Ashfords Solicitors - Employment Update

Sex Discrimination: Burden of Proof

The Court of Appeal, in Madrassay v Nomura International plc has given guidance on the burden of proof in discrimination cases. In the case, one of the points the EAT provided judgment on was that a claimant must show more than a difference in sex and a difference in treatment to establish a prima facie case of sex discrimination.

The claimant must show more than just the mere possibility of discrimination before the burden of proof passes to the respondent. The primary fact must be such that a reasonable tribunal, having heard the evidence from both sides, could conclude that the respondent committed (not just "could have committed") the discriminatory act.

Section 63A of the Sex Discrimination Act 1975 establishes a two-stage approach to the burden of proof in discrimination cases:

The claimant must establish a "prima facie case".
The burden then shifts to the respondent to prove that they did not discriminate.

Ms Madarassy was employed by the financial institution, Nomura, in its equity capital markets team. In November 2000 Ms Madarassy informed Nomura that she was pregnant. In February 2001, after two performance appraisal meetings, Nomura assessed Ms Madarassy performance as not being up to standard. Ms Madarassy took maternity leave in March 2001. During her maternity leave there were a number of redundancies as a result of restructuring. After Ms Madarassy returned to work, she was told that she may be made redundant and attended redundancy consultation meetings. She did not score well in the selection process and was eventually dismissed by reason of redundancy in November 2001.

Ms Madarassy brought a tribunal claim for unfair dismissal and discrimination. She cited 33 incidents of discrimination and victimisation throughout the period of her employment. Ms Madarassy cited the reason she had been treated less favourably (including being selected for redundancy) was because of her sex and/or because she had become pregnant. The Tribunal rejected all of her claims apart from one relating to Nomura's failure to carry out a risk assessment in connection with her pregnancy, as required by regulation 16 of the Management of Health and Safety at Work Regulations 1999 (MHSAW Regulations).

The EAT upheld the tribunal's decision, save for two issues which it remitted to the same tribunal for a review. The EAT allowed a cross-appeal by Nomura against the finding of discrimination in relation to the risk assessment.

Ms Madarassy appealed to the Court of Appeal. Her arguments on the burden of proof included the following:

The wording of the tribunal's judgment showed that it had effectively required Ms Madarassy to prove her whole case (including the discriminatory reason for the treatment) before passing the burden of proof to Nomura.
In order to pass the burden of proof to Nomura, she should only have had to establish two facts: a difference in sex and a difference in treatment between her and a comparator.
When considering whether there was a prima facie case, the tribunal should not have considered any evidence from Nomura which pointed the other way.
In considering whether she had suffered discrimination on grounds of pregnancy, the tribunal had erred in taking account of how Nomura would have treated a male comparator.

The Court of Appeal unanimously dismissed the appeal. The tribunal's approach to the burden of proof had been correct. The court did not think that the tribunal judgment indicated that it had required Ms Madarassy to prove her whole case before requiring Nomura to prove anything.

Held

The court held that there was no need for further "general guidance" on the burden of proof at Court of Appeal level. It took the view that the guidance from previous cases was clear and certain (Igen Ltd and others v Wong and other cases [2005] IRLR 258) and does not need alteration to make it work. The court went on to make the following points about the burden of proof rules:

The burden of proof does not shift simply by the claimant proving a difference in sex and a difference in treatment. That would only indicate the "possibility of discrimination", which is not enough. The correct approach, as set out in Igen, is that a claimant must prove facts from which a tribunal could conclude that the respondent "had committed" (not merely "could have committed") an act of discrimination.
"A tribunal could conclude" means "a reasonable tribunal could properly conclude from all the evidence". This means all the evidence from the claimant and respondent, including evidence as to:
- whether the acts alleged to be discriminatory happened at all;
- whether the comparators were appropriate; and
- whether, if there has been less favourable treatment, it was on the ground of sex or pregnancy.
The only factor which section 63A stipulates should not form part of the material from which inferences may be drawn at the first stage is the "absence of an adequate explanation" for the treatment from the respondent (paragraph 58 and 69). This absence only becomes relevant once a prima facie case has been established. The Court approved the approach of the EAT (Elias P) in Laing v Manchester City Council [2006] IRLR 748.
Igen makes it clear that section 63A requires a tribunal to assume the absence of an adequate explanation at the first stage. However, it was not necessary to introduce a "statutory presumption that there was no adequate explanation", which would itself cause the burden of proof to move to the respondent.
In a case such as this, involving hypothetical comparators, there is no error of law in the tribunal going through the conventional two-stage approach of requiring facts to be proved which established a prima facie case and then placing the burden on the respondent to provide an explanation. Laing (above) and the House of Lords decision in Shamoon v Chief Constable of the RUC [2003] IRLR 285 permit a tribunal to look at the employer's explanation first but do not require it to do so.

