Institute and Faculty of Actuaries v R Davda

This is an appeal and cross-appeal against the judgment of the employment tribunal, Employment Judge Brown sitting with members, sent to the parties on 13 May 2019, after a hearing from 14-17 January 2019, in chambers on 18 January 2019, and at a resumed hearing on 3 May 2019. There is also an appeal and a cross-appeal against the remedy judgment, sent to the parties on 5 September 2019, after a hearing on 17 and 21 June 2019, and in chambers on 9 August 2019.

The respondent is the qualifications body for actuaries in the UK. The claimant is a student member of the respondent. The claimant alleged that he had been subject to direct or indirect race discrimination as a British National in the arrangements that the respondent makes for conferring its qualifications. The employment tribunal upheld complaints of direct race discrimination in respect of the “number of opportunities it gave him to pass examinations” compared to Indian nationals or, alternatively, indirect race discrimination by offering only 2 sittings of its examinations per annum, while granting exemptions to equivalent examinations set by the Indian Actuarial Institute (“IAI”). The employment tribunal also held that the respondent had “subjected the claimant to direct race discrimination by directly or indirectly instructing, causing, inducing and/or aiding the IAI not to admit British nationals as students”. The employment tribunal rejected a complaint that the respondent had subjected the claimant to “indirect race discrimination by requiring that, in order to be regarded as a fully qualified actuary of the respondent, a member of the respondent must be appointed as a Fellow of the respondent.” The claimant was awarded £37,966.27, made up of £15,000 for injury to feeling, interest of £11,520 (calculated as 8% per annum since 2010) and £20,446.27 for future loss of income.

The claimant graduated in 2000 with a BSc in Mathematics from Kings College London. He joined the respondent in 2001 as a student member and took his first actuarial examination in April 2002. The claimant lives and works in Switzerland.

Student members of the respondent undertake examinations to become Associates or Fellows. The respondent introduced a new curriculum with effect from 31 December 2018. In order to be exempt from the requirement to take examinations under the new curriculum, it is necessary for existing students to have passed equivalent exams under the old curriculum. The claimant has repeatedly failed examinations set by the respondent.

The respondent grants exemptions to students who have passed examinations with some actuarial associations in other countries that are considered to be equivalent to its own. The respondent also grants exemptions to those who have passed equivalent examinations or modules with a number of UK universities. The claimant had gained such an exemption himself. The respondent describes an exemption from the requirement to pass any of its examinations as an Individual Exam Exemption (‘IEE’).

The judgment records that the respondent has entered MRAs with bodies in the USA, China, India, South Africa, and Australia. There are also recognition arrangements in place with European countries, including Switzerland.

Pursuant to the IEE arrangements with the IAI, the respondent recognises a pass in an IAI examination as a direct equivalent of a pass in the respondent’s corresponding examination. The exemptions granted for IAI examinations cover all of the examinations required to become an Associate or Fellow of the respondent, save for one Specialist Application (SA) subject. The IAI follows an identical syllabus to the respondent, uses the same educational materials, and sets examinations that are directly equivalent to the respondent’s examinations. Members of the IAI can obtain the most extensive IEEs available to members of bodies with which the respondent has IEE arrangements. The respondent sets examinations twice a year. The IAI also sets examinations twice a year, but not on the same dates as the respondent's. The IAI examinations can be taken in the UK.

Students from countries around the world can join the respondent. A student member of the IAI can also be a student member of the respondent, and so can take the exams set by both the respondent and the IAI. A student who joins both could potentially take an equivalent examination four times a year, whereas a person who is only a member of the respondent can only do so twice. Student members who are able to sit examinations from bodies other than the IAI that provide IEEs may also have more than two opportunities each year to take equivalent examinations.

The claimant asserted that UK nationals were not permitted to be members of the IAI as a result of an agreement made with the respondent. The determination of this factual dispute was of considerable significance in all of the claims.

The respondent sought to introduce further evidence about its dealing with the IAI after the main hearing. The application was mostly rejected, on the grounds that the new evidence had been submitted so late that it was not in the interests of justice to permit its introduction, particularly having regard to the importance of finality in litigation. A consequence of that decision was that there was limited evidence about whether UK nationals are permitted to be members of the IAI and about the precise nature of any agreement or understanding between the respondent and the IAI at the relevant time.

