Secretary of State for Employment, Ex parte Seymour Smith, R v.

Factual and Procedural Background

Under the Employment Protection (Consolidation) Act 1978 an employee originally obtained protection against unfair dismissal after one year’s service. The 1985 Unfair Dismissal (Variation of Qualifying Period) Order (“the Order”) doubled that qualifying period to two years pursuant to statutory power held by the Secretary of State (“Defendant”).

The two employees (“Appellants”) were dismissed after more than one but less than two years’ employment and contended that the Order had a disproportionate adverse impact on women, contrary to Council Directive 76/207/EEC (“the Equal Treatment Directive”). In judicial-review proceedings they sought to quash the Order.

• Divisional Court: held that the statistical evidence did not prove discrimination and, even if it had, would not have quashed the Order.
• Court of Appeal: reached the opposite conclusion on discrimination, declined to quash the Order but declared it incompatible with the Directive as at the date of the dismissals, and granted leave to add a claim under Article 119 EC (equal pay).
• House of Lords: Defendant appealed against the declaration; Appellants cross-appealed on Article 119. The House dealt first with preliminary points on the appropriateness of the declaration and on the proper forum for the Article 119 claim.

Legal Issues Presented

1. Whether a domestic court may declare national legislation incompatible with a Directive where the incompatibility affects only private rights between individuals.
2. Whether proceedings for judicial review are the appropriate forum for determining an Article 119 EC claim, or whether that claim should instead be pursued before an industrial tribunal.
3. Whether the two-year qualifying period for unfair-dismissal protection amounts to indirect sex discrimination under either the Equal Treatment Directive or Article 119 EC.
4. Whether questions concerning the scope of “pay,” the test for disparate impact, the temporal point at which the test is applied, and the criteria for objective justification under Article 119 should be referred to the European Court of Justice.

Arguments of the Parties

Defendant’s Arguments

• Even if indirect discrimination existed, a declaration of incompatibility served no legal purpose because Directives cannot of themselves alter private rights between employees and employers.
• Article 119 issues concern private law and should be determined by an industrial tribunal, not in judicial-review proceedings.

Appellants’ Arguments

• A declaration would enable an industrial tribunal to disregard the Order, leaving the original one-year qualifying period in force and thereby affecting the Appellants’ private rights.
• The incompatibility question was not acte clair; therefore, if necessary, a reference to the European Court of Justice should be made.
• They relied on recent case law suggesting domestic measures enacted in breach of a Directive may be disapplied in disputes between private parties.

Table of Precedents Cited

Court’s Reasoning and Analysis

The House, adopting the lead opinion of Judge Hoffmann, proceeded as follows:

• Effect of Directives on Private Rights: Citing Marshall and Faccini Dori, the Court held it was acte clair that a Directive cannot of itself disapply national legislation in disputes between private parties. Consequently, the Court of Appeal’s declaration that the Order was incompatible with the Directive could not confer enforceable rights on the Appellants.
• Utility of the Declaration: The declaration related only to the circumstances in 1991 and neither required amendment of the legislation nor enabled the Appellants to sue for unfair dismissal. It therefore served no practical legal purpose and should be discharged.
• Forum for Article 119 Claims: Ordinarily an industrial tribunal is the proper forum for such claims (per Equal Opportunities Commission). However, because Article 119 was introduced late in the appellate process and all evidence was already before the House, the Court accepted jurisdiction exceptionally.
• Need for a Preliminary Reference: Both parties agreed, and the Court considered it necessary, to seek clarification from the European Court of Justice on five specific questions concerning (a) whether compensation for unfair dismissal constitutes “pay,” (b) interaction between Article 119 and the Directive, (c) the test and timing for identifying indirect discrimination, and (d) the criteria for objective justification by a Member State.

Holding and Implications

Holding: The House of Lords discharged the declaration of incompatibility granted by the Court of Appeal and ordered that five questions be referred to the European Court of Justice. Further consideration of the appeal was adjourned pending the ECJ’s ruling.

Implications: The decision reaffirms the absence of horizontal direct effect for Directives and limits the circumstances in which domestic courts will issue declarations of incompatibility that do not alter private rights. It also signals that, when necessary, the House will itself frame questions for a preliminary ruling rather than compel litigants to restart proceedings in a different forum. No new domestic precedent on the merits of indirect sex discrimination was set; final resolution awaits the ECJ’s answers.