The difficulty of applying the Equality Act 2010 to charities has been illustrated by two cases involving Catholic adoption agencies that wanted to exclude homosexual couples from their services.
The first was Catholic Care in Leeds, which tried to change its objects to allow exclusion on the grounds that it was a "proportionate means of achieving a legitimate aim" - increasing the number of children placed with adoptive families.
It closed its adoption service after losing its appeal last November to the Upper Tribunal, which decided it could not demonstrate that children not adopted by Catholic Care would not be adopted by another agency.
The second case involves St Margaret's Children and Family Care Society in Glasgow. After being alerted by the National Secular Society, the Office of the Scottish Charity Regulator ruled recently that the charity's use of married couples only was in breach of the act and it should amend its practices or lose charitable status. St Margaret's has since asked the OSCR to reconsider this decision.
Charity lawyers north and south of the border are now advising charities that restrict their services to defined groups to review their constitutions in the light of the two rulings. Some fear the bar is being set too high for some types of charities to qualify for the exceptions in the act.
The two exceptions are the charity exception, which Catholic Care tried to use, and the religious exception, which St Margaret's is relying on.
The charity exemption is designed for charities that restrict their services on the basis of "protected characteristics", such as race, disability or sexual orientation; they need to specify the restriction in their objects and justify it either as a way of tackling a particular disadvantage or as "a proportionate means of achieving a legitimate aim".
Under the religious exemption relied on by St Margaret's, religious organisations can impose restrictions in line with their beliefs.
But the OSCR said that "religious belief by itself cannot justify discrimination on grounds of sexual orientation when an organisation is providing a public-facing service, such as the provision of a voluntary adoption agency". So it concluded that the charity's policies breached the act and that it failed the 'charity test' under Scottish charity law because its services were not for public benefit.
The Charity Commission guidance on the Equality Act includes examples of charities with a strong case for justifying discrimination under the act, such as those providing services for people with impaired hearing. While such a restriction excludes people with other forms of disability, the charity could argue that it is attempting to address disadvantages faced by its beneficiaries.
But in more contentious cases, particularly those involving religion, some lawyers believe that claiming exemption will be extremely difficult. Leona Roche, senior associate at London law firm Bates Wells & Braithwaite, says: "What is clear from these cases is that the threshold has been set high, and charities wishing to come within the exception will need strong and weighty reasons to objectively justify the discrimination involved. It's likely that only very special and limited cases will be recognised as falling within this exception."
Benjamin James, head of charities at London-based firm Wallace, who advised Catholic Care, agrees, particularly regarding the charity exemption: "The 'legitimate aim' is very hard to prove and I think we will find a number of charities that have operated on the basis of a legitimate aim for decades but haven't got it written in their constitutions will run into problems as a result in the coming years."