Law Report: Harrods can be liable for racial discrimination claims

Elmi v Harrods Ltd and anor; Harrods Ltd v Remick; Harrods Ltd v Seeley; Court of Appeal (Sir Richard Scott, Vice-Chancellor, Lord Justice Waite and Lord Justice Ward) 17 July 1997

A complaint of racial discrimination under section 7 of the Race Relations Act 1976 might be brought against Harrods Ltd by a person employed by a licensee of Harrods to work in its department within a Harrods store.

The Court of Appeal dismissed Harrods' appeal against a decision of the Employment Appeal Tribunal that section 7 of the Race Relations Act 1976 applied to persons working in its store who were employed by its licensees.

Professor Bob Hepple QC (Hon) and Paul Goulding (Legal Adviser, Harrods Ltd) for Harrods; Laura Cox QC, Martin Westgate and Sandhya Drew (Commission for Racial Equality) for Mrs Seeley and Mrs Elmi; Mrs Remick did not appear and was not represented.

Sir Richard Scott V-C said that none of the three respondents had ever been or had applied to be an employee of Harrods.

Harrods operated a system whereby it granted licences under which the licensee became responsible for a particular department at which its goods were sold. The licensee provided the sales force. Each member of the sales force, however, had to be approved by Harrods and had to observe Harrods' rules regarding dress, deportment and behaviour. Harrods might withdraw its approval of any such individual at any time. The goods on sale in the department, although provided by the licensee, were sold by the licensee to Harrods immediately before their sale to the public, for the price at which they were to be sold to the public less a percentage, which constituted Harrods' commission.

Mrs Remick, who was black, and Mrs Seeley, who was of Asian origin, had both been recruited by licensees and had been approved by Harrods. Approval of Mrs Remick was withdrawn because she was considered to have failed to adhere to Harrods' dress code. Approval of Mrs Seeley was withdrawn when she refused to remove a nose ring which she had worn since the age of seven.

Both had complained to the Industrial Tribunal, asking it to decide as a preliminary point whether a case of unlawful discrimination could be brought against Harrods under section 7 of the Race Relations Act 1976, which applied to "contract workers", who worked for a principal to whom they were supplied by another person under a contract. The Tribunal found in their favour.

Mrs Elmi, who was black, had applied for a vacancy advertised by a Harrods' licensee. She had been sent to Harrods for approval, which was withheld. Her complaint was heard in full and dismissed by the Industrial Tribunal. No reliance had been placed on section 7 in her case, but, on appeal, the Employment Appeal Tribunal allowed the point to be taken.

Two questions were raised on the present appeal: whether the work done by individuals in the position of the respondents at Harrods' departments was "work done for Harrods" for section 7 purposes; and whether individuals such as the respondents were persons supplied by their respective employers "under a contract made with Harrods".

Under Harrods' contractual arrangements with its licensees the members of the licensees' staff would be selling goods which, at the moment of sale, belonged to Harrods. The gross sums they received would be paid over to Harrods. All of that work was work required by Harrods, under its contractual arrangements with the licensees, to be done by staff employed by the licensees. Furthermore, the contractual arrangements entitled Harrods to impose rules governing the conduct of staff members in carrying out that work. Against that background it could properly be described as "work for Harrods".

If section 7 did not apply to persons such as the respondents, they would be left without a personal remedy in the event of discrimination by the principal.

It had been argued on the second question that section 7(1) required that the supply of workers should be the primary purpose of the contract between principal and employer, and that the primary obligation imposed on a Harrods' licensee was to market goods. There was no justification for an exercise under which primary and secondary obligations were sought to be identified. If the supply of the worker was pursuant to an obligation under a contract, that would do. The appeal was dismissed.

Kate O'Hanlon, Barrister