Supreme Court judgment on discrimination when charities restrict their public benefit
On 16 October 2020 the UK Supreme Court issued its judgment in the case of R. (on the application of Z) v Hackney London Borough Council and another  UKSC 40.
The judgment concerned charities restricting their public benefit to one particular group.
In this case, a charity’s activities were focussed on benefitting the Orthodox Jewish community and this was held to be compliant with the Equalities Act 2010 and was, therefore, not unlawfully discriminatory.
The case involved the allocation of social housing within Hackney London Borough Council. The Agudas Israel Housing Association Ltd (AIHA) was a charity that provided social housing within the Council’s area.
The Council could nominate individuals for AIHA housing and did so following a needs-based assessment that allowed them to prioritise those most in need.
However, AIHA had the final decision on who they would accept as tenants. AIHA had their own criteria for accepting tenants, requiring that the tenants should be from the Orthodox Jewish community (as per the requirements of their constitutional documents).
A single mother with four children - the appellant - applied to the Council for social housing. She was identified as having priority need for a larger property.
The appellant was not a member of the Orthodox Jewish community. The Council did not have an appropriate property available. During the appellant’s wait for housing, several large properties owned by AIHA became available and were given to families of the Orthodox Jewish community who were judged to also have priority need.
The appellant had been on the waiting list for housing longer than these families and raised proceedings against the Council and AIHA on the basis of unlawful discrimination under the Equalities Act.
The case hinged on s.158 and s.193 of the Act and their application.
S.158 provides a defence for taking positive action in respect of a group with a common protected characteristic. The positive action must be a proportionate means of overcoming a disadvantage experienced by that group because of their protected characteristic.
S.193 is similar to s.158 but applies specifically to charities. This section provides a defence for charities whose provision of benefit is restricted to a group with a common protected characteristic - this must be set out in the charity’s constitutional document.
The purpose of the benefit must be to prevent or compensate for disadvantage experienced due to their protected characteristic and the benefit must be a proportionate means of achieving this aim.
The key question before the court was whether the allocation policy of the AIHA was a proportionate response to the disadvantage suffered by the Orthodox Jewish community.
A significant amount of evidence was led on the hardships endured by the Orthodox Jewish community and it was identified in the Divisional Court that the community suffered from this discrimination because of their religion.
The court took into account the extent of the disadvantage suffered and in light of this held that the AIHA policy was a proportionate means of addressing the disadvantage. The Supreme Court was satisfied with the analysis on proportionality and upheld the decision of the lower courts in dismissing the claim.
The court’s decision was aided by other factors such as the relatively small proportion of social housing that AIHA provided in the Council area – 1 percent.
This meant that the disadvantage caused to individuals who were not members of the Orthodox Jewish community (and who were seeking social housing) was very small. Furthermore, the AIHA did not operate a “blanket policy” and there was flexibility in the AIHA provisions to allocate surplus housing to individuals outside the community of interest.
The court’s view on the proportionality of the policy was also influenced by the established use of “bright line criteria” i.e. when social welfare benefits are provided to a particular group to the exclusion of other groups.
This is accepted because it allows aid to be targeted at groups most in need; it provides clear and transparent rules; and it allows for efficient administration of welfare benefits.
The court stated that the application of this principle should be even more flexible when applied to a private body providing charitable welfare, to encourage charitable giving and reduce their administrative burden.
Conclusion and impact
This case will give charities some confidence that when they restrict the benefit they offer to one particular group (e.g. young people, people suffering from disabilities or from particular health problems, people from a minority grouping, the elderly) then this should not be unlawful discrimination.
However, charities will need to be mindful of their own circumstances and any benefit should be a proportionate attempt to remedy a disadvantage experienced by their beneficiaries. They should avoid inflexible “blanket rules” that exclude others without reason.
30th September 2020
The Regulations extend the period for companies, SCIOs and other corporate bodies to hold their AGM.
2nd July 2020
Insight into how the Act will affect third sector organisations.
22nd May 2020
The Corporate Insolvency & Governance Bill 2020 will provide a helping hand to third sector bodies.