The employment tribunal considered evidence about Mr Hirani who was a student member of the respondent and the IAI. On 30 October 2010, Mr L Khan, who was then President of the IAI, wrote to Mr Hirani and stated that he had no alternative but to cancel Mr Hirani’s membership of the IAI. Mr Khan stated that the IAI’s examinations (save that at SA level) were based on the syllabus and study materials of the respondent. The respondent provided the study materials at low cost. Mr Khan said that the IAI did not conduct examinations in the UK for UK residents and subjects, to avoid competing with the respondent. Mr Hirani was unhappy about the response he received from the IAI and raised the matter with Dr Watkins, the respondent's Director of Education. Dr Watkins wrote to Mr Khan and asked if he had a copy of the agreement he had referred to. Mr Khan replied, “There was no agreement, it was more of understanding with Liz Goodwin”. Dr Watkins did not respond to Mr Khan, but wrote to Ben Kemp, General Counsel for the respondent, enclosing the email exchange and stating “As I thought there is no agreement (Liz was my predecessor)”.

The claimant applied to join the IAI in September 2017. On 13 September 2017, Swetha Jain, described by the employment tribunal as a “Senior Executive-Examination” at the IAI, wrote to the Claimant stating, “Regret to inform you that we will not be able to give you admission in IAI since you are a UK citizen”. The claimant sent a number of emails asking why he was not allowed to join and asking what provisions of the rules and regulations excluded him as a British National. He did not receive a detailed response to the points he raised. The IAI sent an email, that was the last in a chain, stating “This is to inform you that as per the Institute of Actuaries of India (Admission as Member) Regulations 2017 a student has to clear ACET to take admission in IAI. Kindly refer the below admission link”.

The employment tribunal also considered an email chain from October 2017 between the IAI and an unnamed potential UK student member. On 11 October 2017 the potential student member sent an email asking: “I am a UK citizen. I am based in the UK. Can I join the IAI? I’ve heard that UK citizens are not allowed to join.” Ms Jain responded on 13 October 2017 “You can join IAI by clearing the entrance exam ACET.”

The employment tribunal considered a “Frequently Asked Questions” document. In answer to the question: “I live outside India, can I appear for the exam from outside India?” the response was:

The evidence suggested that while the claimant had initially been told that he could not join the IAI he was subsequently told that he could take the ACET examination and, if successful, could join the IAI, unless the IAI considered the UK to be “Alien” or that it should not “conduct its examinations for” a person who was a member of the respondent. The claimant has not taken the ACET examination in India. There was no evidence that the other potential student member had taken the ACET examination at a location in India and then applied to join the IAI, or whether any UK national student members of the respondent have done so.

The employment tribunal concluded:

Thus, the employment tribunal concluded that the IAI does not permit UK nationals to join.

I consider it is helpful to consider the claims in a different order to that in the judgment of the employment tribunal and the revised grounds of appeal.

I will start by considering the appeal against the finding that the respondent had “subjected the claimant to direct race discrimination by directly or indirectly instructing, causing, inducing and or aiding the IAI not to admit British nationals as students”.

Discrimination by qualifications bodies is prohibited by section 53 of the Equality Act 2010 (“EQA”):

The term “qualifications body” is defined by section 54 EQA:

The respondent is a qualifications body within the meaning of these provisions.

Sections 111 and 112 EQA make a person liable for discrimination carried out by another in specific circumstances.

The employment tribunal held at paragraph 4 of the judgment:

The employment tribunal gave brief reasons for this determination:

Grounds 8 and 9 of the revised Notice of Appeal assert:

Ground 9, as well as asserting an erroneous approach to the application of sections111 and/or 112 EqA (I shall refer to as ground 9a), also asserts that the finding that there was an agreement between the claimant and the IAI under which there was an absolute prohibition on British Nationals joining the IAI was perverse (which I shall refer to as ground 9b and deal with later in this judgment).

The employment tribunal conflated the provisions of sections 111 and 112 EQA. There are significant differences between the provisions that require consideration.

Section 111 EQA provides:

Mr Jupp, in submissions, accepted that section 111 EQA could not apply to the claimant and accordingly this element of the judgment could not be sustained. There are two core reasons. For the purposes of section 111 EQA “A” is the respondent, “B” is the IAI and “C” is the claimant. The “basic contravention” would be that of a qualifications body discriminating against the claimant in a manner that falls within the provisions of section 53 EQA in respect of the conferring etc of a relevant qualification. Firstly, section 111(7) EQA limits the application of the section to circumstances in which the relationship between A and B is such that A is in a position to commit a basic contravention in relation to B: i.e. the respondent must be able to commit a basic contravention in relation to the IAI by, for example, not conferring a relevant qualification on it. The respondent now accepts that is not the case and so section 111 EQA was not applicable. Secondly, the judgment and the reasoning is based on the basic contravention having been committed by the respondent, whereas it would have to have been committed by the IAI.

