Australian Iron & Steel Pty Ltd v Banovic - [1989] HCA 56

HIGH COURT OF AUSTRALIA

Brennan, Deane, Dawson, Gaudron and McHugh JJ.

AUSTRALIAN IRON AND STEEL PTY. LTD. v. BANOVIC

(1989) 168 CLR 165

5 December 1989

Discrimination Legislation

Discrimination Legislation—Employment—Discrimination—Grounds—Sex—Delay in employing women—Threats of retrenchment and retrenchment—Last on, first off principle—Indirect discrimination—Ascertainment of base group—Anti-Discrimination Act 1977 (N.S.W.), s. 24.

Decisions

BRENNAN J. I agree with the judgment of McHugh J., but I would briefly state the chief reason which leads me to the conclusion that the appeal should be allowed. The case turns upon the construction of the provisions of the Anti-Discrimination Act 1977 (N.S.W.) ("the Act") relating to Sex Discrimination: Pt III of the Act. The provisions relating to Sex Discrimination and the provisions relating to Racial Discrimination (Pt II), Discrimination on the Ground of Marital Status (Pt IV), Discrimination on the Ground of Physical Impairment (Pt IVA), Discrimination on the Ground of Intellectual Impairment (Pt IVB) and Discrimination on the Ground of Homosexuality (Pt IVC) are all framed in the same way. Each of these Parts opens with a definition of the elements of the relevant category of discrimination and is followed by provisions which prescribe either activities in which it is unlawful for one person to discriminate against another or various acts by the doing of which one person might unlawfully discriminate against another. The activities and acts so prescribed are divided in each Part between those engaged in or done "in Work" (Div.2) and those engaged in or done "in Other Areas": Div.3. Not all discrimination is unlawful: unlawful discrimination must be found in activities or in the doing of acts prescribed in Div.2 or Div.3 of the respective Parts.

2. In Pt III, s.24 defines the elements of discrimination on the ground of sex. Sub-section (1) reads:
"A person discriminates against another
person on the ground of his sex if, on the ground of - (a) his sex; (b) a characteristic that appertains

generally to persons of his sex; or

(c) a characteristic that is generally imputed to persons of his sex,

he treats him less favourably than in the same circumstances, or in circumstances which are not materially different, he treats or would treat a person of the opposite sex."

3. Sub-section (3) reads: "A person discriminates against another

person on the ground of his sex if he requires the other person to comply with a requirement or condition -

(a) with which a substantially higher proportion of persons of the opposite sex to the sex of the other person comply or are able to comply;

(b) which is not reasonable having regard to the circumstances of the case; and

(c) with which the other person does not or is not able to comply."

4. Non-compliance or an inability to comply with the "requirement or condition" to which sub-s.(3) refers may not amount to a "characteristic" falling within par.(b) or (c) of sub-s.(1), but the test of "substantially higher proportion" means that the "requirement or condition" is a sex-related criterion. For one person to require another to comply with a sex-related criterion adverse to the sex of the other and with which the other cannot comply is sex discrimination in fact; if par.(b) of s.24(3) is satisfied, it is sex discrimination in law.

5. The proportions - one substantially higher than the other - of members of the respective sexes who "comply or are able to comply" are proportions of a group which s.24 does not identify. The group is not a standard group common to all applications of s.24. Section 24, it will be remembered, does not prohibit discrimination on the ground of sex. The prohibitions are found in s.25 and it is to that section that reference must be made to ascertain the relevant group. The group must be identified by reference to the particular activity in which, or the particular act by means of which, one person is said to discriminate against another. In that way, the nature of the criterion is ascertained in the practical context in which it operates. In cases arising under s.25, the group is constituted by the persons of whom the employer requires compliance with the relevant "requirement or condition" when the employer engages in the particular activity or does the particular act mentioned in that section. That is the group to whom the employer applies the supposed sex-related criterion.

6. In these proceedings we are concerned with two provisions in s.25, namely, s.25(1)(b) and s.25(2)(c). They read as follows:
"(1) It is unlawful for an employer to
discriminate against a person on the ground of his sex - ... (b) in determining who should be offered

employment; or

... (2) It is unlawful for an employer to discriminate against an employee on the ground of his sex - ... (c) by dismissing him or subjecting him to any other detriment."

7. When an employer is determining who should be offered employment out of a group of applicants and he requires applicants to comply with what is said to be a sex related criterion, the relevant comparison is between the proportion of male applicants who comply or are able to comply with the criterion and the proportion of female applicants who comply or who are able to comply with the criterion. In a case where knowledge of a vacancy is disseminated (for example, by advertisement), the proportions would not be of males or females in a known group of applicants but of males and females in the group who might have applied for appointment had appointment not been subject to compliance with the supposed sex-related criterion.

8. Here it is alleged against the employer that it discriminated against each of the first respondents, its employees, on the ground of sex "by dismissing her or subjecting her to any other detriment." Finding it necessary to reduce its workforce, the employer retrenched employees by application of the criterion "last on, first off" (or by requiring compliance with a "requirement or condition" of specified "gate seniority"). The employer applied the criterion of "last on, first off" indifferently to all members of its workforce requiring each employee to have been employed before the cut-off date (6 January 1981 on one claim; 30 September 1980 on another) in order to avoid dismissal or the threat of dismissal. The group to which that requirement was directed was the employer's entire workforce. The question which arises is whether the proportion of men employed in that workforce who were employed before those dates was substantially higher than the proportion of women employed in that workforce who were so employed. If "yes", the employer's requirement is to be seen as sex-related and (subject to satisfaction of s.24(3)(b)) the adoption of the criterion of "last on, first off" in dismissing employees can properly be regarded as discriminatory on the ground of sex. But if the answer is "no", it cannot properly be said that, by dismissing any one of the first respondents, the employer discriminated against that employee on the ground of her sex. In fact, the answer is: no. At the times of the threatened dismissals and actual dismissals, the relevant proportions of the sexes employed in the workforce who complied with the condition of gate seniority were, in the case of both male and female employees, approximately 94%. The statutory test reflects what is manifest in fact: by retrenching its employees according to the criterion "last on, first off", the employer did not discriminate on the ground of sex.