With regard to the pregnancy discrimination comparators, Ms Madarassy argued (following Webb v EMO Air Cargo UK Ltd (No 2) [1995] ICR 1021) that comparators are inappropriate in pregnancy cases as there is no male equivalent.

The court held that Webb did not mean that it is always wrong for a tribunal to consider how an employer would treat a hypothetical male comparator in pregnancy cases. It will depend on the factual nature of the allegation. In this case there had not been an error of law in using the example of a hypothetical comparator in order to decide whether pregnancy was the reason for Ms Madarassy's treatment.

With regard to the failure to carry out a risk assessment, the court rejected Ms Madarassy's appeal and the allegation of pregnancy discrimination inherent in such a failure. The duty to conduct a risk assessment under regulation 16 of the MHSAW Regulations only arises where the work is of a kind which could involve special risk to a new or expectant mother or her baby.

Working Time Regulations and Mobile Workers

Mobile workers are entitled to adequate rest under the Working Time Regulations 1998, but not compensatory rest. In First Hampshire and Dorset Ltd v Feist and others the EAT held that drivers for the appellant Bus company were not entitled to daily rest breaks under the Working Time Regulations. The workers were, for the purposes of the Regulations, both mobile workers and "special cases" under Regulation 21.

The EAT held that the workers were entitled to only the "adequate rest" provided to mobile workers under Regulation 24A and not the "compensatory rest" provided to special cases under regulation 24.

A "special case" worker is one whose activities involve the need for continuity of service or production, e.g. in relation to the carriage of passengers on urban transport services.

However , where a "special case" worker is required to work during a period which would otherwise have been a rest period they are entitled to "compensatory rest"

A "mobile worker" is not entitled to daily rest breaks, but is instead entitled to "adequate rest" as defined in the Regulations.

The individuals in this case were all employed as bus drivers by First Hampshire & Dorset Ltd (First). Some of the roles that they undertook meant that they had less than 11 hours break in 24 hours. It was agreed that they were both "mobile workers" and a "special case" under the Regulations.

The case was remitted to the Tribunal to determine, as a preliminary question, whether the claimants were only entailed to "adequate rest" or whether they were also entitled to "compensatory rest".

Rights not in existence at the time of a transfer can not be created by TUPE

In Computershare Investor Services PLC v Jackson a business was transferred under TUPE. An employee of the transferred business joined the new employer's benefit scheme. The scheme calculated benefits based on the employees' length of service.

The EAT held that it would not be possible for a TUPE transfer to create rights that did not exist prior to the transfer. Accordingly, the employee's length of service was calculated from the date of the transfer, not her full period of continuous employment.

Draconian use of strike out

In Essombe v Nandos Chickenland Limited the EAT struck out Mr Essombe's claims against the Respondent under the Employment Tribunal Rules of Procedure. The rules provide that a claim (or part of a claim) may be struck out for non-compliance with an order or practice direction.

Mr Essombe had told the Tribunal that he had a video camera recording of his disciplinary hearing on 1 and 4 April 2005. He was ordered to disclose this recording. Mr Essombe then told the Tribunal that he was not in possession of his video camera on 4 April 2005, however, the Tribunal accepted the evidence of 2 managers at the disciplinary hearing, that Mr Essombe had had the camera.

The Tribunal considered that video evidence of what had been said at the disciplinary hearing was crucial as Mr Essombe had refused to sign notes of the meeting to confirm their accuracy. The Tribunal concluded that Mr Essombe had directly and consciously refused to comply with its disclosure order and, as a result, the Tribunal struck out his claims.

The EAT acknowledged that the use of a strike out was draconian, but considered that it was justified in such a clear and obvious case as this. Where the deliberate decision to disobey an order of the Tribunal prevented it from being in possession of the best available evidence on which it would base its decision. The Tribunal also made it clear that, as a matter of public policy, orders are made to be obeyed. If they are not obeyed it would be impossible to effectively case manage cases and ensure fairness between the parties.

Reliance on Expired Disciplinary Warnings

The Employment Appeal Tribunal (EAT) has made a clear statement that expired disciplinary warnings cannot be taken into account when deciding whether to dismiss. In Airbus UK v Webb the EAT held that "a tribunal is obliged, and not merely entitled, to ignore expired warnings".