Section 112 EQA provides:

For the purposes of section 112 EQA “A” is the respondent and “B” is the IAI. The second error made in respect of section 111 EQA also applies to the analysis of section 112 EQA because the employment tribunal treated the basic contravention as having been committed by the respondent, whereas it would have to have been committed by the IAI. Mr Jupp also accepted in his submissions that this reasoning in the judgment could not be upheld, but contended that the employment tribunal had made the factual finding that the IAI had committed a basic contravention by excluding British nationals from being members.

The claimant seeks a finding by the EAT that the IAI is in breach of section 53 EQA, presumably in the arrangements it makes for deciding upon whom to confer a relevant qualification, by refusing membership to UK nationals, and that the respondent knowingly helped it to do so, on the basis that there is only one possible correct answer: Jafri v Lincoln College [2014] EWCA Civ 449, [2014] ICR 920.

I consider that there are considerable problems with the approach that Mr Jupp suggests. It involves making a finding that a professional body in India is in breach of UK law in circumstances in which it is not a party to the proceedings and has had a very limited opportunity to submit evidence. There are significant issues about procedural fairness in considering complaints under section 111 or 112 EQA if the person alleged to have been guilty of the “basic contravention” is not a respondent to the claim. In such circumstances it may be necessary to give some consideration as to whether the party alleged to have been guilty of the “basic contravention” should be permitted to participate in the proceedings as having a “legitimate interest” for the purposes of Rule 35 Employment Tribunal Rules 2013.

Insufficient consideration was given to the position of the IAI in the employment tribunal, largely because the parties do not appear to have given the issue much thought themselves. It was merely stated on behalf of the claimant in closing submissions “the IAI hold examinations in the UK it in that respect is bound by the EqA and s. 53 would apply to it”. In the skeleton argument produced for the respondent it was said the claim fell outwith section 53 EQA.

There was also a lack of clarity as to precisely what the respondent was said to have done to knowingly help the IAI to discriminate. The various actions that might have been taken by the respondent were compendiously considered as “instructing, causing, inducing and or aiding”. Aiding, the word used in the heading for section 112 EQA, could be taken to mean “help”, the word used in the text of the provision itself. Precisely what the respondent did that amounts to helping is not clear, nor is it clear who at the respondent provided the help. Furthermore, the judgment referred to the respondent acting “directly or indirectly”, whereas section 112 EQA does not include a concept of indirect helping.

Grounds 8 and 9a of the revised grounds succeed.

I consider it is likely that the claim under section 112 EQA will have to be remitted to the employment tribunal for determination. The respondent in this appeal has raised the fairly obvious issue of territorial jurisdiction. The claimant contends in a supplementary skeleton argument submitted by Mr Jupp, that the issue of territorial jurisdiction was not raised before the employment tribunal and it is too late to do so now. I consider that is also a matter that is likely to be appropriate for the employment tribunal to consider on remission, as will be the question of whether the IAI should be permitted to participate in the proceedings because it has a legitimate interest in them.

I agreed with the parties that they would have an opportunity to make further submissions about disposal once they had the opportunity to consider my judgment.

As I have explained above, I have significant concerns about the safety of the determination that there was an agreement between the respondent and the IAI that meant there is an absolute prohibition of a UK National becoming a member of the IAI because of the limited evidential basis for this finding, in particular the limited scope for the IAI to provide any evidence, in circumstances in which the IAI was not a party to the proceeding and the claimant asserts that the IAI acted unlawfully. This is an important point as the determination that there was an absolute prohibition of UK Nationals being members of the IAI, and that the claimant could not have joined the IAI as a result was of considerable, or fundamental, importance to the determination of the claims of direct and indirect discrimination that I shall now move on to consider. I will return to the safety of the determination of this factual issue later in the judgment.

The employment tribunal held at paragraph 1 of the judgment:

The employment tribunal gave the following reasons for this determination:

Direct discrimination is defined by section 13 EQA:

Section 23 EQA provides:

The respondent challenges the direct discrimination decision on four, somewhat interrelated, revised grounds of appeal that assert that the employment tribunal:

The employment tribunal identified the treatment that the respondent afforded to the claimant and his comparators as “the number of opportunities it gave to pass examinations”. I do not accept that where the IAI, or other organisations that have IEE arrangements with the respondent, allow their students to undertake examinations, that is treatment afforded by the respondent. The respondent offers its students two opportunities per year to pass its examinations. That is the case for student members of whatever nationality. While the IAI also gives its student members two opportunities a year to pass its examinations, that is treatment afforded by the IAI, not the respondent. The fact that passing an IAI examination results in a student obtaining an IEE does not mean that it is the respondent that has permitted IAI students to take the examinations of the IAI.

