Dresdner Kleinwort Wasserstein Ltd. v Adebayo

Under section 54A of the Race Relations Act 1976, a tribunal first asks whether the complainant has proved facts from which discrimination could be inferred. If so, the employer must prove on the balance of probabilities that the treatment was not discriminatory. A genuine belief in misconduct does not automatically discharge that burden. Discriminatory assumptions may operate beneath an honestly held reason. Connected complaints may be considered as a course of conduct, provided the tribunal addresses their substance. In unfair dismissal, asking whether the employer’s belief was based on reasonable grounds does not substitute the tribunal’s own view.

The employer sought renewed permission to appeal against the Employment Appeal Tribunal’s dismissal of its appeal from the London Central Employment Tribunal. The Employment Tribunal had upheld complaints of direct race discrimination, unfair dismissal and wrongful dismissal. The renewed application followed Sedley LJ’s refusal of permission on the papers. No challenge was pursued in relation to wrongful dismissal.

The proposed appeal alleged that the Employment Tribunal had misapplied the statutory burden of proof, failed to address the employer’s genuine belief in misconduct, failed to analyse five complaints separately, and gave inadequate reasons. The unfair-dismissal challenge alleged substitution of the tribunal’s own view for the employer’s assessment. The central issues were the application of section 54A and the correct approach to the employer’s belief in misconduct.

Application refused. Laws LJ rejected the proposed challenges to both the race-discrimination and unfair-dismissal findings. Waller LJ agreed.

1. Race discrimination. Section 54A of the Race Relations Act 1976 requires a two-stage process. The complainant must first prove facts from which discrimination could be inferred in the absence of an adequate explanation. The burden then shifts to the employer to prove that the relevant act was not discriminatory. The Employment Tribunal was entitled to find a prima facie case from the evidence that the respondent was the only black trader, white traders used the same marking methodology, the employer failed to investigate that comparison, the race complaint was not investigated before dismissal, the later investigation and appeal were inadequate, and questionnaire answers were evasive.
2. The five complaints formed a course of conduct. The Employment Tribunal was not required to adopt an unnecessarily over-technical analysis by treating each matter in isolation. The Employment Appeal Tribunal correctly found that the substance of the discrete complaints had been addressed, with the delay complaints subordinated to the substantive allegations.
3. Genuine belief. The employer’s genuine belief that the respondent had committed misconduct did not compel a finding that the burden had been discharged. Discriminatory assumptions may underpin a reason held honestly and without conscious awareness. The question therefore depended on all the evidence and facts, including the absence of evidence from material decision-makers. The approach was consistent with the guidance in Barton v Investec Henderson Crossthwaite Security Ltd [2003] ICR 1205, and with the reasoning in Nagarajan v London Regional Transport [1999] ICR 877 and Bahl [2001] ICR 1065.
4. Unfair dismissal. Asking whether the employer’s belief in misconduct was based on reasonable grounds was an appropriate approach and did not substitute the tribunal’s view for that of a reasonable employer. The criticisms of the investigation, disciplinary process and appeal entitled the tribunals to reject the existence of reasonable grounds. The challenge did not approach the high threshold for perversity.
5. Given the detailed consideration by two specialist tribunals, the Court of Appeal adopted a relatively cautious approach to permission, consistent with Cook V Secretary of State [2002] 3 All ER 279. The formal order was: application refused.

• Court of Appeal (Civil Division): renewed application for permission to appeal refused on 14 July 2005; Waller LJ agreed with Laws LJ.
• Employment Appeal Tribunal: appeal dismissed on 22 March 2005.
• London Central Employment Tribunal: complaints of direct race discrimination, unfair dismissal and wrongful dismissal upheld; decision promulgated on 19 May 2004.