In what circumstances might an individual administrator be liable for discrimination against employees of companies in administration? This was the question the Employment Tribunal asked itself in the case of Spencer v Lehman Brothers (in administration) and others.

Ms Spencer was dismissed by the administrators of her insolvent employer whilst she was on maternity leave. There had been no consultation prior to the dismissal; she was merely recommended for selection by her employers’ Head of Corporate Security. Ms Spencer duly bought a claim of unlawful discrimination under sections 3A and 6(2) of the Sex Discrimination Act 1975. The claims against the employer were stayed due to the statutory moratorium. However, Ms Spencer claimed that both the insolvency practitioners’ firm and the individual administrators were liable because:

  1. They knowingly aided the employer’s discrimination; and
  2. The Head of Corporate Security acted as the administrators’ agent in knowingly aiding the employer’s discrimination.

Ultimately, Ms Spencer’s claim failed because the tribunal found that no unlawful discrimination had taken place; there were no elements to her dismissal that meant she had been subjected to any less favourable treatment or detriment in comparison to her colleagues. Further, it was clear to the tribunal that Ms Spencer’s dismissal arose out of a pure redundancy situation and not simply because she was on maternity leave.

But what if there had been evidence of unlawful discrimination? Firstly, the insolvency practitioners’ firm would have no liability since it was the individual administrators who were appointed as administrators, not the firm. Second, the individual administrators could not be said to have knowingly aided the employer’s discrimination; the administrators, quite reasonably, believed that the redundancy process would be carried out by the management of the employer in such a way that was both fair and within the law. The logic behind these conclusions is clear to see.

However, the tribunal’s findings in relation to the agency argument are rather more troubling for insolvency practitioners. The tribunal did not agree with the administrators’ argument that there could be no agency relationship between themselves and the insolvent company’s employees. In effect, it appears entirely possible that administrators may now be found to be agents of both the company and each of the company’s employees and as such may be liable for unlawful acts undertaken by such employees. It would be interesting to see the extent to which this proposition would stand up to scrutiny in a higher court or tribunal.