Further, any difference of treatment had to be because of race. This was asserted to be a James type of case in which the treatment is because of something other than race that is an exact proxy for race. In Essop and others v Home Office (UK Border Agency) Naeem v Secretary of State for Justice [2017] UKSC 27, [2017] I.C.R. 640 Baroness Hale stated at paragraph 17:

The employment tribunal made a comparison between the claimant and an Indian national who is a student member of the respondent. The treatment was identified as being the number of opportunities to pass examinations. Even if that could be considered to be treatment by the respondent, there is no exact correspondence between membership or non-membership of the IAI and Indian nationality. Not all Indian student members of the respondent will be members of the IAI. There was nothing to suggest that IAI membership was limited to Indian nationals, even if UK nationals were excluded.

The employment tribunal gave a rather different analysis of the treatment at paragraph 141 of the reasons where it referred to the treatment being the respondent giving “exemptions for exams set by the IAI”. That is not the treatment referred to in the judgment. In any event, there will be Indian student members of the respondent who have not joined the IAI, or who are student members of the IAI but have not taken and/or passed any examinations that would provide an IEE. There will also be UK Nationals who have obtained IEEs from bodies other than the IAI. Again, exact correspondence is not established between obtaining IEEs and nationality.

It is to be noted that the claimant has not joined any of the bodies, other than the IAI, with which the respondent has IEE arrangements and taken the opportunity to sit their examinations that might result in an IEE.

Grounds 1-3 of the revised grounds succeed because the employment tribunal misidentified the treatment afforded to the claimant by the respondent, erred in concluding there was James type exact equivalence and erred in its identification of a comparator. Because the employment tribunal erred in its identification of the treatment afforded by the respondent to the claimant ground 4 falls away at present as there can only be a proper analysis of whether treatment afforded by the respondent to the claimant falls within section 53 EQA once the treatment has properly been identified.

As set out above, the parties shall be given an opportunity to make submissions on disposal. Were disposal to involve remission to the employment tribunal and the analysis on remission relies on the claimant establishing that there is a total bar on UK Nationals joining the IAI, that raises the question of the safety of the employment tribunal’s determination that UK nationals are not permitted to join the IAI.

The employment tribunal held in its judgment that the respondent had subjected the claimant to indirect race discrimination by offering only 2 sittings of its examinations per annum, while granting exemptions to equivalent examinations set by the IAI. In the reasons, the employment tribunal considered three overlapping PCPs and set out the following analysis.

The respondent challenges this determination on the following revised grounds:

Indirect discrimination is defined by section 19 EQA:

I noted in Glover v Lacoste [2023] EAT 4:

The approach that the employment tribunal adopted to the three interrelated PCPs was somewhat convoluted. Only two of the PCPs were referred to in the judgment, as opposed to the three PCPs relied on in the reasons. While I accept that, in a sense, it can be said that offering an exemption to passing an examination of the respondent to students who have an IEE because of having passed an examination with the IAI is a general policy it is, at best, a subset of the underlying policy of offering exemptions to all those who have an IEE, whether from the IAI or any other body that has IEE arrangements with the respondent.

The employment tribunal had to compare the treatment of the claimant and those who shared the protected characteristic of UK nationality with those who did not. It was not entirely clear which pool of student members of the respondent UK National members were being compared with. At paragraph 146 the employment tribunal referred to a comparison between UK nationals and “non- UK nationals and, in particular, Indian nationals”. At paragraph 152 the employment tribunal stated that “the Tribunal found that the PCPs did put the Claimant at a disadvantage compared to Indian nationals”. Reading the reasons overall I consider it is clear that the employment tribunal drew a comparison between UK nationals and Indian nationals. I do not consider that was the appropriate pool of comparison. I consider that the appropriate comparison was between members of the respondent who are UK nationals and those with whom the claimant does not share that characteristic, i.e. all non-UK national members of the respondent, as required by section 19(2)(b) EQA. I also consider that, whatever the correct pools for comparison, the employment tribunal’s reasoning was based on a false premise that UK nationals only had an opportunity to take equivalent examinations twice a year whereas those in the comparator group had the opportunity to take them four times a year. Even if it is correct that UK nationals could not join the IAI that did not mean that they only had the opportunity to take the examinations twice a year, because they could obtain IEEs from other organisations with which the respondent has IEE arrangements. Indian nationals could join the IAI, but so could other nationals. There would be Indian Nationals who had not joined the IAI so did not have additional opportunities to pass equivalent examinations. Non-Indian nationals could also obtain IEEs from other organisations than the IAI. There was no material relied on by the employment tribunal about how many Indian nationals or non-Indian nationals obtained IEEs from the IAI or any other bodies. I consider that the decision on indirect discrimination is unsafe and, in particular, revised ground 6 succeeds. I do not consider that the other revised grounds add significantly to that ground. I will consider the submissions on disposal that I have permitted the parties to make.

