Smith v Gardner Merchant Ltd

Factual and Procedural Background

The Appellant, a homosexual male employed as a barman by the Respondent, was dismissed following allegations made by a fellow employee. The allegations included abusive and threatening behavior, flirting with male customers, and talking in detail about his love life, all of which the Appellant denied. The Appellant contended that these allegations were influenced by the fellow employee's hostile attitude towards his sexual orientation. After disciplinary hearings, the Appellant was dismissed for gross misconduct. Due to insufficient length of employment for an unfair dismissal claim, the Appellant brought a complaint under the Sex Discrimination Act 1975 (SDA), alleging unlawful sex discrimination based on the treatment he received from the colleague and his employers during the disciplinary process and dismissal.

The Industrial Tribunal, instead of determining the facts, heard legal argument on a preliminary issue regarding whether discrimination on grounds of sexual orientation fell within the jurisdiction of the SDA. The Tribunal dismissed the claim, holding that discrimination based on sexual orientation was not covered by the Act. The Employment Appeal Tribunal upheld this decision. The Appellant appealed to the Court of Appeal, challenging the interpretation and application of the SDA to his claim.

Legal Issues Presented

1. Whether discrimination on grounds of sexual orientation falls within the scope of the Sex Discrimination Act 1975.
2. Whether the word "sex" in Section 1(1)(a) of the SDA includes sexual orientation.
3. Whether a comparator is necessary for the comparative exercise under Sections 1 and 5(3) of the SDA in cases involving sexual orientation, and if so, who the appropriate comparator should be.
4. Whether the relevant circumstances for comparison under Section 5(3) should exclude sexual matters related to the discrimination.
5. Whether the comparator should be a heterosexual woman or a homosexual woman.

Arguments of the Parties

Appellant's Arguments

• The Equal Treatment Directive’s reference to “family status” should be interpreted to include sexual orientation.
• A homosexual male occupies a unique gender-specific category, analogous to pregnancy, warranting protection under the SDA.
• The comparator for the discrimination claim should be a heterosexual woman, as sexual orientation is part of the relevant circumstances.
• The Appellant was discriminated against both by the colleague’s allegations and by the employer’s disciplinary process and dismissal decision.

Respondent's Arguments

• The SDA does not cover discrimination on the grounds of sexual orientation, which is distinct from sex discrimination.
• If Parliament intended to include sexual orientation, it would have done so explicitly, as it did in other legislation.
• The comparator, if any, should be a homosexual female, not a heterosexual female.
• Discrimination on grounds of sexual orientation is not discrimination on grounds of sex, and thus outside the SDA’s scope.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by distinguishing discrimination on grounds of sex from discrimination on grounds of sexual orientation. It acknowledged that the SDA does not explicitly cover sexual orientation, a view supported by the European Court of Justice in Grant v South-West Trains Ltd and earlier authority. However, the Court identified an error in the approach of the Industrial and Employment Appeal Tribunals, which had prematurely dismissed the claim on jurisdictional grounds without addressing whether discrimination based on sexual orientation could, in some circumstances, amount to discrimination on grounds of sex.

The Court emphasized the statutory requirement under Section 1(1)(a) and Section 5(3) of the SDA to compare the treatment of the claimant, a man, with the treatment of a woman in comparable circumstances, applying a "but for" test to causation. It rejected the argument that a homosexual male is in a unique category analogous to pregnancy, noting that sexual orientation affects both sexes and therefore a comparator must be found.

Regarding sexual harassment, the Court explained that if the harassment is gender-specific and targeted because of sex, a comparator may not be necessary. However, if the harassment is based on sexual orientation, the Court must determine whether it also constitutes sex discrimination. The Court held that the comparator for the colleague's conduct should be a homosexual woman, maintaining the relevant circumstance of sexual orientation constant while changing only the sex of the comparator.

For the employer's conduct in the disciplinary process and dismissal, the comparator is the colleague herself, as the complaint concerns differential treatment between the Appellant and that employee. The Court stressed the importance of determining causation—whether the differential treatment was effectively and predominantly because of the Appellant’s sex rather than solely his sexual orientation.

The Court also criticized the Industrial Tribunal’s decision to isolate a preliminary legal issue without first establishing the facts, which was deemed inappropriate given the contested nature of the facts.

Holding and Implications

The Court ALLOWED THE APPEAL and remitted the matter to the Industrial Tribunal for a full hearing on the facts and application of the statutory provisions.

The direct effect is that the Appellant’s discrimination claims under the Sex Discrimination Act 1975 are within the Tribunal’s jurisdiction and must be considered on their merits, including the appropriate comparator analysis and causation. The Court clarified the legal framework for claims involving sexual orientation and sex discrimination, emphasizing that discrimination motivated by sexual orientation may, in some cases, also amount to discrimination on grounds of sex.

No new precedent was established extending the scope of the SDA to cover sexual orientation per se; rather, the judgment guides proper statutory interpretation and procedural approach in such cases.