Appeal No. UKEAT/0088/10/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal
On 10 & 11 November 2010
Judgment handed down on 19 January 2011

Before
HIS HONOUR JUDGE PETER CLARK
MRS D PALMER
MRS L TINSLEY

COOPERATIVE CENTRALE RAIFFEISEN BOERENLEENBANK BA	APPELLANT

MR A R DOCKER	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR DAVID CRAIG
(of Counsel)
Instructed by:
Messrs Allen & Overy LLP Solicitors
1 Bishop’s Square
London
E1 6AD	
For the Respondent	MR RICHARD LEIPER
(of Counsel)
Instructed by:
Ferguson Solicitors LLP
11 Gough Square
London
EC4A 3DE	

SUMMARY
RACE DISCRIMINATION – Direct

Proper application of the Igen 2-stage test to the facts permissibly found by Employment Tribunal leading to conclusion that the claim of direct racial discrimination was well-founded.  Appeal by employer dismissed.

HIS HONOUR JUDGE PETER CLARK 

1.	The parties in this matter before the London Central Employment Tribunal are Mr Docker, Claimant and Cooperative Centrale Raiffeisen Boerenleenbank BA (“the Bank”), Respondent.  We have before us for full hearing an appeal by the Bank against so much of the Judgment of an Employment Tribunal chaired by Employment Judge Charlton, promulgated with reasons on 2 December 2009, as upheld the Claimant’s complaint of direct race discrimination.  There is no appeal against the Employment Tribunal’s finding of unfair dismissal.  

The facts
2.	The Bank operates internationally.  Its headquarters are in Utrecht.  It is a Dutch bank.

3.	The Claimant commenced employment with the Bank in May 1998.  He was based in London.  On 15 March 2004 he became Global Head of Securities Finance and Synthetic Products.  He performed well in that post.  In 2006 his performance was appraised as exceeding expected performance in all core competencies.

4.	In the year following the sub prime crisis affecting the international banking industry, beginning in August 2007, the Bank looked for savings which included a redundancy programme.  In September 2008 Mr Blok, the overall head of Global Financial Markets (GFM) and Mr Klaasse, who had joined the Bank in May 2008 as Head of GFM, reporting to Mr Blok, decided to move the London Securities Finance Team, which included the Claimant, to Utrecht, merging it with the Liquidity and Finance Team which was to form part of a new group called Client Trading and Money Markets to be headed by Mr Klaasse.  The new structure was announced on 7 October and Mr Klaasse assumed his new position on that day.

5.	Mr Klaasse who, like Mr Blok, is Dutch, met with the Claimant on 8 October 2008 and asked him to put his thoughts about how the new operation would run on paper.  

6.	The evidence of the Claimant and Mr Klaasse diverged (reasons, para 4.15).  The Employment Tribunal found that Mr Klaasse made no effort to establish whether the Claimant was prepared to move to Utrecht, where a post of Head of Securities and Finance was to be created for which the Claimant seemed ideally suited, and there was nothing in the Claimant’s note dated 13 October to indicate that he was not prepared to move to Utrecht although he was against the proposed move of his team from London to Utrecht.

7.	On 15 October the Claimant and Mr Klaasse again met.  Again the recollections of the two men differed.  Preferring the Claimant’s evidence, the Employment Tribunal concluded that nothing was said within that discussion to indicate that the Claimant was not prepared to move to Utrecht.

8.	At about that time, 15 October, Mr Klaasse had dinner with Francois Nissen, a Dutch national who lived in the same village as Mr Klaasse.  They had worked together in the past.  During the course of that dinner it occurred to Mr Klaasse that Mr Nissen, who was then in employment elsewhere, might be suitable for the role of Head of Securities Finance, Utrecht.  The Employment Tribunal found that Mr Klaasse earmarked Mr Nissen for that post (para 4.19) and Mr Nissen was interviewed by Mr Blok on 7 November.  Mr Klaasse’s evidence changed from his witness statement, where he referred to that role, and his oral evidence, when he said that Mr Blok interviewed Mr Nissen about the possibility of an unspecified role.  The Employment Tribunal formed an unfavourable view of Mr Klaasse’s credibility as a witness (para 4.18).

9.	On 22 October Mr Klaasse again met with the Claimant.  On that occasion there was no discussion about the Claimant moving to Utrecht, nor any indication that his employment would be terminated.

10.	On 28 October the Claimant and his Securities Finance Team in London were notified in writing that they were at risk of redundancy.  All were put on ‘garden leave’, save for Mr van Meerendonk, referred to by Mr Klaasse as ‘the Dutch guy on the desk’ who was left to run the book.  He was the only Dutch employee on the London desk.  He was selected to remain by Mr Klaasse, who consulted with others but not the Claimant, the immediate line manager, as to who should remain.  The Claimant would have put forward another member of his team, Mr Cook, as a stronger candidate to run the book than Mr van Meerendonk.