The employment tribunal held that:

The determination of the employment tribunal is challenged on the following grounds:

The employment tribunal held that the PCP asserted by the claimant had not been applied by the respondent. That factual finding has not been appealed and so the cross-appeal must fail. Further, I can see no error of law in the employment tribunal concluding that the PCP adopted by the respondent was circular and that the FIA* qualification differed from FIA, even if that evidence came out at the employment tribunal hearing. Where evidence arises in the course of a hearing it is a matter for the case management discretion of the employment tribunal to decide whether it can be relied upon.

The employment tribunal was entitled to conclude that the claimant had not advanced evidence to establish that qualification in Switzerland was easier than in the UK and that because the claimant had not passed the exams necessary to obtain Associate status he had not been disadvantaged by any PCP that placed Associates at a disadvantage in seeking to obtain fellowship.

Accordingly the cross-appeal fails.

This case may have to be remitted for redetermination, subject to any submission the parties have to make on disposal. That brings into focus my concerns about the safety of the factual finding that the respondent and the IAI had an agreement under which there was an absolute prohibition on British Nationals joining the IAI. Should remission be appropriate, my provisional view is that revised grounds 9b and 11 should also be remitted for re-determination, with the employment tribunal undertaking case management including consideration of whether the IAI should be permitted to intervene if they seek to do so.

As the liability appeal has succeeded and the liability cross-appeal failed, I consider, subject to any submissions as to disposal, all remedy issues would have to be considered afresh were the claimant to succeed in any claims that he maintains.

I have considered the parties submissions and replies in respect of disposal.

I consider that there is only one possible realistic answer to the claim of direct race discrimination: see Jafri v Lincoln College [2014] EWCA Civ 449, [2014] ICR 920. I found that the respondent did not subject the claimant to the treatment asserted in the direct discrimination claim and the employment tribunal erred in accepting that this was a James type case. I substitute a decision that the claimant was not subject to direct discrimination by the respondent in respect of the number of opportunities it gave him to pass examinations to qualify as a Fellow of the respondent.

I am not persuaded that there could only be one answer to the question of whether the claimant was subject to indirect race discrimination by the respondent. The fact that I found that the analysis was based on a false premise that UK nationals only had the opportunity to take examinations twice a year disregarding the fact that they could obtain IEE’s from organisations other than the IAI and that the employment tribunal applied an incorrect pool for comparison does not mean that if these matters were correctly analysed there could only be one possible answer. This claim will be remitted. The extent to which the indirect discrimination claim should be limited by the pleaded case and manner in which the claim has been advanced will be a matter for consideration by the employment tribunal during case management for the remitted hearing.

The section 111 EQA claim is no longer pursued.

It is agreed that the section 112 EQA claim should be remitted. There is a dispute as to whether on remission the question of whether there was an agreement between the respondent and the IAI that UK nationals would not be permitted to join the IAI will be open for fresh consideration. I accept the respondent’s submission that this finding was challenged in the appeal. I consider the finding of the employment tribunal on this issue is unsafe. The employment tribunal analysed the section 112 EQA complaint on a fundamentally flawed basis in that it treated the basic contravention as having been committed by the respondent. If it had appreciated that the basic contravention had to be committed by the IAI it would necessarily have had to consider how the issue could be dealt with in a manner that was fair to the IAI as well as the respondent. I consider this factual matter should be redetermined on remission. It will be for the employment tribunal to consider any application by the IAI to be joined in the proceedings and whether the issue of territorial jurisdiction can be raised.

The remission will be to a newly constituted employment tribunal. I have had regard to the principles set out in Sinclair Roche & Temperley v Heard [2004] IRLR 763. While I would not go as far as to find that this was a totally flawed decision, there were significant errors. I consider that the respondent would have a concern that the employment tribunal might unconsciously take a second bite because some of the findings, particularly in respect of the agreement with the IAI were forcefully made. The significant passage of time limits the extent to which there would be any saving by a remission to the same panel. There would be some prejudice to the respondent as their previous counsel may not be available and so new counsel would be ignorant of matters that the employment tribunal and the claimant’s counsel would be able to recall from the previous hearing. While the eventual award to the claimant was not very large, the claim raised matters of some general importance about two regulatory bodies, the respondent and the IAI, so I consider that remission to a new employment tribunal is proportionate.

Accordingly: