The issue of charities discriminating in the provision of their services is becoming increasingly divisive within the sector. In this article, we explore some of the current issues with which many charities are grappling, and look at the legal exceptions that charities may rely upon in making these difficult choices.
An issue facing many charities, and becoming increasingly divisive within the sector, relates to the rights of transgender people and discrimination in the provision of services by charities as it impacts on the transgender community.
Following the controversial decision of the Charity Commission last year to register LGB Alliance as a charity, there has been an ongoing debate about the purposes and activities of the charity, with strong opposition from another charity, Mermaids. This is the first case we have ever seen of one charity seeking to strip charitable status from another. Mermaids raised funds for the appeal via crowdfunding, and the Charity Tribunal hearing began last month. We are currently awaiting the judgment with anticipation.
Similar issues are also impacting women's charities, in particular in relation to "single sex" services and spaces (at a time where services are increasingly commissioned on a gender neutral basis), and their impact on transgender women.
In March this year, Women's Aid confirmed its position, stating "the provision of single-sex domestic abuse services is a founding principle of Women's Aid, and we will defend it" and that the charity supports the right of its members to conclude that it is not appropriate to include transgender women in women-only shared spaces.
Then in May and June, both sector and mainstream press reported that a rape victim was suing Survivor's Network, after a transgender woman was permitted to join a "women-only space" therapy group at its rape crisis centre in Brighton.
These issues will only be brought into sharper focus as debate on the varying and conflicting theories about sex and gender continue. And these are not the only examples of tensions within the sector relating to conflicting protected characteristics.
Charities are established to tackle specific issues, and many are set up with a very narrow and carefully defined beneficiary group in their charitable purposes. In cases where charities wish to limit their activities to support people with a particular protected characteristic, they seek to rely upon the "charities exception" in s193 of the Equality Act 2010 (the Equality Act) to justify limiting the provision of their services to that specific protected group.
In a blog published on its website, the Women's Resource Centre calls for clarification of the single sex exceptions under the Equality Act 2010 and consistent and clear evidence-based definitions of 'sex' and 'gender'.
We are yet to see any significant case law on this issue, but a recent decision of the ECHR has put to bed a long running case revolving around the extent of the "charities exception" under the Equality Act. In this case, the issue related to discrimination on the grounds of religion, and a refusal to provide services to a person who was not an Orthodox Jew.
The Agudas Israel Housing Association
The Agudas Israel Housing Association (AIHA) is a housing association established to provide housing, accommodation and assistance "primarily" for the benefit of the Orthodox Jewish community. Its policy does not restrict the provision of services solely to members of that religious community, but does state that they are prioritised and, in practice, due to demand from that community, all of the housing is allocated to members of the community.
AIHA works with its local authority (Hackney London Borough Council) to identify beneficiaries in need of housing (providing 1% of the local authority's total social housing stock), with the local authority nominating eligible individuals to AIHA.
The issue in this case arose when a mother of four was identified by the local authority as falling within the group having the highest need for re-housing, but was not nominated for an AIHA property (in practice, the only individuals nominated are members of the Orthodox Jewish community). While waiting for housing, at least six AIHA properties became available and were allocated to families from the Orthodox Jewish community.
The mother brought proceedings against both AIHA and the local authority claiming unlawful direct discrimination on the grounds of religion and race.
The Supreme Court decision in 2020
The case went all the way to the Supreme Court, and a landmark judgment was handed down in 2020 upholding the decisions of both the Divisional Court and Court of Appeal in dismissing the claim.
Direct discrimination occurs where "because of a protected characteristic, A treats B less favourably than A treats or would treat others". Both religion and race are protected characteristics. However, direct discrimination is not unlawful where a statutory exemption applies, and AIHA sought to rely upon three exceptions within the Equality Act 2010 (the Equality Act) in defending its policy as lawful:
- Positive Action (section 158): where positive action is a proportionate means of addressing needs and disadvantages of persons with a shared protected characteristic.
