Although not at first glance an employment law matter, the recent Court of Appeal decision in Jivraj -v- Hashwani is an interesting example of the application of the Employment Equality (Religion or Belief) Regulations 2003.

The parties entered into a commercial contract which included an arbitration clause requiring arbitrators to come from a certain religious group. The clause required one appointment from each party and the third to be the President of HH Aga Khan National Council for the United Kingdom. It was further stipulated that all arbitrators should be “respected members of the Ismaili community and holders of high office within the community”. One of the parties sought to have an arbitrator appointed who was not a member of the community. The other party then sought the appointment of a sole arbitrator under the Arbitration Act 1996 because the subsequent introduction of the Religion or Belief Regulations had rendered the “Ismaili only” stipulation invalid.

In the High Court Mr Justice David Steel took the view that arbitrators are not employees and therefore the apointment of the sole arbitrator under the 1996 Act was invalid. He also took the view that even if arbitrators were subject to the 2003 Regulations they would be exempt on the basis of a “genuine occupational requirement” that the arbitrators should be Ismailis.

The Court of Appeal took a different approach but achieved (at least in part) the same result. It was held that an arbitrator is employed by a person to provide a service. “Employment” under the Regulations includes any contract personally to do any work and work covers the provision of services of any kind. Consequently, arbitrators are employees in this sense and therefore subject to the Regulations. Incidentally, in this context it made no difference whether arbitrators are employed or self-employed in the tax sense; they are still employees within the meaning of the Regulations.

Because membership of the Ismaili community was clearly not a necessary qualification in order to act as an arbitrator, the “genuine occupational requirement” exception could not be effectively invoked. Consequently, the arbitration clause fell foul of the 2003 Regulations and failed in its entirety. However, the appointent of the sole arbitrator under the 1996 Act was also invalid so the result was effectively the same.

There are two important matters highlighted by this decision. First, the imposition of a religious qualification to perform a function, even if it falls outside the scope of regular employment, renders the performance of that function liable to an effective challenge under the Regulations. Perhaps the most obvious example is a recruitment panel for the appointment of a teacher. Evidently, a panel deliberately made up of members of one faith would breach the Regulations. However, applying the same principle, any stipulation based on faith would in such circumstances place the legitimacy of the panel to perform its function at risk. For example, even the appointment of one person (for example, the parish priest) if that person was appointed on the basis of his or her religion could invalidate the entire panel as an effective decision-making body. There is obviously scope for a good deal of litigation resulting from this.

Second, the decision shows just how widely the Regulations (and, by implication, most other equality / anti-discrimination legislation) can be applied. The interpretation of what constitutes “employment” as applied in this case is one of the widest ever seen and opens up all manner of day-to-day functions to protection under the Regulations. It is to be expected that we will see some very imaginative applications of the Regulations and consequent claims in coming months. The issue is also likely to cause further friction between secular and religious bodies which has already been a lively issue in 2010 as reported in earlier blog posts.

You can read the Court of Appeal decision which was delivered on 22 June here.