Race discrimination: The dangers of not giving an honest reason for a dismissal

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Race discrimination: The dangers of not giving an honest reason for a dismissal

Published 8 November 2019

An employer who lied about the reason for a dismissal was trying to cover up a dismissal tainted by stereotypical assumptions about race.

THE FACTS

Ms Otshudi, who is of black African ethnicity, was employed by Base Childrenswear Limited for a short period of time as a photographer. She was told by the managing director, completely out of the blue, that she was being made redundant. She raised a grievance, alleging that the real reason for her dismissal was that she was a victim of race discrimination. She received no response to her grievance. She brought a complaint of race harassment.

The company’s response to the tribunal claim stated that Ms Otshudi had been made redundant “purely for financial/economic reasons”. Three weeks before the hearing, however, the company changed its pleadings, saying for the first time that she had been dismissed for suspected theft. The evidence given for this was fairly tangential – clothes had been found “concealed” in a space apparently only used by Ms Otshudi, and soon afterwards a warehouse assistant had seen her moving the clothes while talking on her phone in French in what he considered to be a suspicious manner. The company claimed that the managing director decided that she was guilty of theft (in spite of the weak evidence and lack of investigation) but that he would tell her that she was being made redundant because this would “minimise the potential confrontation”.

The employment tribunal upheld Ms Otshudi’s complaint. Base appealed unsuccessfully to the EAT and then to the Court of Appeal.

The Court of Appeal had to consider the impact of the managing director’s lie on the burden of proof. Base argued that the burden of proof should not have shifted. The Court of Appeal rejected this argument finding that the managing director had lied about the reason for the dismissal and had persisted in the lie. The reason for the lie – that he wished to avoid conflict – was no longer valid once tribunal proceedings had been brought as it was clear that conflict had not been avoided. The Court of Appeal acknowledged that, in drawing an adverse inference, it is not enough for the employer to have acted unreasonably, and that there was no evidence that the dismissal was obviously race related. It also acknowledged that it might not have reached the same decision as the tribunal. However, it considered that it was open to the tribunal to have decided that the burden of proof had shifted.

Once the burden of proof had shifted, it was up to Base to show that the reason for its treatment of Ms Otshudi was not her race. The Court of Appeal held that, although the managing director’s belief in Ms Otshudi’s theft was genuine, the fact that he had formed his belief that she had stolen clothes so readily and on so little evidence showed that it was likely to have been tainted by a stereotypical assumption based on her race.

WHAT DOES THIS MEAN FOR EMPLOYERS?

It can be tempting to use redundancy as a reason for dismissal because it is a “no fault” dismissal and may be less likely to trigger bad feeling or even a claim. It may also be a quicker and simpler route than (particularly) performance management. However, if redundancy is not the genuine reason for the dismissal, mislabelling it as such can be dangerous. Where an employee has sufficient length of service for an unfair dismissal claim, the mislabelling is likely to result in a finding of unfair dismissal. Mislabelling may also lead a tribunal to question the employer’s honesty overall, and lead to an adverse inference in discrimination claims. This case is also a reminder that employers should consider following their disciplinary and grievance procedures to some extent, even where the employee does not have sufficient length of service to bring a “normal” unfair dismissal claim.

Base Childenswear Ltd v Nadia Otshudi (CA)

Authors

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

Zoë Wigan

Zoë Wigan

London - Walbrook

+44 (0)20 7894 6564

Hilary Larter

Hilary Larter

Leeds

+44 (0)113 251 4710

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