UK: Equality Act 2010: Issues Affecting Charities

Last Updated: 10 October 2010
Article by Alana Lowe-Petraske

Equality Act 2010: Issues Affecting Charities

 

As recently reported ( see here), the majority of the provisions of the Equality Act 2010 ('the Act') come into force today, 1 October 2010. This note highlights some of the key issues likely to affect charities both as organisations and as service providers.

The Act is intended to draw together and harmonise the current assortment of legislation addressing discrimination across various strands (or, in the language of the act, 'protected characteristics'), namely, age, disability, gender reassignment, marital and civil partnership status, pregnancy and maternity, race (including nationality and ethnic origin), religion or belief, sex, and sexual orientation.

The Act introduces a consolidated framework of protection against direct and indirect discrimination, harassment and victimisation in a range of fields (including, amongst others, the provision of services, employment and work and the membership of associations). Charities may be affected in relation to:

  • providing services, including grants and non-monetary support;
  • any limitations on their beneficiaries; and
  • their employment practices.

Charitable Exemption

Many charities have been accustomed to relying (whether consciously or not) on the variety of charitable instrument exemptions contained in the existing anti discrimination legislation, in order to limit the services or benefits they provide to people sharing specified characteristics (e.g. ethnicity or sexual orientation).

These existing exemptions have now been consolidated into a single charitable exemption which allows a charity to restrict its benefits to people with a shared 'protected characteristic' only where:

  1. it is acting in accordance with a 'charitable instrument'; and
  2. the restriction on its beneficiary class is either:
  • preventing or compensating for a disadvantage linked to the 'protected characteristic'; or
  • a 'proportionate means of achieving a legitimate aim'.

Charities with general charitable objects who as a matter of practice restrict their services or benefits to a particular class sharing a protected characteristic are not likely to be acting in accordance with a 'charitable instrument' and so will not be able to take advantage of the charitable exemption. Those acting in pursuance of charitable objects contained in their trust deed, charter or articles of association will be, but will still have to satisfy one of the two tests at 2 above. Moreover, charities administering subsidiary trusts or restricted funds with a relevant beneficiary limitation may have difficulty lawfully complying with the terns of the trust or fund unless the charity exemption applies. Finally, charities which fund other organisations may also be caught by the Act for knowingly instructing, causing or inducing breaches of the Act.

Charities benefitting a class restricted by a shared 'protected characteristic' must take action to ensure compliance and trustees should note that they may be personally liable for breach of trust if operating the charity in breach of the law, or indeed in breach of its governing document. For this reason a charity with objects containing restricted objects that nevertheless cannot meet one of the tests at 2 above will be in a bind - grants compliant with the objects may be unlawfully discriminatory and grants outside the objects will amount to a breach of trust. Such charities will need to seek assistance from the Charity Commission to amend the relevant charitable instrument.

Charities should also note that there is no cap on the compensation available to individuals who allege unlawful discrimination under the Equality Act. Enforcement action by the Commission and/or the Equality and Human Rights Commission is also possible.

Commission summary guidance

The Charity Commission has published summary guidance on the Equality Act and the two tests (which can be found here). 'Summary' is an accurate description. The guidance contains little of the detail which might have assisted charities and trustees in applying the two tests to their particular circumstances. However, in an accompanying statement, the Commission commented that 'where an existing or proposed restriction to a particular group of people on certain grounds is not based on the needs or disadvantages experienced by that group, charities will need a strong justification to continue with or include the restriction'. This is consistent with the recent High Court decision in relation to the application by the charity Catholic Care to amend its objects, in which the Court held that the charity should be allowed to discriminate only if it could show 'particularly weighty and convincing reasons' why the proposed discrimination would be a proportionate means of achieving a legitimate aim. See further here.

The Commission has indicated that more detailed guidance will follow in due course.

Other relevant exemptions

The Act does contain other exemptions which may be relevant to charities, including in relation to:

  • single sex and religious schools;
  • organisations relating to religion or belief;
  • associations (associations - as defined in the Act - may restrict membership to people who share a protected characteristic, provided that membership is not based solely upon a person's colour);
  • the 'positive action' exemption (where charities provide services only to those with a particular 'protected characteristic' and those persons:
  1. suffer a disadvantage connected to that characteristic; or
  2. have needs that are different from people without that characteristic; or
  3. are disproportionately under-represented in a given activity.

Employment

As employers, charities may be affected by the Act's:

  • widening of the scope of direct discrimination explicitly to protect those who are associated with someone who has, or who are themselves perceived to have, a protected characteristic;
  • the extension of the range of circumstances in which an employer may be liable for harassment of employees by third parties (including, for example, service users);
  • restriction of the circumstances in which employers may ask job applicants questions about their health prior to making a job offer.

For further details of the employment impact, please see here.

What should charities be doing?

Charities should consider whether and how the Act applies to their operations including by:

  • considering the changes to the law at board level and engaging early on to create a strategy for compliance;
  • considering the charity's beneficial class and whether benefits are restricted with reference to a 'protected characteristic';
  • ensuring that any relevant restriction in practice reflects the charity's objects or is otherwise contained in a 'charitable instrument';
  • where restrictions are authorised by the objects, considering which of the two exemption tests can be satisfied in relation to the provision of services, grants or other benefits;
  • reviewing any subsidiary trusts or restricted funds for compliance issues;
  • reviewing grant-making criteria and practice to establish if any grants from the charity's assets are being given knowingly to fund another to discriminate; and
  • considering whether any amendments are required to the charity's objects, grant making criteria; recruitment practices, equal opportunity policies or training programmes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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