9. To avoid that conclusion, the respondents seek to reconstitute the group to which reference must be made in ascertaining the proportions of the sexes who complied with the condition that the employee should have been employed before a specified date. McHugh J. demonstrates why it is inappropriate to look to any group other than the group of the employer's workforce. I would add that it is meaningless to look to any group other than the workforce when the relevant acts of alleged discrimination are the dismissals of particular employees and the "requirement or condition" with which a person was required to comply to avoid dismissal was employment before a specified date. The chief argument against this conclusion is that the employer had constituted the workforce at the time by unlawfully discriminating against women on the ground of their sex in determining who should be offered employment (s.25(1)(b) and that it is wrong to test the proportions of male and female employees who complied with the requirement of employment before the specified date by reference to a group which had been so constituted. I turn to that argument.

10. The requirement of gate seniority is not, on its face, discriminatory on the ground of sex: it is, to use the jargon, "facially neutral". It does not attract s.24(1)(a). When an employer in dismissing employees applies a facially neutral requirement indifferently to all members of his workforce and the respective proportions of men and women within that workforce who comply or are able to comply with the requirement are not substantially higher and lower, the elements of discrimination falling within s.24(3)(a) do not appear. Although the constitution of the group has been affected by earlier unlawful discrimination, the Act does not operate by reference to a hypothetical workforce reconstituted to eliminate the effects of the earlier unlawful discrimination. The application of s.24(3)(a) does not depend on hypothetical groups. If the application of the facially neutral requirement to such an hypothetically reconstituted workforce were to produce substantially higher and lower proportions of compliance or ability to comply, it would be necessary to vary or abandon the facially neutral requirement and to dismiss employees of one sex rather than another in order to produce a workforce from which the effects of the earlier discrimination would be removed. But it offends ss.24(1) and 25 to apply a criterion which is not facially neutral in order to alter the composition by the sexes of a workforce. Dismissals for the purpose of advancing the members of one sex at the expense of members of the other sex amounts to unlawful discrimination by virtue of ss.24(1)(a) and 25(2)(c). Putting the proposition in another way, the Act does not provide for "reverse discrimination" or "affirmative action" by an employer in dismissing employees from the employer's workforce in order to undo the effect of prior unlawful discrimination in its constitution.

11. To accept the respondents' argument, the employer would have been bound to dismiss from its workforce men who would not have been dismissed upon application of the facially neutral requirement of gate seniority in order to retain in the workforce women who had been adversely affected in their seniority by discrimination practised by the employer at an earlier time. But if an employer were to dismiss men simply on the ground of their sex - whether in order to undo the effect of earlier discrimination or for any other reason - the employer would be guilty of unlawfully discriminating against men on the ground of sex. Acts of unlawful discrimination are not excused because they are designed to remedy the consequences of earlier unlawful discrimination. The opposite to "discrimination on the ground of sex" is not discrimination against the opposite sex; it is non-discrimination. In the enthusiasm for equality, whether of numbers or proportions, between the sexes in a workforce it is as well to remember that the object of any dismissal is an individual who has no personal obligation to underwrite the perfect fulfilment of the statutory policy.

12. The victims of unlawful discrimination must find their remedy in the statutory cause of action for the activity in which, or for the act by which, the employer unlawfully discriminated against them, that is, a remedy in damages for the particular activity or act. Those damages might properly include an amount in respect of lost gate seniority. If the statutory ceiling on damages precludes full compensation for lost gate seniority, the shortfall is not to be made up by the creation of a new cause of action whenever, in an action or act mentioned in s.25, a non-discriminatory criterion is applied indifferently to the workforce. An employer, who has discriminated unlawfully in employing his workforce, is not placed under a duty to engage in further unlawful discrimination in the selection of the employees whom he will dismiss. The employer is not required to place at the top of his dismissal list a person who has innocently benefitted or, even more, a person who has not benefitted from the employer's earlier unlawful discrimination. Why should employees bear the burden of rectifying the consequences of past discrimination? It offends justice to dismiss an employee in order to rectify the consequences of an illegality on the part of the employer. The Act does not require dismissals in a priority which will rectify those consequences; to the contrary, it prohibits them.

13. Decisions in other jurisdictions or under different statutory provisions on the legitimacy of reverse discrimination to undo the consequences of past discrimination have no necessary relevance to the construction of the Act. But for those who seek an analogue from another jurisdiction, reference may be made to Johnson v. Transportation Agency (1987) 480 US 616 (94 L Ed 2d 615) decided under Title VII of the Civil Rights Act 1964 (US). The conflict in opinions in the Supreme Court of the United States in that case is mirrored in the conflict revealed in the judgments now published.

14. For these reasons and for the reasons stated by McHugh J., I would allow the appeal.

DEANE AND GAUDRON JJ. The first respondents are eight women ironworkers who, on or after 30 September 1980, obtained employment with the appellant, Australian Iron &Steel Pty Limited ("A.I.S."). Some of them were dismissed in 1982 when A.I.S. retrenched employees on the basis of "last on, first off". Those who were not dismissed were identified as persons who were at risk of dismissal in the retrenchment programme. The only issue in this appeal is one of law. It is whether a finding of the Equal Opportunity Tribunal of New South Wales ("the Tribunal") that the "last on, first off" method of retrenchment involved, in the particular circumstances of this case, unlawful sex discrimination under the Anti-Discrimination Act 1977 (N.S.W.) ("the Act"). An appeal under s.118 of the Act against that finding was dismissed by the Court of Appeal of the Supreme Court of New South Wales. From that part of the decision of the Court of Appeal, A.I.S. now appeals to this Court. It is important to stress that appeals to the Court of Appeal under s.118 are limited to questions of law and that the Court's function on this appeal does not encompass a general review of the Tribunal's finding on the merits.

2. Some account of the recruitment practices of A.I.S. is necessary to an understanding of the claim that, by adopting the "last on, first off" method of retrenchment, A.I.S. engaged in acts of sex discrimination. Until mid-1980 A.I.S. pursued recruitment practices that resulted in women constituting only a very small proportion of the A.I.S. ironworker workforce. Another result of those practices was that the waiting time for employment as an ironworker was considerably longer for women than for men. The practices were changed in mid-1980. Thereafter the number of women employed as ironworkers increased in absolute numbers and also as a proportion of the total ironworker workforce. By way of illustration, between June 1977 and April 1980 A.I.S. took on 4,289 new ironworker employees of whom only 58 were women; between 1 July 1980 and 22 August 1980 it took on 468 new ironworker employees of whom 71 were women. Notwithstanding this change, it was found by the Tribunal that "the waiting time for women as compared with men was still vastly disproportionate being measured in years rather than a few days or weeks".

