On 15 July 2021, the European Court of Justice ruled in two German cases that a neutral dress code in the workplace does not constitute either direct or indirect discrimination based on religion or belief. The Court set some conditions for these neutral dress codes, including the employer’s obligation to prove that the neutrality policy meets a ‘genuine need’. This genuine need can be both a need for a neutral attitude towards customers and a need to avoid social conflict in the workplace.

Case IX v WABE

The first of the two combined cases concerned an employee who was employed as an special needs caregiver in a large group of day-care centres. In order to ensure the children’s individual and free development with regard to religion, philosophy of life and politics, a neutrality policy applied in the day-care centres. However, this neutrality policy did not apply to employees in the organisation’s head office, as these employees did not have contact with the parents or children.

Upon returning from parental leave, the caregiver was wearing an Islamic headscarf that she refused to take off. The day-care centre decided to temporarily suspend the employee and to give her a warning. Subsequently, she brought a case before the labour court and requested that the day-care centre be ordered to remove the warning from her personnel file.

Case MH v MJ

The second case involved an employee who worked as a sales consultant and cashier in a department store. Since the employee refused to remove her Islamic headscarf, she was initially transferred to a position where she could continue to wear her headscarf. After some time, the department store decided to introduce a neutrality policy to prevent conflicts between employees. In the past, there had been several conflicts between personnel due to differences in religion and culture.

On the basis of this new neutrality policy, the employee was sent home, after which she received a warning requiring her to return to work without any large, prominent signs of political, philosophical or religious beliefs. The employee contested the validity of the warning and claimed damages.

In the judgment, the European Court of Justice referred to previous case law in which the Court had already ruled that a neutrality policy does not constitute direct discrimination if that policy applies without distinction to all expressions of political, philosophical or religious beliefs and treats all employees of an organisation in the same way by obliging them in a general manner to dress neutrally. The Court ruled that there was no direct discrimination in this case, as the day-care centre had also required a Christian employee to take off a religious cross.

Furthermore, the Court reiterated that the employer’s desire to demonstrate neutrality towards (both public and private) customers could be considered a legitimate objective if, in pursuing that objective, the employer only involves employees who have contact with customers.

In the judgment, the Court specifies that the mere desire of the employer to pursue a neutrality policy is not sufficient to objectively justify an indirect distinction based on religion or belief. The justification can only be objective if three conditions are met:

1. Genuine need

There must be a ‘genuine need’ on the part of the employer, which the employer must prove.

This ‘genuine need’ can be proven by taking into account the rights and legitimate expectations of customers or users (but obviously not any discriminatory demands from customers). For example, parents may have a legitimate expectation that caregivers in day-care centres should dress neutrally to ensure their children’s free development with respect to religion, philosophy of life and politics.

Avoiding social conflict may constitute a genuine employer need as well as maintaining a neutral attitude toward clients. This is a welcome clarification for many organisations, since in previous judgments the Court had only ruled that external neutrality towards customers could be considered a legitimate objective (it had not previously ruled on internal neutrality).

In addition, the employer must prove that, without the introduction of a neutrality policy, its freedom to do business would be affected as it would suffer detrimental consequences given the nature or context of its activities.

2. Appropriate dress code 

The dress code must be ‘appropriate’ to ensure the proper application of the neutrality policy. In other words, the policy must be effectively pursued in a coherent and systematic manner.

3. Proportionality

The dress code must not go beyond what is strictly necessary relative to the detrimental consequences that the employer is trying to avoid through the dress code.

Even if a ban on large, prominent signs (as was the case in the department store in MH v MJ) is applied coherently and systematically, this is unjustified according to the Court. Indeed, allowing any sign, even a small one, undermines the coherence of the neutrality policy. It is therefore not possible to limit the ban to the wearing of ‘large, prominent signs’ of political, philosophical or religious beliefs.

Finally, the German court had asked the European Court of Justice whether a neutral dress code could constitute indirect discrimination on the basis of sex, since in practice neutral dress codes almost exclusively affect female employees. The Court found that the discrimination ground of ‘sex’ was outside the scope of the European Framework Directive on Discrimination to which the question was limited, and therefore did not answer this question.