United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS NAOMI CUNNINGHAM (Of counsel) Instructed by: Messrs Kennedys Solicitors Longbow House 14-20 Chiswell Street London EC1Y 4TW
For the Respondent	Barred from proceeding

SUMMARY

Topic Nos: 13D and 13E

Race Discrimination - Inferring discrimination; Burden of proof

Sex and race discrimination. Was the Tribunal entitled to find that Claimant had established a prima facie case? If so, did it properly analyse the nature of the legal burden on the employer once the onus of proof had shifted? The Employment Appeals Tribunal (EAT) answered yes to the former and no to the latter. Observations on whether a Tribunal should indicate whether it is making a finding of conscious or unconscious discrimination.

THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1. This is an appeal against the decision of the Employment Tribunal sitting at London Central where it found unanimously that the employee had been discriminated against on grounds of race and sex in not being selected for one of the five posts which followed a re-organization in the company. They also found that she was unfairly dismissed, that there had been a breach of contract in relation to her holiday pay but that two other claims, which we need not dwell upon, were not established. The appeal today is directed against the findings of race and sex discrimination. There is no appeal against the finding of unfair dismissal nor the breach of contract.
2. The Appellant has been represented by Ms Cunningham. The Respondent was debarred from the proceedings. She did not lodge an answer and she did not appear before the Tribunal today. She did indicate that she would not be attending.
3. The background is as follows. Miss Griffiths-Henry, the Respondent to this appeal, joined the Appellant, Network Rail in September 2002 as Area Finance Manager. She took up the position of Area Finance Controller on 20 April 2003. She was away for some period at the end of 2003 and again from March 2004 until a phased return to work on 4 August 2004 when she was placed under a new manager, Mark Pearson. Between June 2003 and July 2004 there was a major reorganization of Network Rail's business. This resulted in the transfer under TUPE of approximately 15,000 employees. Following that transfer there was a duplication of roles in the company and a need for redundancies. The redundancy process was carried out after full consultation with the trade unions.
4. There were two stages to the redundancy process. First, where the re-organization resulted in fewer posts at a given grade than employees, the affected employees were asked to submit preference forms indicating up to three posts for which they wished to be considered. Each candidate was then assessed according to a set of skills based criteria and selections for the remaining posts were made on the basis of those assessments. Those employees not appointed to a post at this first stage were then encouraged to apply for alternative posts and, if they were not placed by that method, they were dismissed by reason of redundancy.
5. The Claimant's grade was Band 3. The result of the re-organization in the South East was that nine employees were left competing for five Area Finance Controller positions. The

Claimant is a black female and the other eight candidates were white men. The selection was carried out by Mr Pearson at a meeting where the Human Resources Officer, Sheila Kahir, was also present.

6. Mr Pearson gave evidence that he had assessed the candidates by reference to the CVs that they had submitted with the preference forms and from his own knowledge of their performance. In cross-examination he accepted that he had more involvement with some of the applicants than others and therefore knew their performance better. In certain cases, including the Claimant's, this meant that his information was limited to assessing their performance after having had contact with them for only a relatively short period of time. He did not ask previous managers to give him any information about their assessment of any candidate's performance.
7. The Tribunal found that the criteria adopted by the company were objective and, indeed, there was no challenge against those criteria by Ms Griffiths-Henry. She observed that the criteria were in fact the same which had been used when she was recruited to the position of

Area Finance Manager.

8. On Mr Pearson's assessment, she was the second lowest scoring of the candidates.

Therefore, she was unsuccessful in her application for one of those three positions. She was told this at a meeting on 16 November 2004. She left the meeting saying that she would be going home and not coming back. And she did not return to work after that day.

