are intended to affect. Equality and human rights law is proposed by Government, determined by Parliament, interpreted by the courts and tribunals, so the              Commission does not set the relevant standards. In addition, there are formidable legal problems in applying the growth duty to the Commission in the way the Government intends. Parliament has already provided in the Equality Act 2006 that the Secretary of State must have regard to the desirability of subjecting the Commission to as few constraints as possible, and this conflicts with the growth duty proposals. Finally, the application of the growth duty to the Commission undermines the requirement for the Commission to be independent from the Government in the respects required for compliance with the United Nations Paris Principles for National Human Rights Institutions (NHRI). We believe the application of the growth duty to the Commission creates a real risk that our United Nations 'A' status NHRI accreditation will be lost. DCMS have made considerable effort to retain and protect this status, with the strong support of FCO. The ‘A’ status of EHRC as a NHRI is important to the exercise of British soft power.

2.3              Taken individually or together, these concerns provide a compelling basis to               remove the Commission from the list of regulators to which the Government               currently proposes to apply the growth duty. 

3.0              Removal of employment tribunals' power (in section 124 Equality                             Act 2010) to make wider recommendations in discrimination cases

3.1              The Commission has specific statutory duties and powers to enforce the               equality enactments and to work towards the elimination of unlawful               discrimination and harassment (under section 8 Equality Act 2006).

3.2              Our approach to exercising our statutory functions is to enable duty-holders to               comply with the legislation and take enforcement action only where it is               necessary and proportionate to do so to ensure legal compliance in practice.

3.3              The Equality Act 2010 represents the main domestic equality enactment over               which the Commission has a guardianship role as a statutory enforcer. That               guardianship role can be exercised in part by issuing codes of practice and               guidance to improve understanding of rights and obligations and to support               legal compliance. It also encompasses use of specific legal powers - such as               holding inquiries, carrying out investigations, or supporting litigation through               courts and tribunals - to identify and challenge non-compliance.

3.4              UK equality law has been proposed by Government, scrutinised and enacted               by Parliament and is interpreted by tribunals and courts. One of the general               aims and principles underpinning the legislation is that prevention of               discrimination is preferable to remedy after the event, and this is supported by               sections 124 and 149 of the Equality Act 2010. That Act had broad cross-party               political support during its Parliamentary passage.

3.5              To complement the judicial system (without acting as a substitute for it), the               Commission carries out follow-up work to ensure tribunal recommendations               have been carried out in practice.

3.6              In August 2012 the Commission responded to the Government's consultation,               on proposals that included the removal of employment tribunals’ wider               recommendations power. Our reasons for opposing the removal of this power               were:

• it has been in place for less than two years, and it is therefore too early to judge its effectiveness in reducing repeated discrimination
• it has the potential to benefit employers, employees and the justice system
• we do not think that wider recommendations place a disproportionate burden on business: the evidence indicates that the power to make recommendations is used proportionately, and that where an employer has or would take steps voluntarily, recommendations will not be made
• the burden of the provision only falls on those employers who have lost discrimination cases

3.7              The Commission still believes that the ability to make "wider"               recommendations is an important one which should be retained. Its removal               would limit the powers of tribunals to make recommendations to those cases               where the recommendations would alleviate the discrimination only for an               individual claimant.[1] So long as the current recommendations are followed, the               exercise of the power benefits:

• the employer: the employment tribunal gives an employer a clear indication of steps to take to address the discrimination identified by the detailed evidence. If employers take these steps, it reduces the risk of further discrimination claims and strengthens future defences by providing evidence that the employer took reasonable advance steps to prevent discrimination occurring[2].
• the employer's remaining employees (in cases where the claimant has left employment): where an employer follows their wider recommendations, this reduces the  risk of other employees experiencing discrimination at work. This is likely to result in benefits for the employer by reducing  stress at work; sickness absences; managerial time spent dealing with disputes; and staff turnover.
• the employment tribunal system and other organisations involved in dealing with employment tribunal claims, such as ACAS: an employer’s positive response to recommendations reduces the burden on these organisations by reducing the potential for further discrimination claims.

3.8              In the period Oct 2010 to June 2012 the Commission considered 372 employment tribunal decisions decided in favour of the claimant.[3] Recommendations were made in 13 of these cases. It is not always clear from the decisions which power has been exercised; however, the recommendations in 8 of these cases appear to have been made under the wider power.

