Contract workers and race discrimination

11 August 2009
  

In Leeds City Council v Woodhouse the EAT has provided guidance on how a contractor can successfully initiate a claim of race discrimination against a third party who is not his employer, under the terms of section 7 of the Race Relations Act 1976 (“RRA”).

Background
Leeds City Council (the “Council”) contracted with West North West Homes Ltd (“WN”) for WN to manage Leeds’ former council housing stock. WN was a wholly owned corporate subsidiary of the Council which had a service agreement with the property services division of the Council. Mr Woodhouse (“W”) had formerly been employed by the Council until he was moved under a TUPE transfer to commence work for WN.

W worked with Mr Chapman (“C”) who was employed by the Council’s property services division. C was alleged to have made a number of racist remarks or actions against W, who responded by issuing a claim in the employment tribunal for racial discrimination against the Council, C and WN under the RRA.

The RRA S.7 states:
“7(1) This section applies to any work for a person (“the principal”) which is available for doing by individuals (“contract workers”) who are not employed by the principal himself but by another person, who supplies them under a contract made with the principal…..(2) It is unlawful for the principal, in relation to work to which this section applies, to discriminate against a contract worker – (d) by subjecting him to any other detriment. (3A) It is unlawful for the principal, in relation to work to which this section applies, to subject a contract worker to harassment”

W claimed that, under section 7 of the RRA, he was a contract worker and his principal employer was the Council rather than WN. He also claimed that the Council was vicariously liable for C’s actions because it was C’s employer. W commenced proceedings and the Council, C and WN responded by applying to strike out the claim.

Decision at the Employment Tribunal
The Tribunal found that W was a contract worker and the Council was his principal for the purposes of section 7 of the RRA. This was despite the fact that W was an employee of WN. The Tribunal also found that the Council was vicariously liable for C’s allegedly racist comments or actions because they were C’s employer.

Decision at the Employment Appeal Tribunal
The EAT upheld the Tribunal’s decision and dismissed the Council’s and the other respondents’ appeals.

Who was W’s principal under the RRA?
The Tribunal noted that S.7 of the RRA does not include the word “benefit”. However, the Tribunal stated that, in determining who is the “principal”, sometimes it will be of assistance to look at the question: for whose benefit is the contractor’s work? It found that the ultimate beneficiary in W’s case was the Council. It also found that the discrimination that occurred was related to that work as a consequence of which the principal could be liable.

The Tribunal also examined the close relationship between the Council and W in order to establish the identity of the principal. It noted that W‘s personnel records and his leave authorisations were administered by the Council. It also found that he had access to Council facilities as if he were an employee, he was listed on the Council’s website, he had been a long standing employee of the Council until his transfer to WN and some of his contact details were advertised as being via the Council. The Council could, to some degree, influence, if not control, W’s working conditions; a factor taken into account by the tribunal in assessing who was W’s principal. The Tribunal concluded that the connection between the two was a particularly close one.

The Tribunal decided that W was a contract worker supplied by WN to the Council and that the Council was his principal. This judgment was based on:

• the fact that the discrimination that occurred was related to W’s employment; and
• that the Council was the ultimate beneficiary of W’s work

The close relationship W had with the Council and the influence or control of W’s work by the Council was also noted by the Tribunal in reaching its decision.

Comment
The Tribunal noted that W was in a “unique situation”. In resolving this matter, the Tribunal admitted that it had taken a “broad approach” to a “broad interpretation” of s.7 of the RRA. As a consequence, it is not surprising that the Council has sought and been granted leave to appeal against the EAT’s decision. In the meantime, a contract worker subjected to acts of race discrimination, or harassment on racial grounds, by your employee may hold you vicariously liable for that behaviour. We will keep you informed of developments.