9. The Tribunal dealt in its decision with what occurred thereafter that because one of her complaints, which was not however upheld by the Tribunal, was that she had been discriminated against in relation to her treatment following that decision. Since that is not an issue before us, we say no more about it.
10. In the course of their decision, the Tribunal did identify certain specific defects in the assessment carried out by Mr Pearson. They were critical of the fact that he had made a provisional assessment of her after only seeing her at work for half a day when she returned on 4 August. They observed that another candidate had received 3.5 for the criterion of planning and delivery when she was only given 1.5 but there was no apparent reason for distinguishing between the two. She was also criticized for having missed important deadlines, but in cross-examination the Tribunal noted that Mr Pearson confirmed that another candidate was at that time the lead employee and therefore responsible for those deadlines.
11. The Tribunal also noted that although Miss Kahir was present, she did not take part in the scoring. The Tribunal concluded that these defects in procedure rendered the dismissal unfair and, as we have indicated, there is no challenge to that. But they also concluded that there was evidence from which they could properly infer both sex and race discrimination. There were in fact three forms of discrimination which were initially advanced: race and sex discrimination, and a more precise form of sex discrimination, it being alleged that there had been discrimination against Ms Griffiths-Henry because she had made it known that she wished to have a child. It is not clear whether that was in fact pursued before the Tribunal but in any event they made no findings at all in relation to it.
12. The appeal is directed against the findings of sex and race discrimination. The principal ground of attack is that the Tribunal were not entitled on the evidence to find that the employee had established sufficient facts from which the Tribunal could infer discrimination. Accordingly, it is submitted that the Tribunal were wrong to say that there was a prima facie case causing the onus to switch to the employer. The Tribunal should not have found that the employee got past the first stage in the well known analysis in Igen Ltd v Wong [2005] ICR 931.
13. A related ground of appeal is that even if the Tribunal were right to conclude that the onus did shift in that way, the Tribunal erred in finding that the employers had failed to discharge it simply because the criteria for selection that they adopted were applied in a subjective manner. Ms Cunningham submits that the question which the Tribunal had to ask was why the employers had acted as they did. The fact that they may have acted inconsistently or unreasonably, or applied the criteria subjectively, whilst it may be evidence of discrimination, did not establish it. We shall consider these issues in turn.

Was there a prima facie case?

14. It is necessary to focus on what facts the Tribunal found gave rise to the prima facie case. They summarised their reasoning at paragraph 27 in the following terms:

"The Claimant was not selected for the position whereas five of her colleagues were. They are all white and male. She is the only black person and the only female in the group. The failure to select her was clearly to her detriment. We conclude that there was a difference of race and sex and a difference of treatment. It follows that the Claimant has proven facts from which we could conclude, in the absence of an adequate explanation, that the Respondent had committed an act of discrimination. We therefore turn to the Respondent to prove that they did not commit, or are not to be treated as having committed, that act."

15. It is submitted that the mere fact that she is a black woman and the others are white men and that she was not appointed could not constitute sufficient primary facts to justify an inference of discrimination. We would accept that those mere facts would not do so. But the Tribunal here also identified the fact that five of her colleagues were appointed out of a total of eight. Another highly relevant factor is that she was, on the face of it, as equally qualified as the five successful candidates were for that position. Indeed, it was her evidence that she was originally appointed ahead of one of the successful five, and another had been graded lower (although Mr Pearson thought that his grade was not appropriate and should have been higher.) In our judgment this is part of the context against which paragraph 27 should be read.
16. In addition, the Tribunal found that there were the two matters, to which we have made reference in paragraph 10 above, where on the face of it she was less favourably assessed than her comparators in circumstances which called for some explanation. These were arguably not in the mind of the Tribunal itself in paragraph 27, but they are in our view relevant primary facts. It seems to us that when all these factors are taken into consideration, there was a perfectly sound basis on which a Tribunal could properly infer that there was a prima facie case of discrimination, and that the onus therefore shifted to the employer to provide an explanation, given that at that first stage the Tribunal is of course ignoring any explanation that could be given by the employer.
17. We note that in Dresdner Kleinwort Wasserstein Ltd. v Adeboyo [2005] IRLR the EAT (Mrs Justice Cox presiding) suggested obiter that an employee would be able to establish a prima facie case if he were black, was at least as well qualified as the white comparator, and was not promoted. We would accept that this could be the case, but it would depend on the circumstances. If there were only two candidates, which we think the judge probably had in mind, we would respectfully agree. But obviously the case becomes weaker where there are a number of candidates and the unsuccessful black candidate is rejected along with a number of equally well qualified white candidates. There is then no distinction between all the unsuccessful candidates and the justification for inferring a prima facie case is significantly weaker. In this case it was not just two candidates, in our view but the fact that it was five out of eight, coupled with the other matters we have identified, entitled the Tribunal to take the view it did as to whether there was a prima facie case.
18. Ms Cunningham says that in order to establish a prima facie case there must always be some positive evidence that the difference in treatment is race or sex, as the case may be. That seems to us to put the hurdle too high. As the courts have frequently recognised, there are real difficulties in establishing discrimination because of the obvious fact that it is never admitted, and it has to be inferred from the circumstances. The law has tried to strike the balance between on the one hand making such claims impossible to sustain, and on the other not subjecting employers to unwarranted and unfair findings of discrimination. The statutory burden of proof, as interpreted in Igen, by which of course we are bound, directs tribunals how the issue should be approached. Provided tribunals adopt a realistic and fair analysis of the employer's explanation at the second stage, we see no justification for requiring positive evidence of discrimination at the first stage.
19. We accept Ms Cunningham's submission that nothing in the new statutory burden of proof alters the evidence needed to establish a prima facie case as that concept was used in the well known authority of King v Great Britain-China Centre [1992] ICR 516. Nor does it affect, in our view, the analysis of how evidence is to be assessed when determining at the second stage whether the employers have provided an adequate (in the sense of non-discriminatory) explanation as laid down by the Court of Appeal in Bahl v The Law Society [2004] EWCA Civ 1070; [2004] IRLR 799. The significant legal change is that whereas formerly under the analysis in King the Tribunal could but was not obliged to draw an inference of discrimination if there was a prima facie case and no adequate or satisfactory answer, now the Tribunal must draw such an inference in those circumstances. Whether in practice Tribunals did frequently take advantage of their discretion not to find discrimination where the conditions referred to in King were established, is a moot point.
20. Accordingly, in our judgment the Tribunal was fully entitled to find that the employee had established a prima facie case so that it fell to the employer to explain why it was that five white men have been selected and she was not. The employer knows why the selection was made and can give evidence about that. That evidence should identify why he did what he did and if that has nothing to do with race or sex, then that is the end of the matter. Also, it seems to us that the burden imposed on the employer will depend on the strength of the prima facie case. A black candidate who is better qualified than the only other white candidate and does not get the job imposes a greater burden at the second stage than would a black candidate rejected along with some others who were equally qualified (assuming that the Tribunal properly finds a prima facie case in such a case).
21. Ms Cunningham says that finding a prima facie case on the evidence established here puts employers in too difficult a situation. She cites the case of somebody who may be not only female and black but perhaps an Anglican or gay, or has some other legally relevant feature which distinguishes her from the remaining members of the group from which selection is made. She says that on the analysis by the Tribunal one could in all those cases infer that the reason why she was rejected was each and every one of these distinctive features which distinguished her from the other employees. We accept that the logic would indeed be that there a tribunal would be entitled to find that there was a case to answer in all these examples, if the circumstances were otherwise as in this case. But it will often be easy to rebut. A Tribunal will have to have regard to all the evidence when determining whether the employer has rebutted the prima facie case. For example, in most cases the employer will be able to show that he has no interest or knowledge of the religious affiliation of the staff or perhaps their sexual orientation. In some cases it may be shown that the manager alleged to have discriminated on, say, sex grounds has frequently in the past promoted women. That will obviously be powerful evidence rebutting any inference of sex discrimination.

