In the case of Base Childrenswear Ltd v Otshudi, the Court of Appeal upheld a tribunal’s decision that an employee had been racially discriminated against after her employer changed its reason for dismissal shortly before the hearing. The claimant in this case was awarded loss of earnings, injury to feelings, aggravated damages, personal injury and a 25% uplift for a failure to follow the ACAS code, together with interest.
The Equality Act 2010: shifting burden of proof
The Equality Act 2010 provides for a shifting burden of proof for discrimination claims. This means tribunals and courts should consider a two-stage test. At the first stage, the claimant must prove “a prima facie case”. In other words, the claimant must prove facts from which a reasonable tribunal could properly conclude that the respondent has committed an unlawful act of discrimination. If the claimant proves a prima facie case, the burden shifts to the respondent to prove that he has not committed an act of unlawful discrimination. If the respondent is unable to prove this by an adequate non-discriminatory explanation, the tribunal must uphold the discrimination claim.
Ms Otshudi worked as a photographer for Base Childrenswear Ltd (the “Company”) but was dismissed after just 3 months, which she was told was by reason of redundancy. She told the Company that she did not believe it was redundancy and that it was related to her race. The Managing Director, Mr Granditer, reacted strongly to this allegation, saying he was very upset and disappointed and “dared her to repeat it”. Ms Otshudi submitted a grievance and appealed against her dismissal. However, the Company decided to ignore her grievance, her appeal and also the notification that she had commenced ACAS Early Conciliation.
Ms Otshudi subsequently brought a tribunal claim against the Company for racial harassment in respect of her dismissal and other matters. The Company’s grounds of resistance, which, according to the tribunal, seemed to have been drafted by the Company without legal assistance, said that Ms Otshudi was made redundant “purely for financial/economic reasons”.
Three weeks before the final hearing and 15 months after her dismissal, solicitors for the Company lodged amended grounds of resistance. These raised, for the first time, a wholly new explanation for the dismissal, being ‘suspected theft’ of some designer clothes. It explained that the Company hadn’t mentioned this before because it wanted to avoid confronting Ms Otshudi with the allegation when she was dismissed.
There was little direct evidence of discrimination. Nevertheless the tribunal considered there was a proper basis for inferring a prima facie case that Ms Otshudi’s race had been a factor in her dismissal. The Company’s evasiveness was a key factor. The burden therefore shifted to the Company to provide a non-discriminatory explanation. It could not and therefore her claim succeeded.
The Company appealed to the Employment Appeal Tribunal and then to the Court of Appeal.
Court of Appeal decision
The Court of Appeal dismissed the Company’s appeal and found that Ms Otshudi’s race had been a factor in her dismissal.
The Court considered the prima facie case and held that there was a sufficient basis for an inference of racial discrimination. The Court did however say that the case was “near the borderline.” The Court concluded that the persistence in lying about the reason for dismissal was a defensible basis for the tribunal’s conclusion. The Court said that “Giving a wholly untruthful response when discrimination is alleged is well-recognised as the kind of conduct that may indicate that the allegation is well-founded.”
On the second stage of the test, the Court held that Mr Granditer did believe, or at least may have believed, that the Ms Otshudi 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. Therefore, there was no non-discriminatory explanation for the treatment.
This case demonstrates the damaging impact that last minute changes to the reason for dismissal and evasiveness can have on the prospects of success at tribunal, even where there is no direct evidence of discrimination.
Ms Otshudi was awarded the following by the tribunal:
- £3,505.24 in respect of loss of earnings;
- £16,000 for injury to feelings, the tribunal considering that the extent of her injury to feelings fell within the middle of the middle Vento band;
- £5,000 (reduced to £4,000 on appeal) aggravated damages in respect of the Company’s post-dismissal conduct, including its failure to respond to the grievance, its conduct during the tribunal proceedings (initially maintaining its position that she was dismissed for redundancy, its failure to respond to disclosure requests and its late alteration of its response to allege Ms Otshudi was dismissed for suspected theft) and its failure to apologise to her;
- £3,000 for personal injury in respect of the depression Ms Otshudi suffered for three months after her dismissal;
- An uplift of 25% due to the Company’s failure to follow the Acas Code in respect of Ms Otshudi's grievance or her dismissal; and
The case highlights the risks of a failure to follow the Acas Code when dismissing an employee, even where they have only been employed for a few months and have no unfair dismissal rights. It also is a reminder that a tribunal can award aggravated damages in relation to post-dismissal conduct and that personal injury can also be claimed on top of injury to feelings.