Mr Webb worked as an aircraft fitter at Airbus UK's site in Filton. In July 2004 he was summarily dismissed for allegedly washing his car on company time and using company equipment. After he appealed, the summary dismissal was reduced to a final written warning which was expressed to remain on his personal file for 12 months. On 20 September 2005 three weeks after the expiration of the final written warning, Mr Webb (and 4 colleagues) were found assembled in a locker area where they appeared to be watching television. Once the disciplinary procedure had been concluded Mr Webb was summarily dismissed, but his colleagues were only given final written warnings and removed from the night shift for a period of six months.

The employment tribunal, by a majority, found that the decision to dismiss had been unfair as it had treated Mr Webb inconsistently to his colleagues. Although the employment tribunal commented that the dismissal would have been fair had all the employees been treated the same, i.e. dismissed. The tribunal concluded that once the warning had expired Mr Webb, like any other employee, would have to be treated has having a clean record. The Employer appealed on the basis that it was legitimate for an employer to take an expired disciplinary warning into account.

The EAT decided that the employer could not rely on the warning for any purpose and felt bound to follow the Scottish case of Diosynth LTD v Thomson [2006] IRLR 284. Diosynth stated that "an [employee] was entitled to assume that the warning letter meant what it said, and that it would cease to have effect after one year". The Court of Session also advised that " The ACAS Code of Practice, which tribunals are required to take into account in determining relevant issues, provides that all warnings, including final written warnings, should normally be disregarded for disciplinary purposes after a specified period. The clear inference from this provision is that a warning which remains hanging over an employee's head for an indefinite period would not normally be consistent with good industrial relations practice"

Airbus argued against Diosynth stating that it was wrong and that taking the warning into consideration "was not the basis for taking a more severe disciplinary action that the conduct otherwise justified; rather it was the basis for not showing leniency to conduct which fully merited dismissal" and "that tribunals should consider all the circumstances of the case when deciding whether a dismissal is fair, and that the adoption of rigid rules should be eschewed". Airbus argued that this final point was rooted in the interpretation of s.98(4) Employment Rights Act 1996 and that following Diosynth "fettered the discretion which the tribunals should exercise".

While the EAT saw strength in Airbus' argument they agreed with Mr Webb stating that "but for the warning, or more accurately, but for the commission of the earlier offence which gave rise to the warning" he would not have been dismissed. The EAT recognised that this was a difficult decision, but decided that the ET had not erred in following Diosynth, although they "could have limited the effect of Diosynth in the way suggested by the Appeallant".

The EAT gave some useful guidance on how an employer should use warnings:

"The purpose of giving warnings is to enable the employee to know where he stands and what is expected of him. If the warning is to expire, whether the language be that it is to be disregarded, ignored or excised from the record, we think that this would give rise to the expectation that this would be so for all purposes.

"Ms Mills [a lay member of the tribunal], who has extensive experience in this area, takes the view that employers and employees typically do act on the basis that the slate should be wiped clean once a warning has expired, and that it would undermine disciplinary procedures were it otherwise, even if minor or occasional blemishes or injustices may be produced by that principle. The employer can always give himself greater room for manoeuvre by drafting the procedural rules to cater for exceptional circumstances." (paragraphs 54-55).

Then finally, at paragraphs 61 and 62, the EAT conclude with advice to employers:

"Perhaps the lesson for employers is to take care when giving warnings, particularly final warnings, to tailor them to the particular circumstances - as indeed this employer did in other contexts. As we have said, para 24 of the ACAS Code indicates that although final warnings should normally have a time limit of 12 months, that need not always be so. There is in our view no reason why it should not be longer if the nature of the misconduct justifies it, and in particular if the imposition of a lesser penalty is an act of leniency. An employer might also be justified in extending the period of the warning with respect to a later act of gross misconduct which is the same or substantially the same as that for which the earlier final warning was given.

"We recognise that to some extent there is a tension between the flexibility allowed to employers to consider expired warnings and the complexity of the warning provisions prescribed by the ACAS Code. If employers are going to be denied the right to have regard to expired warnings in any circumstances, then they must be allowed reasonable flexibility to formulate their rules to allow for exceptional cases. This will inevitably make them more complex. Of course, whatever the rules, they must always be carefully drafted and clearly drawn to the attention of employees".

The EAT also considered that, given that the arguments for and against the Diosynth approach were finally balanced, it was not appropriate to depart from the recent line of authorities, particularly since this would lead to different rules applying in England and Wales to those applying in Scotland (as Diosynth was a Scottish Court of Session case).

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.

19th March 2007

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Employment Update - March 2007