3. A downturn occurred in the steel industry in 1981 and A.I.S. ceased recruiting new ironworkers from September of that year. The downturn continued and in October 1982 A.I.S. announced that it would be retrenching ironworkers as from 14 November 1982: retrenchments would be effected on the basis of "last on, first off"; the group of employees likely to be affected was identified as those who commenced work after 30 September 1980. As it happened, A.I.S. retrenched those ironworkers who commenced work after 6 January 1981.

4. In the proceedings before the Tribunal it was found that the delays in employing women ironworkers constituted unlawful discriminatory conduct. Damages were awarded to women ironworkers who had suffered loss or damage in consequence. By s.113(b)(i) of the Act damages may not exceed "$40,000 by way of compensation for any loss or damage suffered by reason of the respondent's conduct". The Tribunal further found that the retrenchments (both as announced and as implemented) constituted discriminatory conduct separate and distinct from that involved in the delays in employing women. On the basis of that finding further orders for damages were made in favour of the first respondents or those whom they represent.

5. In so far as vulnerability to retrenchment under a "last on, first off" policy was the consequence of discriminatory delay in employment, it is arguable that it constituted loss or damage suffered by reason of that delay and was necessarily to be comprehended in any award of damages based on it. However, that point has not been taken and the only question which presently arises is whether the announced retrenchments and the actual retrenchments constituted acts of unlawful discrimination.

6. Subject to certain exceptions which are not presently relevant, s.25(2)(c) of the Act renders it unlawful for an employer to discriminate against an employee on the ground of his sex "by dismissing him or subjecting him to any other detriment". It is not in issue that those persons who were employed after 30 September 1980, both those who were and those who were not retrenched, suffered detriment in so far as they were identified as persons who might be retrenched. Thus, the only issue is whether, in the particular circumstances which existed as a result of earlier recruitment practices, A.I.S., by announcing retrenchments and by implementing those retrenchments on the basis of "last on, first off", discriminated against women ironworkers on the ground of their sex.

7. The Act relevantly specifies what constitutes discrimination on the ground of sex as follows:

"24.(1) A person discriminates against another person on the ground of his sex if, on the ground of - (a) his sex; (b) a characteristic that appertains generally to persons of his sex; or

(c) a characteristic that is generally imputed to persons of his sex,

he treats him less favourably than in the same circumstances, or in circumstances which are not materially different, he treats or would treat a person of the opposite sex. ... (3) A person discriminates against another person on the ground of his sex if he requires the other person to comply with a requirement or condition -

(a) with which a substantially higher proportion of persons of the opposite sex to the sex of the other person comply or are able to comply;

(b) which is not reasonable having regard to the circumstances of the case; and

(c) with which the other person does not or is not able to comply."

8. It was argued on behalf of the first respondents that the "last on, first off" method of retrenchment offended both s.24(1) and s.24(3) of the Act. The argument in relation to s.24(1) was put in this way: the first respondents were retrenched or put at risk of retrenchment because they lacked employment seniority; they lacked employment seniority because the recruitment practices of A.I.S., both before and after mid-1980, resulted in the waiting period for employment as an ironworker being longer for women than for men; therefore they were retrenched because they were women.

9. Section 24(1) of the Act is usually understood to refer to direct discrimination or acts involving different treatment of men and women; s.24(3) of the Act is usually understood to refer to indirect discrimination or acts having a disparate impact on men and women. See, for example, the discussion of the similar provisions of the Sex Discrimination Act 1975 (U.K.) in James v. Eastleigh Borough Council (1989) 3 WLR 123, at p 126; (1989) 2 All ER 914, at pp 916-917. Doubtless, the presence of s.24(3) in the Act takes much of the force from any argument that s.24(1) should be given a broad application similar to that accorded to provisions in the Civil Rights Act 1964 of the United States of America and in the Canadian Human Rights Act 1976-1977 proscribing discrimination "because of" sex, race or other characteristic thereby made the subject of unlawful discrimination. The American and Canadian provisions have been applied to acts or decisions made by reference to criteria or standards which are apparently non-discriminatory (sometimes referred to as "facially neutral") but which have a discriminatory effect. In the United States that application is the result of treating evidence of discriminatory effect as prima facie proof of discrimination because of sex, race, or other identified characteristic. See Griggs v. Duke Power Co. (1971) 401 US 424, at p 431; Albemarle Paper Co. v. Moody (1975) 422 US 405, at p 425; Dothard v. Rawlinson (1977) 433 US 321, at p 329. However, for that to be done it is necessary for the plaintiff to identify the specific employment practice that is challenged: Wards Cove Packing Company Inc. v. Atonio (1989) 57 LW 4583. The significance of the concept of onus of proof and related considerations in the area of anti-discrimination law in Canada is discussed in Ontario Human Rights Commission v. Simpsons-Sears Ltd (1985) 2 SCR 536, at pp 558-559.

10. Section 24(1) and like provisions in the Act directed to other acts of unlawful discrimination operate by reference to the ground which provides the basis for the act or decision in question. Similar provisions in the Sex Discrimination Act 1975 (U.K.) and in the Equal Opportunity Act 1984 (Vic.) have occasioned some discussion of the relevance of intent to discriminate. In Department of Health v. Arumugam (1988) VR 319 Fullagar J. said of the Victorian legislation (at p 327) that "the 'ground' of one's discrimination must be conscious to fall within the proscriptions of the Act". On the other hand, in Reg. v. Birmingham City Council; Ex parte Equal Opportunities Commission (1989) 2 WLR 520, at pp 525-526; (1989) 1 All ER 769, at p 774, Lord Goff stated that "(t)he intention or motive of the defendant to discriminate ... is not a necessary condition to liability". His Lordship explained that, if it were otherwise, "it would be a good defence for an employer to show that he discriminated against women not because he intended to do so but (for example) because of customer preference, or to save money, or even to avoid controversy".

