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Case law: Ruling highlights the dangers of lying about reasons for dismissal

Employers should avoid giving false reasons for dismissal or other sanctions, even if they do so with good intentions, otherwise they risk a discrimination claim and costs penalty, a ruling makes clear.

November 2019

This update was published in Legal Alert - November 2019

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A manager found evidence that led him to honestly believe a black employee, who had been employed for under three months, was stealing clothes from the company’s stock – or was planning to. The employee was summarily dismissed later that day at a meeting called by her manager. To avoid a confrontation with her, the manager told her that her dismissal was by reason of redundancy not for suspected theft.

The employee immediately said she did not believe redundancy was the true reason. She said she believed she had been victimised by others in her team because of her race, and that was the real reason for her dismissal. The manager professed himself very upset by this allegation, later calling it a ‘vile accusation’, and dared her to persist with it.

She appealed her dismissal and filed a grievance letter claiming race discrimination. Her employer therefore found itself in a confrontation with her anyway. But even though the rationale for saying the dismissal was by way of a redundancy (ie, to avoid a confrontation) had disappeared, the employer still failed to raise the real reason for the dismissal. It simply ignored her appeal and grievance.

She then brought proceedings for race discrimination. Her claim included an allegation that the fact and manner of her dismissal amounted to harassment on grounds of her race. However, in its defence as filed, her employer persisted in saying her dismissal was ‘purely for financial/economic reasons’.

However, just before her Employment Tribunal hearing – some 15 months later - it came out that the real reason for her dismissal had been the belief she had been stealing or was planning to do so. The employer therefore changed its defence to reflect the true reason (even though it had not previously put this to her), and that it had nothing to do with her race. It argued that even if the court decided it had not acted fairly or reasonably, that was not enough to infer it had been discriminatory on grounds of race - nothing said or done to the employee had been obviously race-related.

The Court of Appeal found it could be inferred that the reason for her dismissal was her race, based on:

  • her employer’s extreme and intimidatory reaction to the allegation of discrimination (the fact the relevant manager ‘protested too much’ implied he knew the allegations were true);
  • its refusal to address the claimant's grievance;
  • its persistence in putting forward a false reason for the dismissal (even though the reason for doing so no longer applied).

It could therefore be inferred that the employer was aware that at some level at least, race had been a factor in dismissing her, and it was trying to cover it up.

The court found that the manager ‘did believe, or at least may have believed, that the [employee] had stolen the clothes but that he was influenced in coming to that conclusion, so precipitately and on so little evidence, by a stereotypical prejudice based on her race’. It did not matter whether the prejudice was conscious or otherwise.

The employer failed to show the dismissal was unrelated to race, and the employee’s discrimination claim was upheld. As well as paying compensation (and an uplift for failure to follow Acas procedures), the employer was ordered to pay the employee’s legal costs of dealing with the false redundancy argument.

Operative date

  • Now

Recommendation

  • Employers should avoid giving false reasons for a dismissal or other sanction, even if they do so with good intentions, or risk a discrimination claim and costs penalty.
Case ref: Base Childrenswear v Otshudi [2019] EWCA Civ 1648

 

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