11.	On 4 November the Claimant met with Julie Fitzgerald of the HR Department.  He was given a list of vacancies, not including the proposed post of Head of Securities Finance, Utrecht (by then Mr Klaasse had earmarked Mr Nissen for that post, on the Employment Tribunal’s findings).  None of the vacancies were suitable for the Claimant.  The Employment Tribunal found that Ms Fitzgerald incorrectly recorded the Claimant as having no interest in taking any other role in the Bank (para 4.22).

12.	When a list of vacancies was circulated on 14 November the Head of Securities Finance role was not included.  Indeed, the Claimant was never informed that such a post was to be filled.  His employment ended on 13 January 2009; Mr Nissen, following final interview, was offered the post of Head of Securities Finance.  The post had not been advertised.  He accepted and commenced work on 1 March 2009.  On 19 May he was promoted to Global Head of Securities Finance, the post formerly held by the Claimant.

13.	As to the Bank’s non-advertisement of the role eventually filled by Mr Nissen, the Employment Tribunal noted (para 4.27) that following an enquiry by the Claimant’s solicitors as to Mr Nissen’s appointment in a letter dated 25 March 2009, the Bank’s solicitors replied stating that the role had been advertised on the Bank’s recruitment intranet, to which the Claimant had access and that Mr Nissen had been fairly selected for that position via the Bank’s recruitment process.  The Employment Tribunal found that those assertions were wrong in every respect.  

14.	In their pleaded case the Bank changed its position; it accepted that the Claimant could not access the intranet but continued to maintain that the Utrecht role had been advertised on the intranet.  Then shortly before the Employment Tribunal hearing, on 25 September 2009, the Bank applied to amend its grounds of resistance.  By that amendment, which was unopposed, the Bank accepted that the Utrecht role eventually filled by Mr Nissen was not advertised on the intranet.

15.	In seeking to explain why an external candidate was chosen for the Utrecht role at a time when the Bank was freezing recruitment and the Claimant seemed, on the Employment Tribunal’s findings, ideally suited for it, Mr Klaasse told the Employment Tribunal that Mr Nissen had strengths which the Claimant lacked; however at no stage did Mr Klaasse raise with the Claimant any lack of capability, nor had there been any such reference in his performance reviews (para 4.18).

The law
16.	As Mr Leiper points out, there is no challenge by the Bank in this appeal to the Employment Tribunal’s statement of the applicable law contained at paras 26-36 of their reasons.  The appeal is directed to the application of the law to the facts and, in certain respects, the Employment Tribunal’s factual findings are said to be unsupported by or contrary to the evidence.  However, we would wish to add some observations of our own as to the effect of the reverse burden of proof, inserted into the Race Relations Act 1976 by s54A with effect from 19 July 2003.

17.	By s 54A(1) the section applies to claims of direct racial discrimination, the complaint in the present case and by s54A(2):

“Where… the complainant proves facts from which the tribunal could, apart from this section, conclude in the absence of an adequate explanation that the respondent – 
(a) has committed such an act of discrimination…
the tribunal shall (our emphasis) uphold the complaint unless the respondent proves that he did not commit… that act.”

18.	To state the obvious, s54A (and its equivalents) changed our domestic law of unlawful discrimination.  It was designed to and did have the effect of making it easier for claimants to succeed in such cases.  The historical context is important.  It is referred to in the judgment of Peter Gibson LJ, paras 6-7, in Igen v Wong [2005] ICR 931.  In short, s54A represents a return to the position taken by Browne-Wilkinson P in Khanna [1981] ICR 653 and Chattopadhyay [1982] ICR 132, from which his Lordship resiled in Zafar [1998] ICR 120, in the light of the approach of Neill LJ in King v Great Britain China Centre [1992] ICR 516, 528-9, namely that where a claimant establishes a prima facie case of discrimination and the respondent fails to establish an explanation for the treatment complained of which has nothing whatsoever to do with his race, then the tribunal must, not may uphold the complaint.

19.	The somewhat elaborate Barton guidance, as revised in Igen v Wong, involves a 2-stage approach.  At stage 1 it is for the claimant to prove, on the balance of probabilities, facts from which the tribunal could conclude in the absence of an adequate explanation from the respondent, that the employer has committed an unlawful act of discrimination against the claimant.  In Madarassy v Nomura International plc [2007] ICR 867, para 56, Mummery LJ made clear, by reference to Igen v Wong, that it is not enough for the claimant simply to prove a difference in race and a difference in treatment to pass stage 1 of the Igen test.  Something more is required, as this Employment Tribunal observed in their self-direction at para 30(v) of their reasons.