11. It is not difficult to envisage situations in which the ground of an act or decision may be identifiable as one falling within s.24(1)(a), (b) or (c) notwithstanding that the act or decision is not actuated by a motive to discriminate. One need go no further by way of example than an act or decision - as in the past frequently happened - denying women certain opportunities by reference to the inadequacy of toilet facilities. And in that situation it is possible that "consciousness" may extend only to the inadequacy of toilet facilities without a full appreciation that that consideration is but an aspect of a characteristic that appertains generally or is generally imputed to women. And there may be other situations in which habits of thought and preconceptions may so affect an individual's perception of persons with particular characteristics that genuinely assigned reasons for an act or decision may, in fact, mask the true basis for that act or decision. Thus, in the ascertainment of the true basis of an act or decision it may well be significant that there is some factor, other than the ground assigned, which is common to all who are adversely affected by that act or decision. In certain situations that common factor may well be seen to be the true basis of the act or decision. And that may also be the case where some factor is identified as common to a significant proportion of those adversely affected.

12. Even if it could be said that a factor common to all or to a significant proportion of those who were adversely affected by the decision of A.I.S. to retrench by the "last on, first off" method was that they were women, a further finding that that was the true basis of the decision would be necessary to render s.24(1) applicable. See James v. Eastleigh Council, at pp 128-129; pp 918-919 of All ER. There is no finding to that effect by the Tribunal. And the argument made on behalf of the first respondents does not even go so far as to suggest that the true basis of the decision to retrench by the method of "last on, first off" was in any way related to the fact that some of the persons who would be retrenched were women. Instead, it merely identifies the factor which caused some women ironworkers to be within the group retrenched or the group likely to be retrenched rather than within the group unaffected by the decision. That is not sufficient to render s.24(1) applicable.

13. Section 24(3) of the Act operates by reference to "a requirement or condition". There is some awkwardness in relating that expression to s.25(2)(c) which renders it unlawful for an employer to discriminate against an employee "by dismissing him or subjecting him to any other detriment". However, it is plain enough that it was a requirement or condition of continued employment with A.I.S. that the employee should have commenced work prior to 6 January 1981. And it was a requirement or condition of being employed without risk of retrenchment that employment should have commenced prior to 30 September 1980. Risk of dismissal and, in most cases, dismissal were the consequences of failure to comply.

14. The critical consideration in the present appeal is whether the condition or requirement that employment should have commenced before the date which attracted dismissal or the date which put an employee at risk of dismissal is one falling within s.24(3)(a) of the Act. That paragraph applies only if the condition or requirement is one "with which a substantially higher proportion of persons of the opposite sex to the sex of the other person comply or are able to comply".

15. Section 24(3) requires the ascertainment of those proportions which complying men and women bear to some larger group or base group. The first question which arises is whether s.24(3)(a) directs that the proportions be ascertained by reference to separate groups of men and women. In the Court of Appeal Street C.J. was of the view that the proportions could be ascertained by reference to a single group, comprised of men and women, being the "aggregate workforce (of A.I.S.) in November 1982". We do not think that that approach is permitted by s.24(3)(a). The word "proportion" requires more than mere numerical comparison. A calculation made by reference to the aggregate workforce is, in truth, no more than numerical comparison. And, ordinarily, the simple ratio obtained by reference to a single base group comprised of men and women will be influenced by the sexual composition of that base group. Having regard to the purpose of the Act, s.24(3)(a) is to be seen as requiring a calculation which will reveal whether sex, as distinct from the sexual composition of the group, is a factor influencing the number of complying men as compared with the number of complying women. For that purpose it is necessary that complying men be ascertained as a proportion of other men and that complying women be ascertained as a proportion of other women.

16. The more difficult question concerns the identification of the groups of men and women which will enable the proportions of complying men and women to be calculated. On that issue s.24(3)(a) is wholly silent. In the Court of Appeal, Street C.J. held that the identification of a base group was "a matter of fact to be determined having regard to the context in which the requirement or condition is imposed", adding that "(i)t will be the group to which it is directed and which will be divided or segregated by it". On the other hand, Priestley J.A. (with whom Mahoney J.A. agreed), after a consideration of decisions based on the similar provision in the Sex Discrimination Act 1975 (U.K.), inclined to the view that the relevant groups were the male and female populations of New South Wales.

17. As previously indicated, s.24(3)(a) requires an exercise which will ascertain whether sex is significant to compliance with the condition or requirement in question. It may be expected, as was indicated by Street C.J. in the Court of Appeal, that the base groups which are appropriate to that exercise will vary according to the context in which the condition or requirement is imposed. That being so, there is no warrant for reading s.24(3)(a) as invariably requiring the calculation of proportions by reference to the general male and female populations. Equally, there is no warrant for reading s.24(3)(a) as excluding that calculation if it will reveal the significance, if any, of sex to compliance. The silence of s.24(3)(a) as to the method of identifying appropriate base groups should, we think, be taken as requiring the Tribunal to determine for itself the base groups which will reveal whether sex is a significant factor in compliance. That is not to say that a determination of the appropriate base groups is merely a finding of fact which is beyond appellate review by reason of the limitation on appeals in s.118 of the Act.

18. The determination of the appropriate base groups will ordinarily involve the making of findings of fact. But it also involves a reasoning process which is not dissimilar from that involved in the process of determining whether or not evidence is relevant to an issue in a trial. A decision to select particular base groups involves a question of law, at least in so far as it is a question of law whether the base groups selected produce the exercise required by s.24(3)(a), namely, the ascertainment whether sex is significant to compliance. In this respect, it is necessary to enquire, as was pointed out in the recent decision of the United States Supreme Court in Wards Cove Packing Company (at pp 4586-4587), whether the groups are "too broad" or "too narrow". That exercise is, in essence, the same as an enquiry whether irrelevant considerations were taken into account or relevant considerations were not taken into account.

19. It was argued on behalf of the appellant that the Tribunal erred in not selecting as base groups those groups of men and women who together comprised the workforce of A.I.S. and who were, to adapt the words of Street C.J. in the Court of Appeal, the persons to whom the condition or requirement was directed and who would be divided or segregated by it. Calculations by reference to those base groups reveal that the proportions of men and women retrenched and put at risk of retrenchment were not significantly different.

