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Income - calculation of earnings - absence from family credit scheme in 1989 of a provision for deduction of child minding costs from earnings - whether family credit within the scope of Council Directive 76/207/EEC and whether discriminatory on grounds of sex
The claimant was a lone parent who claimed family credit on 26 April 1989, declaring earnings of £487 per calendar month and £60 per week childminding expenses. The adjudication officer disallowed the claim on the grounds that her income exceeded the appropriate limit. She appealed to a social security appeal tribunal, arguing that the child minding costs should be deducted in calculating the earnings to be taken account in the assessment. The tribunal allowed the appeal on the grounds that the child minding costs constituted a payment of expenses wholly exclusively and necessarily incurred in the performance of her duties.
The adjudication officer appealed to the Commissioner, who gave an interim decision ruling that the tribunal had erred in law and that there was no provision in the family credit scheme allowing for the deduction of the childminding costs. However the claimant contended that the absence of such a provision had the effect that the family credit scheme indirectly discriminated against women contrary to Council Directive 76/207/EEC because it was more difficult for lone parents than couples to avoid having to pay for child care whilst working and the great majority of lone parents were women. On 11th February 1994 the Commissioner referred to the European Court of Justice the question of whether a benefit having the characteristics and purpose of family credit fell within the scope of the Directive. On receipt of their reply, the Commissioner gave a final decision.
Held, by the European Court of Justice, that:
1. although social security matters are excluded from Council Directive 76/207/EEC by Article 1(2), a particular benefit comes within the scope of the Directive if it is concerned with any of the subject areas mentioned in Article 1(1) i.e. access to employment, including vocational training and promotion, or working conditions (Jackson and Cresswell v. CAO, appendix 2 to R(IS) 10/91, followed) (para 13);
2. the concept of access to employment is not limited to matters that obtain before a person finds work. As the family credit scheme is intended to encourage both (a) workers to remain in low paid employment and (b) unemployed persons to take up such employment, for the purpose of the Directive it is concerned with access to employment (paras. 20 to 22);
3. the concept of working conditions within the meaning of Article 5 of the Directive is not limited to those conditions laid down by or agreed with the employer and can include a benefit necessarily linked to an employment relationship (para. 24);
4. there was a link between family credit and an employment relationship in that the benefit could only be awarded if there was such a relationship, albeit that the recipient might not be a party to the relationship and that the award, being for a fixed period, might continue after the relationship had ended (para. 23);
5. a benefit having the characteristics and purpose of family credit therefore comes within the scope of Council Directive 76/207/EEC.
Held, by the Commissioner in his final decision, that:
1. in order to determine whether a measure that falls within the scope of Council Directive 76/207/EEC is indirectly discriminatory on grounds of sex:
(a) the test to apply is to consider whether there is a considerable difference in the number or percentage of one sex as against the other in either the advantaged group (i.e. those who can comply with the requirement or condition imposed by the measure) or the disadvantaged group (i.e. those who cannot comply with that requirement or condition);
(b) the facts to be considered are those which applied at the time the measure actually affected the claimant (R v. Secretary of State for Employment ex parte Seymour-Smith [1995] ICR 889, CA followed) (para. 20);
2. on consideration of the statistical evidence, the family credit scheme, at the time it actually affected the claimant (i.e. in 1989), was indirectly discriminatory on grounds of sex in that the absence of a provision allowing childminding costs to be deducted in the calculation of earnings worked to the disadvantage of far more women than men (para. 22);
3. the design of the family credit scheme was justified by reasons that were objective and unrelated to discrimination on grounds of sex. This was because:
(a) the test to be applied was whether the scheme reflected a legitimate social policy aim of the UK government and was appropriate and necessary to achieve that aim (Nolte v. Landesversicherungsanstalt Hannover [1996] IRLR 225 followed) (para. 24);
(b) the aim of the scheme as stated by the government was to ensure that families do not find themselves worse off in work than they would if they were not working (para. 26);
(c) in judging the appropriateness of the scheme, the following principles should be applied:
(i) the government had a wide discretion to choose the measures capable of achieving its social policy aim (para. 25);
(ii) the appropriateness of the choices made by the government had to be judged on the basis of the information available to it when they were made (para. 37);
(iii) it was not necessary to enquire how or to what extent the policy aim had in fact been achieved (para. 35);
(d) after appraising the scheme, and taking into account, amongst other things, research evidence showing that in 1989 a lone parent with average childcare costs was better off in work and receiving family credit than unemployed, the Commissioner concluded that the scheme met the test of appropriateness (para. 39);
4. the absence from the family credit scheme of a provision for the deduction of childcare costs in the calculation of earnings was therefore not precluded by Council Directive 76/207/EEC. |