3.9              The relatively low number of recommendations might be explained by               claimants not being aware that they can ask tribunals to make wider               recommendations in their case. Neither the current ET1 form nor the guide to               making a claim[4] refer to the possibility of such recommendations being made.

3.10              The Commission analyses the employment tribunals’ decisions in which wider               recommendations are made. In judgements without full written reasons it is               difficult to assess the effectiveness and proportionality of the               recommendations because the detailed facts of the case are not known.               However in cases where there is sufficient information, the Commission's view               is that tribunals generally do act proportionately, taking into account the size               and resources of an employer in making its recommendations.

3.11              The effectiveness of recommendations is harder to establish because there is               no automatic method for enforcing wider recommendations. The Commission               is aware that some tribunals include in their recommendations a requirement               that the employer report back to the tribunal to confirm that steps have been               taken.

3.12              The Commission also treats cases with a recommendation from an               employment tribunal as a priority for follow up action. It is in contact with some               employers to whom recommendations have been directed, both under the               current and the previous recommendation making powers, in order to               ascertain whether the employers have implemented the recommendations               fully.

3.13              It is not appropriate to discuss outcomes in specific cases, as this would               breach confidentiality. However, the Commission's experience is that               employers respond in different ways. Some employers accept the               recommendations as a useful framework for addressing the problems               identified by the employment tribunal.  Other employers seem unwilling, or in               some cases lack the organisational capability, to implement the               recommendations effectively.

3.14              In its consultation paper the Government stated that an employer has "no way               of knowing how or when a tribunal may make [a wider] recommendations; or               whether it is feasible or affordable for them to comply." [5]  We do not agree with               this view:

• an employment tribunal hears representations from the employer before deciding on the appropriate recommendation. The tribunal is well placed to recommend the steps that it would be reasonable for the employer to take to "obviate or reduce the adverse effect of any matter to which the proceedings relate" as s.124 EA 2010 states.

• Where the employer feels that the recommendations are disproportionate it has the right to appeal against them to the employment appeal tribunal[6]. The Commission is not aware of any appeals having been heard in relation to recommendations made under the wider power in the Equality Act 2010.

• The absence of recommendations means the Commission has to assess the steps we think the employer needs to take to eliminate or prevent further breaches of the Equality Act 2010. That can take time and inevitably involves the employer expending additional resources. 

• In comparison with employment tribunals there are greater legal constraints on the Commission making binding recommendations. The Commission’s power to issue recommendations to employers, in the form of an unlawful act notice, can only be exercised further to the completion of an investigation (under s.20 EA 2006).

3.15              The Government's consultation noted that the British Chambers of Commerce               believes that the power is not required because employers often make               changes to their policies anyway.[7] The Commission agrees that in some cases               employers take proactive steps to address the discrimination identified by the               tribunal. The tribunal is unlikely to make a recommendation where there is               evidence that an employer is already taking steps voluntarily[8].  For these               employers the power to make recommendations is not likely to be an               additional "regulatory burden".

3.16              However, in the Commission’s experience some employers do not take action voluntarily, as they do not accept that their policies or practices need to change despite losing a discrimination case[9]. The Commission's view is that it is appropriate that a proportionate "regulatory burden" should fall on these employers as a result of failing to adhere to the law.

3.17              The power to make wider recommendations has only been in force since               October 2010. The Commission's view is that this time period does not provide               a sufficient evidence base to assess whether the power is being used               effectively and proportionately and whether it is a disproportionate burden on               business.

3.18              A better evidence base might also clarify whether removal of the power might               have more of an impact on people with some protected characteristics under               the Equality Act 2010. An analysis of this would contribute to ensuring that the               Secretary of State gives ‘due regard’ to the Public Sector Equality Duty in               s.149 of the Equality Act 2010.

3.19              We urge the Joint Committee to seek clarification from the Government as to               whether they have plans to carry out a review before any decisions are taken               on whether this proposal should be included in the Bill. We believe that a               review is necessary and reasonable because it would allow:

• data about recommendations already made to be systematically collected from ET decisions for 12 months from the end of the current consultation; and
• time for the outcomes of recommendations already made to become clear.

4.0              Exercise of regulatory functions (the Growth Duty) clauses 58 to 61

4.1              This section of the paper analyses the implications for the Commission of imposing the proposed Growth Duty. We then consider a related voluntary measure, the Accountability for Regulator Impact (ARI) Guidance, which came into operation in July 2013.