20. The comparison of the proportions of complying men and women to the male and female populations to be divided by the condition or requirement in question will reliably reveal the extent of the significance, if any, of sex to compliance only if sex is not a factor influencing the composition of those populations. In the present case the composition of the A.I.S. workforce had been influenced by the discriminatory recruitment practices of A.I.S. Calculations made by reference to those groups of men and women who together comprised the A.I.S. workforce would thus not reliably disclose the significance, if any, of sex to compliance. That being so, the Tribunal did not err in failing to select the groups of men and women comprising the workforce of A.I.S. as the base groups for the purpose of calculating the proportions of complying men and women.

21. Because the composition of the groups of men and women comprising the A.I.S. workforce was influenced by past discriminatory practices the significance, if any, of sex to compliance had to be ascertained by other means. Presumably a statistician could have ascertained that significance, if any, by adjusting or correcting for the effects of past discriminatory practices. But s.24(3)(a) is premised on a less sophisticated exercise. It merely requires the selection of relevant base groups which do not themselves incorporate the effect of allegedly discriminatory practices and which can accordingly be used as reference points for ascertaining the effect of those practices. That requirement will not be satisfied if the definition of the selected base groups itself catches up and entrenches the effect of past discriminatory practices. Thus, in the present case where A.I.S.' selected touchstone was that of gate seniority, the selected base groups will not be unaffected by sex if they are defined in a way which merely reflects the adverse effect upon the gate seniority of female employees of the discriminatory delay between application for employment and commencement of employment.

22. The approach adopted by the Tribunal was to select base groups within the A.I.S. workforce by reference to date of application for employment. It seems that the date selected was the date of application of the woman last employed on 6 January 1981. That was a permissible approach for it was open to the Tribunal to find that, in so far as seniority of some form or another was to determine whether or not a person was to be retrenched, the selection of that date would reveal those persons from amongst whom the persons to be retrenched or identified as likely to be retrenched would be selected. And when so revealed and grouped according to sex the resultant groups were unaffected by the past discriminatory practices of A.I.S. The selection of those groups allowed for the ascertainment of the significance, if any, of sex to compliance with the condition or requirement for continued employment. The course adopted by the Tribunal was thus permitted by s.24(3)(a) of the Act. The result of that course was to disclose that the case fell within s.24(3)(a) since the proportion of male employees able to comply with A.I.S.' touchstone of gate seniority would, other things being equal, necessarily be higher than that of female employees whose gate seniority, vis-a-vis male employees who applied for employment at about the same time, was reduced by the effect of the past discriminatory practices.

23. It was further argued on behalf of the appellant that the "last on, first off" method of retrenchment was necessarily to be seen as reasonable, within the terms of s.24(3)(b), because it resulted in men and women being retrenched in proportion to their numbers in the A.I.S. workforce. That argument assumes that the numerical composition of the workforce is the standard by reference to which reasonableness should be judged. Viewed solely from the perspective of discrimination, composition of the workforce is an appropriate standard only if the composition of the workforce is not, as in the present case, the result of discriminatory practices. However, s.24(3)(b) is also directed to those considerations identified by the Supreme Court of the United States in Albemarle Paper Co., at p 425, as "the employer's legitimate interest in 'efficient and trustworthy workmanship'". Perhaps in the Australian context those interests should be identified as extending to the maintenance of a stable workforce and one not subject to industrial disputation which otherwise might result if established patterns of industrial regulation and representation were put at risk. No attempt was, however, made to justify the "last on, first off" method's exacerbation of the adverse effects of past discriminatory practices as reasonable having regard to those interests. That being so, it was open to the Tribunal to find, as it did, that the condition or requirement was unreasonable in that it operated to keep alive the effects of past discrimination on the ground of sex and it was not established that it served the employer's legitimate interests.

24. The appeal should be dismissed.

DAWSON J. This appeal raises the question whether Australian Iron &Steel Pty Limited ("AIS") discriminated against female ironworkers employed at its steelworks at Port Kembla when, because of a downturn in the steel industry, it was forced to retrench workers during a period extending from the end of 1982 into the first half of 1983. The retrenchments were made upon the principle of "last on, first off" or, as it has been called, the "reverse gate seniority" principle. The reason why it is said that retrenchment upon this basis discriminated against female workers is that for some years before 1980, AIS had discriminated against females in the employment of ironworkers so that at the time of the retrenchment the proportion of females in its workforce at Port Kembla who had been recently employed was higher than it would have been if there had been no discrimination in the past. In other words, women ironworkers tended to be amongst the most junior, as a result of the prior discriminatory practice. The retrenchment programme was first announced on 11 October 1982, when it was said that those selected for retrenchment would be those whose last commencement date with the company was after 30 September 1980, the retrenchment programme to begin as from 14 November 1982. In the event, retrenchments stopped at those who commenced work before 6 January 1981. At about the time the retrenchments were to begin, the total number of ironworkers employed by AIS was 8,208 of whom 7,698 were male and 510 were female. In all, 553 ironworkers were retrenched of whom 521 were male and 32 were female.

2. The Anti-Discrimination Act 1977 (N.S.W.) prohibits discrimination on the grounds of sex, race, marital status, physical impairment, intellectual impairment and homosexuality. Part III of the Act deals with sex discrimination. Section 25 makes it unlawful for an employer to discriminate against an employee on the ground of sex in such matters as the terms on which he offers employment and the provision of access to opportunities for promotion and transfer. The discriminatory dismissal of an employee is covered by s.25(2) which, so far as is relevant, provides:

"It is unlawful for an employer to discriminate against an employee on the ground of his sex - ... (c) by dismissing him or subjecting him to any other detriment."

3. What amounts to sexual discrimination for the purposes of the Act is defined by s.24:

"(1) A person discriminates against another person on the ground of his sex if, on the ground of - (a) his sex; (b) a characteristic that appertains generally to persons of his sex; or

(c) a characteristic that is generally imputed to persons of his sex,

he treats him less favourably than in the same circumstances, or in circumstances which are not materially different, he treats or would treat a person of the opposite sex.

... (3) A person discriminates against another person on the ground of his sex if he requires the other person to comply with a requirement or condition -

(a) with which a substantially higher proportion of persons of the opposite sex to the sex of the other person comply or are able to comply;

(b) which is not reasonable having regard to the circumstances of the case; and

(c) with which the other person does not or is not able to comply."