- Charities Exception (first limb) (section 193(2)(a)): where charities may restrict benefit to a specific protected characteristic if that restriction is set out in their governing documents and is a "proportionate means of achieving a legitimate aim".
- Charities Exception (second limb) (section 193(2)(b)): where charities may restrict benefit to a specific protected characteristic if that restriction is included in their governing documents and is for the purpose of preventing or compensating for a "disadvantage linked to the protected characteristic".
The key questions that were considered by the Supreme Court were whether the lower courts had been correct to conclude that the direct discrimination was "proportionate" (as required by both s158 and s193(2)(a) of the Equality Act), and whether the proportionality test should also be applied to the exception in s193(2)(b).
It was argued by the mother that the "proportionality" test for the purposes of these statutory exceptions requires any positive discrimination to be aimed at securing equality of opportunity rather than equality of outcome. If this argument were correct, then in the context of this case it would have been necessary for AIHA to only consider a person's membership (or not) of the Orthodox Jewish community in a "tie-break" situation, following an objective assessment of all applicants (which was not AIHA's policy or practice).
Very unusually, the Supreme Court also granted permission for a new claim based on the Race Directive to be put forward during the appeal. The Race Directive enshrines a principle of equal treatment between persons irrespective of racial or ethnic origin. This principle applies in relation to a number of matters, including access to housing. The mother sought to argue that AIHA's allocation policy involved direct discrimination on the grounds of race or ethnic origin, contrary to the Race Directive.
The Supreme Court found that:
- There is no general requirement to consider equality of opportunity rather than equality of outcome when assessing proportionality for the purposes of the relevant exceptions under the Equality Act. The range of permissible legitimate aims in each of s158 and s193(2)(a) includes seeking to achieve particular outcomes. The lower courts had therefore applied the correct approach to considering proportionality.
- Proportionality analysis requires identification of a legitimate aim and then an assessment of whether a measure taken to promote that aim is proportionate in its effects in pursuing it, having regard to other interests at stake. This should be assessed on a group basis. Lord Sales commented as follows:
"Charitable status is a way of recruiting private benevolence for the public good (subject to the public benefit test in the Charities Act), and charities focus on providing for particular groups since that is what motivates private individuals to give money, where they feel a particular link to or concern for the groups in question. It is for the public benefit that private benevolence should be encouraged for projects which supplement welfare and other benefits provided by the state, even though those projects do not confer benefits across the board. Accordingly, Parliament contemplated that the proportionality of measures falling within section 158 and section 193 should be assessed on a group basis, by comparing the advantages for groups covered by the measure in question with the disadvantages for groups falling outside it."
"It is in the public interest that charities should be able to minimise their costs of administration. That is in order to ensure that maximum resources are made available to address the problems which charities seek to alleviate and since otherwise charitable giving may be deterred, if donors feel excessive amounts of what they give will be spent on administration rather than actually helping people in need. The aims of minimising wastage of resources on administration and encouraging charitable giving are themselves legitimate objectives to be brought into account in the assessment of proportionality."
- There is no requirement to consider proportionality in relation to the exception in s193(2)(b) of the Equality Act.
- AIHA's housing policy involved discrimination on the grounds of religious observance, rather than Jewish matrilineal descent (which might have amounted to a test of ethnic origin). Therefore, there had been no breach of the Race Directive.
The mother then appealed to the European Court of Human Rights under Article 14 of the European Convention on Human Rights (the Convention) (the right not to be discriminated against in the enjoyment of human rights and freedoms) in conjunction with Article 8 of the Convention (the right to respect for private and family life and the home).
The decision of the European Court of Human Rights
On 16 June 2022, the European Court of Human Rights (ECHR) published its unanimous decision that the mother's application was inadmissible.
It is a legal requirement that the Equality Act is interpreted by the courts in a way which is compatible with the Convention. The ECHR held that the rights under Article 8 of the Convention do require that where a State decides to provide housing benefits it must do so in a way that is compliant with Article 14 (in other words, without discrimination). However, the ECHR also explained that:
"Article 14 does not prohibit a member State from treating groups differently in order to correct 'factual inequalities' between them... A difference of treatment is, however, discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised."
