CLFIS (UK) Ltd v Reynolds [2015] EWCA Civ 439

Why care

Under section 13(1) of the Equality Act 2010, direct discrimination occurs where "because of a protected characteristic, A treats B less favourably than A treats or would treat others".  In some cases, the reason for the treatment is inherent in the act in question; in other cases, an otherwise unremarkable act may become discriminatory as a result of the motivation behind it.

In this case, the Court of Appeal had to decide whether, in order to determine whether direct discrimination has occurred, a tribunal should consider the mental processes of those employees who have significantly influenced the alleged discriminatory outcome, or only those of the actual decision-maker.

The case

The Claimant, "the doyenne of medical underwriting in the insurance business in the UK", was 73 years old when her consultancy agreement was terminated by Canada Life's General Manager.  Before taking that decision, he had attended a presentation by the Managing Director of the Claimant's Division and the Director of Claims Management Services which drew attention to various perceived problems with the Claimant's performance. The General Manager "did not relish the task of breaking the news to the Claimant, and in a misguided attempt to shuffle off some of the responsibility for his decision he told her, untruthfully, that Canada Life was under pressure from the Financial Services Authority to provide for "succession planning". When in due course the truth came out the Claimant was understandably very aggrieved" and brought a claim for direct age discrimination.  

The tribunal dismissed her claim, holding that there was an adequate non-discriminatory explanation for the Respondent's treatment of the Claimant. The tribunal found that the General Manager genuinely believed the Claimant was not providing the required level of support and that she would not make the necessary changes to enable her to do so. In coming to the decision, it noted that the Respondent went on to engage medical officers who were in the same age rang (and another worked until he was 90).

The EAT overturned the tribunal's decision.   Even if the person who had done the act had not done so for a discriminatory reason, discrimination could still be made out where a protected characteristic had a significant influence on the outcome (Nagarajan v London Regional Transport[1999] IRLR 572).  Since the views of others had played a significant part in the General Manager's decision to dismiss, the mental processes of those should also be considered in order to determine whether on the balance of probabilities, the treatment had been "in no sense whatsoever" on grounds of age.  Since an employer is vicariously liable for the acts of its employees, the Respondent could not discharge the burden of proof unless the tribunal did so.

The Court of Appeal unanimously overturned the EAT's decision and restored the tribunal's decision. The tribunal had held that:

  • it was fact that the General Manager had made the decision alone (if it had held it was a joint decision, then the mental processes of all decision makers would have had to have been considered as above).  Whilst it was true that It was true that once the burden of proof had shifted, it was for the respondent to provide that the decision to terminate the claimant's consultancy agreement was "in no sense whatsoever" on the grounds of age (Igen v Wong [2005] IRLR 258), this did not mean that the Respondent had to demonstrate the absence of discrimination in every act of every employee in the chain of causation leading to the discriminatory act. Rather, whether the Claimant had provided a prima facie case would be based on the specific case she had made.  Here, the involvement of others was not clear until witness statements were exchanged and the burden of proof did not require an extension of the factual issues before the tribunal.    
  • The tribunal was entitled to find that the decision to dismiss the Claimant was because she was resistant to change, not because of her age, and the perception of her unwillingness to change was not because of her age.   
  • In a case like this of "tainted information", where a manager (X) has decided to dismiss an employee on the basis of an adverse report about her from another employee (Y) who is motivated by age, Y's act of making the adverse report would constitute an act of direct discrimination. If that act was done in the course of employment, then the employer would be vicariously liable under regulation 25. Y, but not X, would also be personally liable. Losses could still flow from that separate act, including losses flowing from the claimant's dismissal, which could still be claimed provided they were not too remote. The employer should not be liable for loss which did not in fact flow from Y's discriminatory act, or which was not a sufficiently direct or foreseeable consequence of it.    

What to take away

Perhaps this is a strange outcome on the face of it: the Claimant lost her position after all, and discriminatory opinions may have been at the root of that decision.  

However, the Court of Appeal placed its emphasis on the need to consider the mental processes of the alleged discriminator. Where, as here, the decision to terminate the Claimant's contract was not a joint decision but the decision of one manager alone, the supplying information or opinions which are used for the purpose of a decision by someone else does not constitute participation in that decision. Here, the court could consider only the Claimant's pleaded case, which did not include the other individuals whose role in the process only became clear once witness statements were exchanged.