4. The New South Wales Act follows the method adopted in the Sex Discrimination Act 1975 (U.K.) where both direct discrimination and indirect discrimination are prohibited. In the New South Wales Act direct discrimination is prohibited by s.24(1); indirect discrimination is prohibited by s.24(3). A requirement may fall within the latter sub-section although it is "facially neutral", that is, although on its face it is neutral, in that it does not distinguish between the sexes or is not phrased in terms of a characteristic commonly associated with one sex.

5. The Equal Opportunity Tribunal of New South Wales found that AIS had in its recruitment practice discriminated against 34 female complainants on the ground of sex. Its practice between the time the Anti-Discrimination Act came into force in June 1977 and April 1980 when complaints were first lodged was to employ men almost immediately upon application but to place women applicants on a waiting list for substantial periods of time, often amounting to several years. The finding in relation to each of the 34 complainants was that AIS had discriminated against her by delaying hiring her. The tribunal also held that AIS had, both in threatening to retrench ironworkers in accordance with the principle of "last on, first off" and in retrenching them on that basis, acted in breach of the Act. Damages were awarded for each breach, although damages for the threat of retrenchment and damages for actual retrenchment were treated as being in the alternative.

6. The tribunal's treatment of retrenchment, or the threat of retrenchment, as an act of discrimination in addition to the act of discrimination in delaying the hiring of a complainant, is important, because s.113(b)(i) of the Act restricts the amount of damages to which any complainant is entitled for any single act of discrimination to $40,000. Eight of the 34 complainants were each awarded damages which in total amounted to more than $40,000 and it is against only those complainants that AIS has appealed to this Court, recognizing that damages for retrenchment or the threat of retrenchment would have been an available head of consequential damage under the complaints based upon delay in hiring. In other words, AIS has not sought to appeal where the complainant was able to rely upon direct discrimination in the form of delay in hiring, but only where, in order to support an award of damages in excess of $40,000, she had to rely upon retrenchment or the threat of retrenchment as a separate act of discrimination, direct or indirect. And in the case of the eight complainants against whom AIS appeals, it does not seek to disturb the finding of the tribunal that it discriminated against them by reason of its delay in hiring them.

7. The question is, therefore, whether, having discriminated against them by delaying their employment, AIS further discriminated against the first eight respondents to this appeal, within the meaning of s.24(1) or s.24(3), by retrenching them upon a "last on, first off" or "reverse gate seniority" principle. The question whether there was discrimination within the meaning of s.24(1) may, I think, be disposed of shortly.

8. Were it not for s.24(3), it may have been possible, in order to give effect to the intention of the Anti-Discrimination Act, to have given s.24(1) a broad construction embracing indirect discrimination. Nevertheless some difficulty would have been encountered because the sub-section expressly extends the grounds upon which a person may discriminate upon the ground of sex to include, in addition to sex itself, a characteristic that appertains generally to persons of the complainant's sex or a characteristic that is generally imputed to persons of the complainant's sex. In other words, the sub-section says that a person will discriminate on the ground of sex if he discriminates, not only on the express ground of sex, but also upon other specified grounds. It is hard to avoid the conclusion that the extension of the grounds upon which sexual discrimination may take place, to include matters other than sex itself, marks the limits of the sub-section. Be that as it may, when s.24(1) is read with s.24(3), it is clear to my mind that s.24(1) cannot be read so as to cover indirect discrimination, for to do so would be to render s.24(3) superfluous. That being so, discrimination will not amount to discrimination on the ground of sex within the meaning of s.24(1) merely because it is upon a ground which produces an effect equivalent to the effect of discrimination upon the ground of sex, unless the ground upon which the discrimination is based is a characteristic that appertains generally to persons of the complainant's sex or is a characteristic that is generally imputed to persons of the complainant's sex.

9. I do not think that this construction of s.24(1) requires it to be applied subjectively. The mere assertion of a ground which is not sex will not take discrimination out of the sub-section if the true basis for the action in question is in fact sex. Thus, in the present case if it could have been shown that the "last on, first off" principle was selected as the ground for retrenchment, not as an equitable means of shedding redundant employees, but as a means of shedding female employees more quickly, s.24(1) would have applied. The true ground would then have been sex and any discrimination would have been on that ground. But that was not shown and in my view s.24(1) had no application. Cf. James v. Eastleigh Borough Council (1989) 3 WLR 123, at p 128; (1989) 2 All ER 914, at pp 918-919.

10. Section 24(3), which defines indirect discrimination, has a much wider application and covers discrimination which is revealed by the different impact upon the sexes of a requirement or condition. The starting point with s.24(3) must be the identification of the requirement or condition. Upon principle and having regard to the objects of the Act, it is clear that the words "requirement or condition" should be construed broadly so as to cover any form of qualification or prerequisite demanded by an employer of his employees: Clarke v. Eley (IMI) Kynoch Ltd. (1983) ICR 165, at pp 170-171. Nevertheless, it is necessary in each particular instance to formulate the actual requirement or condition with some precision.

11. It is not, I think, enough in the present case simply to see the requirement or condition for continued employment as being contained within the principle of "last on, first off". That principle was applied within defined limits and it is necessary to incorporate them in the requirement. Thus, it was accepted upon both sides in this Court that the requirement was that, for an ironworker to remain in employment once retrenchments had begun in November 1982, he or she must have commenced employment before 6 January 1981.

12. The requirement having been identified, s.24(3) then demands that a comparison be made between the compliance rates for each sex, in order to determine whether "a substantially higher proportion of persons of the opposite sex to the sex of the (complainant) comply or are able to comply". There is more than one possible method of making the comparison.

13. One method is to make a bold comparison, within the aggregate workforce of AIS at the time of the retrenchments, between the raw figures for the number of men who complied and the raw figures for the number of women who complied. Given that 7,177 men were employed before 6 January 1981 while only 478 women had commenced employment before that date, it is self evident upon that comparison that the requirement was satisfied by many more men than women.

