Race discrimination – burden of proof – reasons – unfair dismissal – reasons for dismissals

Khan & anor v Home Office: CA (Civ Div) (Lords Justice May, Wall, Maurice Kay): 23 May 2008

The appellant employees (K) appealed against a decision of the Employment Appeal Tribunal (EAT) upholding the employment tribunal’s rejection of their claims of race and sex discrimination against their former employer (H).

K had been employed by H as interpreters, but over time H increasingly used freelance interpreters. K complained that the freelancer workers received preferential treatment, and they invoked the grievance procedure in respect of various complaints including race and sex discrimination. K took sick leave arising from stress, and were then put on special paid leave pending identification of suitable alternative work. K rejected offers of redeployment to jobs that they considered to be non-existent or bogus.

H decided that, in view of the reiterated refusal of the offered jobs, K should be dismissed on the basis of redundancy. K issued claims against H alleging race and sex discrimination. In relation to the grievance procedure the employment tribunal found that K had been treated less favourably on the grounds of their sex and race, and that they had been unfairly dismissed, as H had not acted in accordance with its own redundancy policy procedure and all efforts were not reasonably made to avoid the termination of employment. However, it found that the dismissals were not the result of race or sex discrimination, and neither were other complaints that concerned pay, special leave and the failure to make payments under the Civil Service Compensation Scheme. K appealed against that decision.

The EAT concluded that the dismissals were automatically unfair pursuant to section 98A of the Employment Rights Act 1996, so that K were entitled to an uplift in their compensation for unfair dismissal, and that K’s new claim to a shift allowance was established, but it upheld the tribunal’s conclusion on the reason for the dismissals.

K contended that the tribunal had failed to approach the burden of proof in the manner required by the section 54A of the Race Relations Act 1976, section 63A the Sex Discrimination Act 1975 and the approach set out in Wong v Igen Ltd (formerly Leeds Careers Guidance) [2005] EWCA Civ 142, [2005] 3 All ER 812 and later authorities. K further submitted that the rejection of their complaints was afflicted by an insufficiency of reasoning.

Held: (1) In respect of the burden of proof in discrimination cases, it was settled law that it was for the complainant to make out his case on different treatment and, if that stage had been satisfied, the evidential burden of proof shifted to the respondent to provide an adequate explanation. If the explanation was inadequate, an employment tribunal should conclude that the complaint should be upheld.

However, tribunals ought not to divide hearings into two parts to correspond to those stages but should hear all the evidence, including the respondent's explanation, before deciding whether the first-stage requirements were satisfied and, if so, whether the respondent had discharged the onus shifted to him, Igen, Laing v Manchester City Council [2006] ICR 1519 EAT and Madarassy v Nomura International Plc [2007] EWCA Civ 33, [2007] ICR 867 applied.

In the present case it was clear that, notwithstanding the discrimination that afflicted the grievance procedure, H convinced the tribunal that it had thought it had no choice but to dismiss K for redundancy, and that at that stage K were treated no differently than any hypothetical comparator would have been. That holding was faithful to the statutory requirements in relation to the burden of proof and consistent with previous authority. The tribunal’s conclusions as to pay, special leave and civil service compensation similarly gave no cause for concern that they were the result of a legal misdirection or misapplication of the burden of proof.

(2) Where the parties could have had no difficulty in understanding why they had won and lost as they had, K’s complaint about the adequacy of the tribunal’s reasons to support its findings of no discrimination was unsustainable.

Appeal dismissed.

Non-counsel representative for the appellants; Adam Tolley (instructed by the Treasury Solicitor) for the respondent.

Redundancy payments – staff handbooks – contract terms – custom and practice – enhanced redundancy payments

Christopher Harlow v Artemis International Corporation Ltd: QBD (Mr Justice McCombe): 22 May 2008

A redundancy policy to make an enhanced payment had been part of the employee staff handbook, which was a collection of policies kept in electronic form and apt to be an express contractual term.

The claimant redundant employee (H) claimed an enhanced redundancy payment pursuant to his contract of employment with the defendant employer (D), alternatively damages in the same sum for breach of contract.

H’s employment terms and conditions were detailed in a staff handbook, which was kept in electronic form. H maintained that the staff handbook comprised all the files and policies stored electronically in the same folder, which included D’s redundancy policy. D maintained that the staff handbook did not include the redundancy policy. H contended that the redundancy policy constituted an express term of his employment contract so that he was entitled to an enhanced payment. D contended that enhanced redundancy payments were made only on an ex gratia basis.

Held: on the evidence the staff handbook included the redundancy policy. The fact that a staff handbook was presented as a collection of policies did not preclude their having contractual effect if, by their nature and language, they were apt to be contractual terms, Keeley v Fosroc International Ltd [2006] EWCA Civ 1277, [2006] IRLR 961 applied. The redundancy policy was kept with others that must have had contractual effect, such as sickness and holiday pay, and contained an express statement of the manner of calculation. In the circumstances the redundancy policy was apt to be a contractual term and formed part of H’s contract. In addition, it had become D’s custom and practice to compensate redundant employees in accordance with its enhanced redundancy policy from time to time. No relevant employee of the company would have considered his employment to be other than subject to the current redundancy policy. In the circumstances, if it had not been an express term, the redundancy policy would have constituted an implied term of H’s contract, Albion Automotive Ltd v Walker [2002] EWCA Civ 946 applied.

Judgment for claimant.

Akash Nawbatt (instructed by Bates, Wells & Braithwaite) for the claimant; Daniel Stilitz (instructed by White & Case) for the defendant.