4.2               The Commission is listed in the Annex to the consultation response amongst               the organisations proposed to be covered by the growth duty. The lack of               detail in the proposals (for example on the meaning of economic growth in               practice, or guidance on how to discharge the growth duty) creates problems               in fully predicting the legal position. However our assumption is that the               Government’s current intention is to include, by order, all the Commission’s               'regulatory' functions within scope of the growth duty. Our principal activities               likely to be captured by the duty are producing codes and guidance,               conducting inquiries, using enforcement powers and bringing, supporting or               intervening in litigation.

4.3              There are three distinct and individually exceptionally compelling reasons why               both the growth duty and the ARI should not be applied to the Commission:

4.4               Firstly, definitional issues in the characterisation of Commission as a ‘regulator’ for the purposes of the growth duty. The Commission does not have most of the functions of a regulator of the sort that the growth duty proposals are intended to affect. We agree with the Government’s previously expressed view               (see para 4.10  below) that the Commission should not be treated in the same way as other regulators, which (unlike the Commission) typically have responsibility over a particular sector or activity, and the power to set standards and impose sanctions for that sector.

4. 5               Secondly, legal concerns about the compatibility of these provisions with               relevant legislation. They raise a potential conflict with the Commission’s               statutory duties and, crucially, a conflict with the statutory protection of its               independence. To help secure the Commission's independence, Parliament               provided in the Equality Act 2006 that the Secretary of State must have regard               to the desirability of ensuring that it is subject to as few constraints as possible               in its activities, timetable and priorities. However, in its consultation response               on the growth duty[10], the Government states its view that: ‘all non-economic               regulators and regulatory functions should be covered by this measure unless               there is an exceptionally compelling case for their exclusion’. The               Government's approach to the application of the growth duty to the               Commission, as set out above, appears not to have regard to the Equality Act               2006 duty set out in paragraph 4.21.

4.6               Thirdly the proposed imposition of additional constraints on the Commission’s               independence greatly threatens our ‘A’ status as a National Human Rights               Institution (NHRI), to which the Government has repeatedly stated that it               attaches great value.

4.7               For these reasons, and although we are happy to work to realise the aims of               these measures (e.g. by greater consultation with businesses on any costs to               them of the Commission's activities), it would not be appropriate, legally sound               or politically beneficial for the Government to require the Commission to               comply with the requirements of the growth duty. Looking at each in more               detail:

a) Definitional issues

4.8              The Commission is often described as a regulator; however, the Commission does not make regulations. We have no role in setting standards, or in promulgating new regulations. In the UK, the relevant requirements, restrictions, conditions or standards for equality and human rights issues are set by Parliament and initiated by Government.

4.9              Consequently, since the Commission does not determine the content of the               requirements, it does not impose costs on business through regulation, set                requirements with which others have to comply or determine their costs in               doing so. For example, the recent regulation on age discrimination in services               was put forward by the GEO, and the Commission has no power to change its               terms.

4.10              The Government acknowledged the distinction between the Commission and               typical regulators in its response to the consultation on reform of the               Commission.[11] The Government decided against its original proposal in the               consultation to amend section 8 of EA 2006 to define the Commission’s role               as an 'equality regulator', having concluded that it was unrealistic and               undesirable to expect the Commission to 'regulate' every part of society on               equality. It drew a clear distinction between the Commission and sector-              specific regulators such as Ofsted and the Care Quality Commission, and               stated that it was more appropriate to regard the Commission as a 'strategic               enforcer' than as a regulator.

4.11              Nevertheless, we are currently included in the list of affected organisations in               Annex A to the growth duty consultation response[12], alongside regulators such               as the Health and Safety Executive, the Care Quality Commission, the Food               Standards Agency and Ofsted. We agree that we are fundamentally different               in character from regulators like these, which have responsibility for oversight               of defined sectors or fields of activity, and typically have the power to set               standards and to enforce them through inspections and sanctions. We               therefore believe that our distinctly different position and limited remit, in               comparison to these more typical regulators, strongly supports the argument               that we should be removed from the list of organisations to which the duty               applies.

b) Legal concerns

4.12              Since the ARI guidance does not have legal force, this section on legal issues               focuses principally (though not entirely) on the proposed statutory growth duty.               We have identified a number of legal problems in the proposed application of               the growth duty to the Commission, which provide cogent and persuasive               reasons for not including the Commission within scope of the growth duty at               all.