14. The problem with that form of comparison is that the result may merely be a reflection of the fact that the workforce was sexually imbalanced. Indeed, where the sexes are not evenly balanced in a workforce, the application of the "last on, first off" principle will almost always result in the retrenchment of a higher proportion of one sex. Where, as in this case, the men employed outnumbered the women by a ratio of fifteen to one, it was only to be expected that the number of men who complied with any condition, however genuinely neutral and non-discriminatory, would greatly outnumber the number of women who could comply. Upon this approach, the fact that the sexes in a workforce are unequal is itself a significant factor in determining whether a requirement imposed upon that workforce amounts to discrimination within the meaning of s.24(3), regardless of whether or not that inequality is the result of a prior discriminatory practice. Such an approach could only be justified by treating s.24(3) as being aimed generally at discouraging workforces in which the sexes are unequally represented and there is, in my view, no basis for interpreting the sub-section in such a far-reaching manner. Obviously, the reach of the sub-section was intended to be far less ambitious and to extend only to discriminatory requirements or conditions imposed upon a workforce, whether the sexes in the workforce happen to be unequal or not. The sub-section was not intended to embrace requirements which are truly non-discriminatory and it must, therefore, require something more than a direct comparison between the number of men who comply and the number of women who comply with a requirement imposed by an employer.

15. The English legislation makes it clear that what is to be compared for the purpose of establishing that a requirement is discriminatory are not the raw figures of those of each sex who comply but the proportion of men who comply and the proportion of women who comply. Each proportion upon this method is made up of only one sex so that any difference in the compliance rates between the two sexes is revealed. Section 1(1)(b) of the English Act specifically refers to the need to compare two proportions. It provides:

"A person discriminates against a woman in any circumstances relevant for the purposes of any provision of this Act if - ...

(b) he applies to her a requirement or condition which he applies or would apply equally to a man but - (i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it ..."

16. Although the New South Wales Act refers to a proportion only once when it speaks of the need to determine whether a "substantially higher proportion of persons of the opposite sex to the sex of the (complainant) comply or are able to comply", it seems clear that the most appropriate way to test the incidence of discrimination between the sexes is to compare the relevant proportion of men with the relevant proportion of women. Having regard to the similarity between the two pieces of legislation, it seems unlikely that it was intended that the New South Wales Act should require the application of a different test. Moreover, a comparison upon a proper basis between the two proportions has the effect that inequality of the sexes in the workforce will not of itself determine whether the compliance rate by one sex is substantially higher than that of the other and will not, therefore, pre-empt the question whether a requirement which has been imposed upon a workforce is discriminatory.

17. But a proportion must be a proportion of something, so that it is necessary to determine the appropriate grouping or pool within which to calculate the proportions which are to be compared. The English cases have discussed in detail the problems associated with the determination of an appropriate base group. Two main contrasting approaches can be identified. One seeks to narrow the base group to the particular group of persons to whom the requirement is directed, while the other seeks to establish a broader base beyond the immediate context. The need to select an appropriate base group, which may be limited to the immediate context, was recognized in Kidd v. D.R.G. (U.K.) Ltd. (1985) I.C.R. 405, at p 409, where Waite J., in delivering the decision of the Employment Appeal Tribunal, held that:

"... for the purposes of the statutory comparison, like must be compared with like in a context appropriate to the case under review. The consequence is that the particular section of the members of the public upon whose lives the impact of the relevant requirement or condition has to be measured is liable to vary from case to case

- ranging from the population as a whole at one end of the scale to employees of a single

work-place at the other: and there is liable also to be ample scope for debate in many instances as to which section of the public within that range is the right one to choose for a particular case."

18. As that passage indicates, the contextual approach will provide different answers depending upon the circumstances of each case. For example, where a requirement is contained in a published offer of employment, the relevant base group may be made up of those who might be expected to be eligible to take up the employment based upon geographical, educational and other restraints. Similarly, where a requirement is imposed upon existing employees, the relevant group may be the class of employees affected.

19. In this case, the appellant submitted that the appropriate base group, being that to which the requirement in question was directed, was the aggregate workforce of AIS. That base group, so it was submitted, had to be divided into the two sexes to enable the proportions of each sex affected to be calculated and compared. Accordingly, the appellant argued that the relevant proportions to be compared for the purposes of s.24(3) were the actual number of men who complied with the requirement divided by the number of men to whom the requirement was directed, as against the actual number of women who complied with the requirement divided by the number of women to whom the requirement was directed. On this basis the appellant argued that 93.23% (7,177/7,698) of all male ironworkers in the workforce were not retrenched and 93.73% (478/510) of all female ironworkers in the workforce were not retrenched, so that it could not be said that a substantially higher proportion of men complied or were able to comply with the requirement in question. However, for reasons which will appear later, to adopt the aggregate workforce as the base group in this manner would be to fail to take into account the continuing discriminatory effect of past recruitment practice upon the retrenchment programme.

20. The broader approach to the determination of a base group was adopted at first instance in Price v. Civil Service Commission (1977) 1 WLR 1417; (1978) 1 All ER 1228. In that case an industrial tribunal dismissed a complaint by a female civil servant that she had been discriminated against by the imposition of an age requirement as an eligibility condition for a job as an executive officer. The complainant submitted that the age requirement imposed (between 17 and 28 years) was one with which fewer women could comply than men because many women between those ages were occupied looking after children. The industrial tribunal adopted as the appropriate base group the whole population of England, divided into males and females, and held that the proportion of women within the specified age group was not considerably smaller than the proportion of men. In allowing the appeal, the Employment Appeal Tribunal considered that the base group might better have been restricted to qualified men and women of the relevant ages. A similar broad approach seems to have been adopted in Steel v. Union of Post Office Workers (1978) 1 WLR 64; (1978) 2 All ER 504.

21. Adopting the broad approach in this case, it would be possible to take the whole of the population of, say, New South Wales, divided into males and females. Upon such an approach, although the proportions would be small, because those who could comply would necessarily be persons within the AIS workforce, it would be evident that a greater proportion of men could comply with the condition than women, because the division of the sexes in New South Wales is approximately equal and the number of men and women who complied with the condition were unequal, by far the greater number being men.

