Key Facts

The case related to Landlord & Tenant Law. Mr Malcolm was granted a secure tenancy by Lewisham Council. One of the terms of the Lease was that Mr Malcolm must live in the property as his main home. There is a clause under the Housing Act 1985 which means the tenant loses statutory protection if the dwelling no longer becomes his principal home. Mr Malcolm ended up subletting his flat and for that reason the Council sought possession. The defence was that Mr Malcolm had schizophrenia, which had led him to sublet the flat. He therefore claimed he was a disabled person under the Disability Discrimination Act 1995 (which applies to other areas of the law as well as employment) and that the subletting of the flat was related to his disability. He therefore argued that the Council, in seeking possession, was treating him less favourably for a reason relating to his disability. The Council sought to argue that they could rely on the justification defence under the Disability Discrimination Act.

Justification in the employment sphere is a particularly broad defence which states that in cases of disability related discrimination:

“treatment is justified ..... if and only if the reason for it is both material to the circumstances of the particular case and substantial”.

In layman’s terms the “justification defence” means that if, for example, there are good business (or health and safety) reasons as to why a company would be treating an employee less favourably relating to a disability, then Tribunals can find that any claim under the DDA for disability related discrimination should fail.

The problem for the House of Lords was that in housing law (unlike employment law) there is only a very limited defence of ‘justification’ available to landlord defendants, however on the facts it clearly wanted to find that Mr Malcolm’s defence failed.

The House of Lords therefore focused on whether or not the correct comparator was used for the purposes of disability discrimination. In essence, by focusing on the correct comparator, the House of Lords upheld the Council’s defence to the claim and held that the repossession of the flat was not disability related discrimination because the Council would have treated a non-disabled tenant (the comparator) in the same way in those particular circumstances.

Comment

In the employment sphere the significance of this Judgment goes back to a key Court of Appeal case Clarke v TDG Ltd (trading as Novacold Ltd) decided in the late 1990s. This case may now have over-ruled that Court of Appeal case.

Until Clarke v Novacold, where an employee was suffering from a disability and argued less favourable treatment by the employer, if the employer could show that it would have treated another employee without the disability in the same way, then arguably it could escape liability for disability discrimination.

Like other strands of discrimination, to succeed in a claim a disabled person has to show a comparator to which, in comparison, they are being treated less favourably.  The Disability Discrimination Act says : “a person discriminates against a disabled person if, for a reason which relates to the disabled person’s disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply”.

Explaining the change in the law

Take the case of an employee on long-term sick leave.  The decision in Clarke – v - Novacold  essentially held as follows: If someone was absent from work and had a disability, then if the employer dismissed for reason of the absence, provided the absence was related to the disability, the above definition would be satisfied and it would amount to disability related discrimination (subject to any defence of justification). The disabled absent person was compared to a person who was not absent when comparing whether there was any difference in the treatment.  The reasoning was that if the dismissed employee did not have the disability, he or she would not have been absent.

To take another example, in the case of a car mechanic who developed arthritis which reduced his productivity, the correct comparator under Clarke would be a mechanic who did not have arthritis and therefore whose productivity had not deteriorated. This test was very difficult for employers.

The decision in Malcolm has arguably reversed the comparator test.  To take the previous examples, the correct comparator would not be someone who is not absent, but someone else who was absent and on long-term sick leave, but due to an  illness not classed as a disability under the Disability Discrimination Act 1995.  As long as an employer can show that it would have treated somebody on long-term sick leave who did not have a disability the same as the person who had a disability, then it can escape a liability for disability related discrimination.

Continuing with the example of the mechanic; following Malcolm the correct comparator is not the mechanic who did not have arthritis and therefore whose productivity did not decrease, but a mechanic who has a medical problem that is not a disability and whose productivity had also decreased.

The pendulum has therefore swung firmly towards employers in relation to disability related discrimination.  There is potentially a new defence open to employers in this area which has not been available for a decade.

However, this is not the end of the story and there are other potential claims under the DDA, such as a freestanding claim for a failure to make “reasonable adjustments”.  The legal comment at the moment suggests it is likely that, if the avenue of disability related discrimination is closed to employees, then the Tribunals will start to interpret the duty to make reasonable adjustments in a more pro-employee fashion.

In practical drafting terms for motor industry employers, it may mean the return of some clauses that were thought to be redundant.  A good example would be a clause relating to long-term absence where dismissal is automatically considered an option after a certain period of time.  An employer would still have to show that it satisfied the normal unfair dismissal laws relating to the fairness of a dismissal before operating such a clause, however there are now greater possibilities to defend such a position.

A word of caution however; the applicability of Judgment is presently far from certain.  It was not a unanimous Judgment and therefore we can expect a new wave of legal argument in the Appeal Courts trying to interpret the issues in Malcolm.

Although a pro-employer decision, it will cast the certainty of the law on disability discrimination into some disarray for months, if not years, to come; this is not a positive move for employers who, as well as wishing for a sensible interpretation of the DDA, also seek certainty for their decision making when dealing with disabled employees.