4.13              The current breadth of coverage of the growth duty is problematic. It is a               particularly critical omission that the proposed legislation does not expressly               render the growth duty subject to other requirements affecting the exercise of               regulatory functions, since it is currently unclear how it interacts with other               legal obligations or with the standards for better regulation.

4.14              We understand the Government’s intention is to define economic growth in relation to specific businesses and economic sectors. There are constraints on the Secretary of State's powers to define growth, and on what can be covered in the growth duty guidance, which limits the potential value and assistance offered through               those sources. A definition of economic growth cannot include irrelevant considerations. The guidance on the meaning of economic growth cannot exclude a matter relevant to economic growth from consideration, as the Secretary of State's approach appears to contemplate. Nor can it specify what must be taken as compliance with the growth duty, or purport to determine the performance of other legal duties. Even if the Government’s intention is tenable, we foresee considerable challenges ahead in this regard. For example, it may be said that the consequence of exercising regulatory               functions is that whilst growth is promoted for one business, this is at the expense of growth for another.

4.15              Our firm view, based on legal advice, is that the growth duty cannot justify a failure to discharge the Commission’s statutory duties or its objectives (under the Equality Act 2006 and Equality Act 2010), or justify acting in a way that is incompatible with European Union law and/or the Human Rights Act 1998.

4.16              For example, the Commission could not lawfully refuse to take enforcement               action where there is a breach of equality law or violation of human rights,               simply on the basis that a failure to act will promote economic growth               (whatever that concept embraces). Consequently, we believe it is incorrect for               the Government to state that the growth duty will provide the framework for               regulators (in which category the Government seeks to include the               Commission) explicitly to balance growth with their duties to protect.

4.17              Whilst in general it is recognised that equality is good for business, individual cases might occur in which legal complexities arise from the need to balance growth and equality considerations. For example, would the Commission be justified in desisting from the promotion of equal treatment in respect of pay on the ground that it would damage economic growth by increasing costs to the detriment of competitiveness?

4.18              Our analysis of the potential impact of the growth duty is that it appears to insert an incongruous consideration into the exercise of the Commission's enforcement or litigation powers, and that this might also be the case in relation to exercising regulatory functions concerning inquiries and issuing codes of practice or guidance.

4.19              We also take the position that there is a fundamental incompatibility between the growth duty and the Commission's competence and functions in protecting and promoting human rights if the promotion of economic growth were considered paramount regardless of other considerations in every case.

4.20              In public law terms, the effect of the growth duty is that the promotion of economic growth (whatever that concept may embrace) would have to be considered whenever the Commission is contemplating the exercise of specified regulatory functions. Attempts to invalidate regulatory decisions could succeed on growth duty grounds on the basis that the Commission had failed to have regard to the desirability of promoting economic growth or the Secretary of State's guidance, or that it had misdirected itself on the meaning of economic growth, or that it had failed to obtain the information necessary to determine reasonably what the effect of its actions on the promotion of economic growth was likely to be and/or reached irrational conclusions. Furthermore, the Commission would have to have cogent reasons for departing from the Secretary of State's guidance. The growth duty guidance would be likely to place additional requirements in practice upon regulators that go beyond the regulators’ code.

4.21               The Secretary of State is under a legal obligation (contained in Schedule 1, paragraph 42 (3) of the Equality Act 2006) to have regard to the desirability of ensuring that there are as few constraints as possible imposed upon the Commission in its activities, timetables and priorities. This obligation reflects the need to preserve the Commission's independence from Government, in relevant ways, whose activities the Commission is empowered to scrutinise and is highly relevant to any consideration of whether the Commission should be covered by the growth duty. A failure to consider this factor properly would potentially render a Ministerial decision to include some or all of the Commission’s functions in the growth duty unlawful. In our view, these legal problems constitute exceptionally compelling reasons for the growth duty not to be              applied to the Commission.

c) Independence and NHRI status

4.22              A further exceptionally compelling reason why it would not be in the Government’s interests to impose the growth duty or ARI guidance on the Commission, is that it would present a significant further threat to the Commission retaining 'A' status as an NHRI.