Did the Tribunal infer discrimination on insufficient grounds?

22. We do accept, however, that the observations made by Ms Cunningham demonstrate why it is crucial that the Tribunal at the second stage is simply concerned with the reason why the employer acted as he did. If there is a genuine non-discriminatory reason, at least in the absence of clear factors justifying a finding of unconscious discrimination, that is the end of the matter. It would obviously be unjust and inappropriate to find discrimination simply because an explanation given by the employer for the difference in treatment is not one which the Tribunal considers objectively to be justified or reasonable. If that were so, an employer who selected by adopting unacceptable criteria or applied them inconsistently could, for that reason alone, then potentially be liable for a whole range of discrimination claims in addition to the unfair dismissal claim. That would plainly be absurd. Unfairness is not itself sufficient to establish discrimination on grounds of race or sex, as the courts have recently had cause to observe on many occasions: see Bahl and the House of Lords decision in Glasgow City Council v Zafar [1998] ICR 120.
23. That leads us onto the second principal ground in this appeal. It is that the Tribunal did indeed make the mistake to which we have alluded, and concluded that there was discrimination merely on the basis that the employers had not acted reasonably. The relevant paragraph in which the Tribunal sets out its conclusions on this point is paragraph 28 which is as follows:

"The Respondent's explanation for the non-selection of Miss Griffiths-Henry is that they carried out an exercise based on objective criteria which were non-discriminatory. We find that the process was tainted by subjectivity, and we therefore reject that it was an objective process. In the circumstances, the Respondent has not proven that the process was not tainted by either race or sex discrimination and we find the Claimant's complaint made out."