On the facts of the case, the ECHR found that the mother's case did fall within Article 8 and agreed that she had been treated differently. However, the ECHR found that, on the facts in this case, the different treatment was "objectively and reasonably justified".
In its decision, the ECHR explained that member States are afforded a "wide margin" to determine general measures of economic or social strategy, but this margin is narrower where it concerns rights of "central importance" to an individual's identity, self-determination, physical and moral integrity, maintenance of relationships with others and a settled and secure place in the community. However, in this case, the ECHR concluded that this margin had not been exceeded.
The mother also sought to complain that s193(2)(b) of the Equality Act breaches Article 14 of the Convention in not requiring any consideration of proportionality. However, the ECHR did not consider it necessary to consider that particular issue in this case.
The ECHR decision in this case turned on the facts. However, it is clear that the ECHR will only intervene in circumstances where the "wide margin of appreciation" afforded to member States is exceeded. We therefore consider it likely that the ECHR will rarely interfere with reasoned and carefully considered decisions of the courts of England and Wales.
Whilst the Supreme Court judgment was clear that there is no requirement for a charity to carry out a proportionality analysis when seeking to rely on the exception in s193(2)(b), there remains some scope for further challenge in respect of the compatibility of this provision with Article 14 of the Convention, given that the ECHR declined to consider the issue in this case.
The Birketts View
Controversy relating to the provision of services by charities to certain groups to the exclusion of others is a very hot topic within the sector, and we expect that these issues will continue to impact many charities. The law in this area is complex, and involves the interplay of the Equality Act with the Convention and various other pieces of legislation on specific issues (such as the Race Directive and the Gender Directive).
The AIHA case provides some helpful clarification in relation to the application of the exceptions that are available to charities under the Equality Act. However, we anticipate that further clarification of the law will become necessary, in particular in relation to questions of sex and gender.
The Supreme Court decision confirms that charities may lawfully discriminate where (a) their charitable objects either restrict benefits to persons with a particular protected characteristic, or give priority to those persons over others; and (b) the charity's purpose in restricting benefits to that group is to prevent or compensate for a disadvantage linked to the protected characteristic (i.e. the exception in s193(2)(b) of the Equality Act). There is no requirement to engage in any "proportionality" analysis when relying upon this exception.
This provides greater scope for discrimination than is afforded by either s158 or s193(2)(a) of the Equality Act, both of which require the discrimination to be "proportionate". However, care should be taken when relying solely on the exception in s193(2)(b), given the potential for further challenge that has been left open by the ECHR choosing not to consider whether this position is contrary to Article 14 of the Convention.
If possible, it is preferable to rely on more than one of the Equality Act exceptions (as AIHA did in this case). Where this is possible, the Supreme Court judgment helpfully confirms that any consideration of proportionality that is required should be carried out on a group basis. In other words, the proportionality of a policy in furtherance of a charity's purposes should be assessed by weighing the benefits to the group (or community) that the policy is intended to help against the disadvantages experienced by other groups as a result. The Supreme Court was clear that it is not necessary to compare "the benefits for that community with the disadvantage suffered by one person drawn from those other groups falling outside the policy". This means that the use of blanket policies by charities might be proportionate on the basis of this test.
It is important to remember that both of the "charities exceptions" set out in s193 of the Equality Act are only available where a charity has a provision in its governing documents that requires it to favour (or only support) persons with particular protected characteristics. If your charitable purposes do not contain any such restrictions, then discrimination is only possible if you are able to rely upon some other grounds within the Equality Act (e.g. s158) or if you amend your charitable purposes to introduce a restriction. In the latter case, it is necessary to justify this to the Commission under one or both limbs of s193 of the Equality Act.
Issues involving discrimination and the restriction of services to particular groups are often complex and controversial. If your charity is impacted by this, get in touch with our Charities Team to discuss how we can support you with advice and guidance on the adoption of appropriate policies and practices in line with current legal requirements.
Originally published by 26 October 2022
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