22. However, to apply the sub-section in this way may lead to the unacceptable result that a requirement is sexually discriminatory when clearly it is not. For example, if an employer seeks to retrench only red-headed employees, the relevant requirement for continued employment, namely, that a person have hair of a colour other than red, is clearly not grounded upon sex. But, to continue the example, if the workforce consists of 5,000 men and 500 women and 4,500 men and 450 women comply with the requirement, and if the aggregate workforce, divided into the respective sexes, is the base group, it is apparent that the same proportions, 10% of males and 10% of females, are able to comply. However, if the entire population of New South Wales were adopted as the base group, the sexes being approximately equally divided, 4,500 over the New South Wales male population yields a substantially higher proportion of men who can comply with the requirement than 450 women over the female population, and s.24(3)(a) is satisfied. Moreover, the requirement, being arbitrary, would be likely to be unreasonable and thus satisfy s.24(3)(b). And it is easy to imagine a red-headed female complainant who would not be able to comply with the requirement so as to fall within s.24(3)(c). Thus imposing a requirement which may be unfair, but is not sexually discriminatory, would be held to amount to sexual discrimination. The sexually unequal nature of the workforce would demand the conclusion that the more numerous sex in the workforce had been favoured.

23. I have already adverted to the problem that in selecting an appropriate base group in this case, the group should not be defined so as to mask the effect of the previous discriminatory recruitment practice. Failure to make some adjustment for this would be to avoid the very sort of wrong which the Anti Discrimination Act was intended to redress. A problem of this nature was considered in Reg. v. Secretary of State for Education; Ex parte Schaffter (1987) IRLR 53. In that case, the requirements for eligibility for hardship study grants for lone parents included a requirement that the parent must once have been married. If the base group was made up of lone parents divided into sexes, the result was that about 20% of lone parents of both sexes had never been married. However, the figures also showed that there were about four times as many female lone parents who failed to comply with the requirement as there were male lone parents who failed to comply. Schiemann J., at p 56, rejected as the base group all lone parents in the student population because:

"if one ... reduces the size of the pool under consideration to a very small size there is ... a very real risk that you have incorporated an act of discrimination into your definition. If I were to adopt (the respondent's) submission in this case and only look at single lone parents, and then compare the proportion of female lone parents which is single with the proportion of male lone parents which is single, I would indeed find no significant difference, but I would have fallen into precisely that trap."

24. In that case, Schiemann J. appears to have assumed that many more women than men were affected by the requirement as the result of a sexist practice in the community whereby unmarried mothers rather than unmarried fathers typically carried the responsibility of caring for their children. To make an adjustment for this practice, he selected as the appropriate base group, a pool comprising all students with dependent children claiming grants, in which a much greater proportion of men than women complied with the condition of once having been married.

25. One method of making an appropriate adjustment, which in my view is satisfactory in this case, is that submitted by the respondents and adopted by the Equal Opportunity Tribunal, namely, taking a base group consisting of those employees who applied for employment at about the same time as one of the complainants, Mrs Donka Najdovska. She was treated before the tribunal as the principal complainant. Mrs Najdovska applied for employment in August 1977, but was not employed until 26 February 1981. It is possible to speak of those who applied for employment, men and women, about August 1977, because, provided a period is selected which throws up a sufficient number of persons, the precise length in this case is not significant. The period must however be sufficiently short to enable it to be said that during that period the women applying for employment had not yet been subjected to discriminatory treatment. In that way a group of men and women who were treated equally by AIS can be identified, because the discriminatory effect of men being taken on almost immediately and women being placed on a waiting list had not then appeared. In selecting the base group in that way that element of discrimination is not built in. It is eliminated because the base group which is selected is in fact a sample of the workforce which is not subject to the bias which would arise, as a result of the discriminatory recruitment practice, if the whole workforce were taken as the base group. The selection of an appropriate sample is a common and statistically acceptable means of calculating the proportions of persons in a larger community who answer a particular description. Of course, to select a group in this way is not to impose an additional requirement of eligibility for continued employment, but rather to choose a pool whose members do not have a characteristic which could bias the result.

37. Once it was established that 93.73 per cent of female ironworkers and 93.23 per cent of male ironworkers complied or were able to comply with the condition imposed by A.I.S., the Tribunal was bound as a matter of law to hold that the retrenchments and threat of retrenchments by A.I.S. were not in breach of s.24(3). It is, therefore, unnecessary to determine whether the provisions of s.24(3)(b) and (c) were satisfied. The appeal of A.I.S. in respect of the finding of sex discrimination within the meaning of s.24(3) should be allowed.
Section 24(1)

38. The respondents sought to justify the awards of damages in their favour by asserting that the Tribunal was correct in finding that the retrenchments and threat of retrenchments of the respondents were a breach of s.24(1) of the Act.

39. For the respondents to succeed on this ground it was necessary for them to establish that on the ground of sex A.I.S. treated them less favourably than male ironworkers in the same circumstances by threatening to retrench, and in retrenching, them. However, there was no evidence that it was on the ground of sex that the respondents were retrenched or threatened with retrenchment. On the contrary the respondents were retrenched on the ground that they had not commenced employment before 6 January 1981. Accordingly, the respondents cannot rely on breach of s.24(1) of the Act to support the findings that the threats of retrenchment and the retrenchments amounted to independent acts of unlawful sex discrimination.
Conclusion

40. A.I.S. must succeed in its appeal and the damages awarded to the respondents must be reduced. This is hardly a satisfactory result because the amounts of damages which the respondents lose were the direct consequence of the discriminatory conduct of A.I.S. in delaying in hiring them. Unfortunately, the respondents are not entitled to full compensation for this discriminatory conduct of A.I.S. because of the statutory limit of $40,000 for any one act of discrimination. Mr Basten sought to overcome this injustice by arguing that retrenchment on a "last on, first off" basis was an independent act of discrimination. But for the reasons I have given, the respondents are not entitled to treat the threat of retrenchment and the actual retrenchment as separate, unlawful acts of sex discrimination.
Orders

41. The appeal must be allowed. The order of the Court of Appeal dismissing the appeal of A.I.S. should be set aside. In lieu thereof, it should be ordered that the appeal to that Court against the awards of damages to the present respondents should be allowed and that the damages awarded to each of them should be reduced by the amounts specified in par.9(a) of the Notice of Appeal. The matter should be remitted to the Court of Appeal to make such order as it thinks fit in respect of the costs of the proceedings in the Court of Appeal.

Orders

Appeal dismissed with costs.