20.	It is not necessary to analyse the facts for the purposes of the stage 1 exercise where the Employment Tribunal accepts a non-discriminatory explanation advanced by the employer for the purposes of stage 2 – see Madarassy, para 81, approving the approach of Elias J in Laing v Manchester City Council [2006] ICR 1519, para 74.  In this context Mummery LJ referred to the ‘reason why’ question posed by Lord Nicholls in Shamoon [2003] ICR 337, paras 10-12, an approach adopted by Elias J in The Law Society v Bahl [2003] IRLR 640, paras 111-115, and later approved by the Court of Appeal in that case; see [2004] IRLR 799.

21.	Again, this Employment Tribunal directed itself, at para 32, to the ‘reason why’ question as first formulated by Lord Nicholls in Nagarajan v LRT [1999] ICR 877.  

22.	During the course of argument we raised with counsel the question as to whether the reason why question formulated by Lord Nicholls in cases which pre-dated the advent of s54A RRA should now be revisited in the light of that new provision.  Mr Craig took us to the judgment of Maurice Kay LJ in Khan v The Home Office [2008] EWCA Civ 578 at para 23, where his Lordship expressly upheld this statement of the law by Elias J in Bahl (approved by the Court of Appeal):

“The tribunal’s own findings of fact may identify an obvious reason for the treatment in issue, other than a discriminatory reason.”

Khan was decided in claims which post-date the introduction of s54A RRA.

23.	That said, we should emphasise that the permissible approach to be taken by an Employment Tribunal to the direct discrimination question is as stated by Lord Nicholls in Shamoon, para 12, as Mummery LJ reminds us in Madarassy (para 83):

“The most convenient and appropriate way to tackle the issues arising on any discrimination application must always depend upon the nature of the issues and all the circumstances of the case.”

24.	Finally, we should mention the case of Coker and another v Lord Chancellor and another [2001] ICR 507 (EAT, Lord Johnston presiding); [2002] ICR 321 (CA), to which we were referred.  That was a case ultimately concerned with claims of indirect discrimination brought by two claimants, unknown to the Lord Chancellor, Lord Irvine of Lairg, when he appointed a city solicitor known to him personally as his special adviser.  We do not find that case helpful in determining this direct discrimination appeal.

The Employment Tribunal decision
25.	Having found the dismissal unfair (paras 37-40) the Employment Tribunal first rejected a jurisdictional point taken on behalf of the Bank, namely that the act of dismissal on 13 January 2009 should be separated out from the process leading up to dismissal on the grounds of redundancy (para 41).  That finding disposed of the limitation and statutory grievance points identified at para 3.3 of the reasons.

26.	As to the merits of the direct racial discrimination claim the Employment Tribunal found that the Claimant passed the stage 1 hurdle identified in Igen v Wong; comparing him with a hypothetical comparator, a Dutch employee with the attributes set out at para 43.1, the Employment Tribunal found that the Claimant was less favourably treated than that comparator on the basis of two factors drawn from the evidence; first, the treatment of Mr van Meerendonk and secondly the change in the racial make-up of the Department heads following the restructure (para 44).  Further, that the Utrecht role was given to a Dutch national (Mr Nissen) and the Bank’s failure to advertise that position was in breach of its own stated procedures on equal opportunities (para 45).

27.	As to the Bank’s explanation for the treatment complained of by the Claimant the Employment Tribunal found it to be neither cogent nor indeed coherent.  They rejected the Bank’s case that the Claimant did not wish to move to Utrecht on the facts (para 46).  We have earlier noted that the suggestion by Mr Klaasse that the Claimant lacked strengths which Mr Nissen possessed was found to be at odds with the Claimant’s earlier performance assessment (para 4.18).  In rejecting the Bank’s non-discriminatory explanation, the Employment Tribunal expressly record (para 48) that it was not the Bank’s case that the Claimant was selected for redundancy simply because Mr Nissen was an old friend of Mr Klaasse and trusted by him irrespective of his nationality.  It followed that no finding to that effect was made by the Employment Tribunal.

28.	Having rejected the Bank’s explanation it followed that the discrimination claim succeeded.

The appeal
29.	We can deal shortly with the jurisdictional ground of appeal (ground 7).  We agree with the Employment Tribunal’s analysis at para 41 of their reasons.  They were entitled to conclude that the events leading up to the Claimant’s dismissal on 13 January 2009 formed part and parcel of the dismissal such that no point arose on either limitation or the 28 day period between raising a grievance and lodging his form ET1 (Employment Act 2002, s32).  This ground of appeal is dismissed.

30.	Turning to the substantive finding of unlawful direct discrimination on racial grounds, we first address the Bank’s challenge to the Employment Tribunal’s finding that the Claimant made out a prima facie case of discrimination (Igen, stage 1).  