24. We confess that we have some difficulty in the Tribunal treating the process as subjective. There were criteria which the Tribunal accepted were appropriate and Mr Pearson had to apply those criteria. In doing that he had to exercise judgment. In every case of this kind, there is no single right answer to the question of what mark should be given in relation to a particular criterion. It involves the exercise of judgment. But that is not the same as saying that the criteria are therefore subjective, or else every exercise of this kind would have to be so described.
25. However, whether subjective is the right term or not, the Tribunal found that there was a certain inconsistency in the way the criteria were carried out, and that it operated unfairly because Mr Pearson had more knowledge about the relevant skills and abilities of certain persons than others. This was plainly evidence which justified the finding of unfair dismissal. But it does not ineluctably lead to a finding of discrimination. Indeed, the analysis of paragraph 28, it seems to us, is that because the process was not objective, it must then be considered to be tainted by race or sex.
26. We accept that there was some evidence which might, depending on a careful analysis of the other evidence, have been relied upon by a Tribunal in concluding that there was discrimination on grounds of race or sex. We bear in mind in particular the finding of the Tribunal that the claimant had received only 1.5 for the particular criterion of planning and delivery when another person, namely DN, had scored 3.5. There was also the concern that DM may have been more responsible for missing deadlines than she was, although we are not told whether that effected DM's scores also. The difficulty is that inconsistency may be evidence of discrimination but if the Tribunal is going to reach that conclusion then the evidence needs to be much more fully analysed than it was by this Tribunal. In particular, if, for example, there was evidence of inconsistency across the board and others could say that they had been marked rather lower that DN, that would suggest that this had nothing to do with sex or race.
27. It is not legitimate, it seems to us, to focus on a particular score which appears out of line and without more to say that that demonstrates relevant discrimination. That would particularly be so if the score made no difference because the obvious question then would be why the employer would deliberately reduce that score with no apparent reason. In any event, we are left with the clear impression that the Tribunal here was satisfied that discrimination could be inferred merely because the selection criteria were not applied as objectively as the employer claimed. It may be for that reason that it did not analyse the implications of its conclusion that the selection criteria had been subjectively assessed. We appreciate that the employer was contending that the criteria were objectively applied, and that was highly relevant to the unfair dismissal claim, but it was far from decisive in the discrimination claims.
28. Again, the importance of a tribunal setting out the primary facts which justify the inference of discrimination has been emphasised on many occasions. In Bahl in the Court of Appeal, Peter Gibson L J, giving the judgment of the court said this:

"104 The second is that, in an area where the drawing of inferences is central, it is essential that the ET sets out with the utmost clarity the primary facts from which any inference of discrimination is drawn see: Chapman v Simon, above. It is particularly important that the ET takes care to explain how it has made a finding of unconscious discrimination: see Governors of Warwick Park School v Hazlehurst [2001] EWCA Civ 2056, per Pill LJ at paragraphs 24-25 and Shamoon, per Lord Hutton at paragraph 86."

This succinctly summarises a fuller analysis in the decision of the EAT in that case: see paragraphs 118-120. It was also emphasised in that case that the Tribunal must take account of all potentially non discriminatory factors when reaching its decision. We do not think the Tribunal obeyed those injunctions here.

29. Accordingly we find that the appeal succeeds on this ground. The Tribunal did not distinguish between unreasonable conduct which rendered the dismissal unfair, and discriminatory treatment. Plainly there cannot be a finding of sex or race discrimination every time an employer carries out a selection process unfairly to the detriment of someone who is black or female. Indeed, taken to its logical conclusion it would mean that there would be discrimination if one black woman were kept on and seven white males were dismissed provided the selection criteria were not fairly applied.
30. Ms Cunningham advances two further grounds. She submits that the Tribunal did not separately consider the question of race and sex. She refers again to the conclusion of the Court of Appeal in Bahl which said that it was not legitimate for a Tribunal simply to treat both of them together (see paragraphs 135-137). We agree with her but do not accept that the Tribunal made that error here. Of course, it is for the Tribunal to consider the evidence with regard to each case separately, as Bahl states, but if the employer does not seek to identify any potentially relevant feature which distinguishes the case with respect to each - such that women have frequently been promoted to the position, or that the manager responsible has often treated them more favourably in other situations - and Ms Cunningham accepts that they did not do so here, then the Tribunal is obliged to find discrimination with regard to each if there is no satisfactory or adequate (in the sense of non-discriminatory) explanation for the treatment.
31. Finally it is submitted that the Tribunal did not indicate whether it was finding conscious or unconscious discrimination. We would agree that in giving proper reasons it will generally be necessary to show which form the discrimination took. It is particularly important in cases of unconscious discrimination for the Tribunal to set out the primary factors which have led it to the conclusion it has reached: see the observations of the Court of Appeal in Bahl at paragraph 127. In this case the fact that this was not done confirms us in our view that the Tribunal thought it was unnecessary to analyse the matter further once it had found the selection process to be subjective.
32. Having found that the Tribunal did err, the question is what remedy is now appropriate. We are satisfied that this is not a case where the conclusion is obvious and indeed Ms Cunningham accepts that there will have to be a remission. She suggests that it should be to a fresh Tribunal. We do not accept that. This Tribunal has heard much of the evidence; we are satisfied that it will be able to reconsider the matter in the light of this judgment. It will be for the Tribunal to decide whether it wishes to hear further evidence. No doubt it will want to hear the parties about that.

Accordingly, for the reasons given, this appeal succeeds.