4.23               Ministers have repeatedly signalled their strong commitment to retention of 'A' status; for example, the 2 May 2013 letter[13] to the Commission’s Chair from Helen Grant MP, Minister for Women and Equalities, stated that: ‘The Government is committed to the Commission being a strong, effective and independent equalities and human rights body, and to retaining the Commission’s ‘A’-rated status as a National Human Rights Institution’. Other ministers, including Lord McNally and Baroness Stowell of Beeston, have echoed this commitment.

4.24              That the UK has an 'A' status NHRI is a vital part of the Government’s human rights record at home, this issue has wider impact for Government, in particular in relation to its foreign policy priorities: which naturally affects its reputation at the UN and in its bilateral relations. For example, the Foreign Secretary and Baroness Warsi have given strong support to the UK’s candidacy for election to the UN Human Rights Council, and we expect our NHRI status to be considered when votes are cast. Activities such as the recent high-profile launch of the Government’s action plan on business and human rights would also carry less credibility.

4.25              Despite Government commitments, and recent improvements to the               Framework Agreement between Commission and the Government Equalities               Office, the Commission’s 'A' status remains under scrutiny by the United               Nations International Co-ordinating Committee Sub-Committee on               Accreditation (SCA). Our next five-yearly scheduled review by the SCA will be               in 2015, but we were added to the agenda of the SCA’s last meeting in May               2013, and were subsequently asked to provide further information on the               application of spending controls, in advance of a likely further discussion on               our independence at the SCA’s next meeting in November of this year.

4.26              There is an incompatibility between the growth duty and the Commission's               objectives, duties and competence as a National Human Rights Institution               (NHRI) under the United Nations Paris Principles. Our considered judgment is               that there is a real risk that the SCA will perceive the imposition of the growth               duty as undermining the Commission’s independence from Government,               risking removal of our UN accreditation as an ‘A’ status NHRI.

5.0              Accountability for Regulator Impact

5.1              The Accountability for Regulator Impact (ARI) Guidance[14] sets out expectations for engagement with business by national non-economic regulators in respect of their regulatory policy and practice. It is expected regulators will publicly commit to principles covering engagement with business by publishing draft impact assessments for comment and sharing evidence, and providing mechanisms for businesses to complain that they have not been properly engaged by regulators. In the event of disputes about regulatory assessments, the Government's Regulatory Policy Committee potentially becomes the final arbiter. The Government appears to believe that the ARI should be applied to the Commission’s work, although it recognises the guidance’s voluntary nature.

5.2              As a matter of choice, and with the agreement of our Board, we would seek to adapt and evolve our approach to deliver the aims of the growth duty and the principles of ‘Accountability for Regulator Impact’, but would do so in a way which is compatible with our statutory duties and which does not risk the UN downgrading the UK’s 'A' status as an NHRI. To this end, we would be happy to discuss and agree with GEO a protocol whereby the Commission commits to implementing the outcomes and approaches of the growth duty and ARI guidance - including engaging with business and assessing their costs - and to applying this proportionately to those areas of the Commission's work where it acts like a regulator.

5.3              The Accountability for Regulatory Impact (ARI) measure assumes that the               regulators to whom it applies are accountable to Government departments for               taking particular decisions. If a dispute arises as to the likely impact of change,               a regulator is, in the final analysis, expected to accept and to act in               accordance with whatever the Government's Regulatory Policy Committee               determines to be correct. The ARI measure could, therefore, undermine the               Commission's independence in practice, resulting in loss of our NHRI 'A'               status. 

6.0              Conclusion

6.1              The Commission supports the aims of growth and better regulation, and is               prepared to agree to taking a voluntary approach which will meet these aims.               However the measures in the proposed legislation would: constrain our               freedom to exercise our statutory duties; are not proportionate or               appropriate to the Commission’s functions; do not accord with the relevant               legislation; and would restrict the Commission's independence with               consequences that we have outlined above. They are exceptionally compelling               reasons to exclude EHRC from the scope of the proposed growth duty in               clauses 58 to 60 of the Draft Deregulation Bill.

6.2                There is a real risk that the imposition of the growth duty on the               Commission               will breach domestic law (including Schedule 1, paragraph 42 (3) of the               Equality Act 2006) and that it would place at risk the Commission's               independence and UN accreditation as an 'A' status NHRI in the UK.

Equality and Human Rights Commission

26 September 2013