31.	Mr Craig advances the proposition that the reason why the Claimant was not appointed to the Utrecht role was because Mr Klaasse wanted Mr Nissen for the role.  That would have been the position had the hypothetical Dutch employee, constructed by the Employment Tribunal at para 43.1, been Head of Securities in London.  There was no less favourable treatment of the Claimant.  

32.	That proposition demonstrates, we think, the danger of elevating Lord Nicholls’ reason why question to a level at which the statutory provisions become immaterial.  There will be many cases where the reason for the treatment complained of is self-evidently non-discriminatory.  An example, raised in argument, is where a complainant is paid less than an appropriate comparator, but where the evidence satisfies the tribunal that the reason for the difference in pay was an administrative error, later corrected on discovery by the employer.  However that is not this case.  One reason for the non-selection of the Claimant for the Utrecht role could be that he was English and Mr Nissen was Dutch and that a Dutch Head of Securities in London, apparently ideally suited for the role in Utrecht, would have been selected without the need to recruit Mr Nissen.  Rather than speculate in this way the Tribunal properly applied s54A RRA in accordance with the Igen v Wong guidance.  They first constructed a hypothetical comparator, the characteristics of whom differed from the construct proposed by each party.  Mr Craig argues that the comparator constructed by the Employment Tribunal at para 43.1 was flawed in two respects; first that in his memorandum of 13 October 2008 the Claimant suggested that he would not relocate to Utrecht and secondly that the Employment Tribunal relied on their findings as to what the Claimant said to Ms Fitzgerald at the 4 November 2008 meeting, rather than what she reported to Mr Klaasse.  This submission essentially amounts to a challenge to the Employment Tribunal’s finding of fact on the first point and as to the second, we accept Mr Leiper’s point that by 4 November the die had been cast; Mr Nissen had by then been ‘ear-marked’ for the role.

33.	Having identified a difference in treatment and difference in race they then looked for something more (see Madarassy, para 56).  They concluded, on their findings of fact, that the selection of Mr van Meerendonk (‘the Dutch guy’) to run the book, without consulting his manager, the Claimant, and the changed racial make-up of the Heads of Department following the reorganisation, increasing the number of Dutch Heads, were facts from which they could conclude that the Claimant had been less favourably treated than his hypothetical comparator on grounds of his race.

34.	Mr Craig has advanced detailed submissions challenging the relevance and evidential basis for those findings by the Employment Tribunal at para 44 of their reasons.  Mr Leiper has responded in kind.  Our conclusion is that Mr Craig is seeking to draw us into precisely the exercise of re-trying the facts so deprecated by the Court of Appeal in Yeboah v Crofton [2002] IRLR 634.  We shall not do so.  In our judgment the Employment Tribunal made permissible findings on the evidence before them and were entitled to conclude that those two factors assisted the Claimant in passing the stage 1 hurdle when making a comparison with the hypothetical comparator.  

35.	As to stage 2, the Bank’s explanation for the treatment complained of, the Claimant’s dismissal as opposed to redeployment to Utrecht, here the case foundered on a lack of credibility.  It was their case that the Claimant had no intention of transferring to Utrecht.  That was roundly rejected by the Employment Tribunal on the facts.  Similarly, the suggestion by Mr Klaasse that Mr Nissen had strengths not possessed by the Claimant was dismissed on the basis of the Claimant’s earlier appraisals.  The various accounts given as to whether the Utrecht role was advertised on the intranet, to which the Claimant was initially said to have had access, further undermined the Bank’s case.  As the Employment Tribunal put it, the explanation for the non-selection of the Claimant for the role taken by Mr Nissen was neither cogent nor indeed entirely coherent and was therefore rejected.  A possible explanation, that Mr Nissen was an old friend and trusted by Mr Klaasse irrespective of his nationality was expressly not advanced in evidence or argument on behalf of the Bank and was therefore rightly not considered by the Employment Tribunal.  We do not understand Elias J to have said in Bahl, in the passage cited by Maurice Kay LJ in Khan, para 23, that, having rejected the reason for the treatment advanced by the respondent, it is incumbent on tribunals to create a non-discriminatory explanation which does not arise out of their findings of fact based on the evidence before them.

36.	Mr Craig complains that the Employment Tribunal did not consider, as part of the explanation for the treatment of the Claimant given by Mr Klaasse, the latter’s assertion that the appointment of Mr Nissen had nothing to do with his race.  We agree with Mr Leiper that it was unnecessary for the Employment Tribunal to deal specifically with that assertion.  Discrimination may be subconscious rather than conscious.  It may be an effective cause in the decision-making process, not necessarily the sole reason; see O’Neill v Governors of St Thomas More School [1997] ICR 33.  The real question for us on appeal is whether the Employment Tribunal made permissible findings of fact to which they correctly applied the law in reaching a properly reasoned conclusion.  In our judgment they did.

Disposal
37.	For these reasons this appeal fails and is dismissed.