Employment: Liability for race discrimination and contract workers

Section 7 of the Race Relations Act (RRA) 1976 provides specific protection from discrimination for individuals supplied by their employer on a contract basis ('contract workers') to do available 'work for' a third party ('the principal'). The provisions of section 7 make it unlawful for principals (for whom the work is actually done), to discriminate against, or subject to harassment, a contract worker. The Employment Appeal Tribunal has recently considered the scope of 'contract workers' for the purposes of the RRA.

In Leeds City Council v Woodhouse and others, the council set up an Arm's Length Management Organisation (ALMO) to manage its housing stock. Mr Woodhouse was employed by the ALMO. The ALMO subcontracted some of its duties under its service agreement with the council back out to the council's Property Services Division, which employed Mr Chapman.

Part of Mr Woodhouse's duties was the inspection of work carried out by the council's Property Services Division as subcontractor to ensure the work was done to the ALMO's satisfaction (thereby ensuring the ALMO was in compliance with the terms of its Service Agreement with the council). While Mr Woodhouse was inspecting the work done by Mr Chapman, Mr Chapman allegedly made racially discriminatory remarks.

The question arose as to whether Mr Woodhouse could rely on s7 RRA as being a 'contract worker' of the council. The council argued he was not, as he was working for the ALMO and the purpose of his work was not for the benefit of the council, but for the ALMO.

However, the tribunal and Employment Appeal Tribunal (EAT) agreed with Mr Woodhouse that he did fall within the ambit of 'contract worker'. The EAT concluded that the test for establishing whether work was done for a principal under the RRA was broad: for whose benefit was the work ultimately being done? The quality control work that Mr Woodhouse did was found to be as much for the benefit of the council as for the ALMO. It followed therefore that the council had a primary liability to Mr Woodhouse for Mr Chapman's remarks under section 7.

Although fact specific, this case is an interesting illustration of the potentially very wide ambit of section 7. Public sector bodies need to be aware of this potential liability when entering what are often structurally complex outsourcing arrangements.

An application for leave to appeal is currently pending before the Court of Appeal.

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