Rank Nemo (DMS) Ltd & Ors v Coutinho

The Court of Appeal held that an employment tribunal (ET) should not have rejected a claim of victimisation brought by an ex-employee at the threshold on jurisdictional grounds. The tribunal must investigate whether the respondent's unexplained failure to honour an ET award and subsequent county court judgment amounted to less favourable treatment linked to a protected act under the Race Relations Act 1976 (in particular ss.1, 2 and 4(2)), and whether there was a sufficient connection with the previous employment relationship. The court distinguished D'Souza v Lambeth LBC on the basis that a failure to comply with a reinstatement order (the D'Souza context) is qualitatively different from a failure to pay a compensation award, which may, depending on the facts, form part of a victimisation complaint. The transferee employer under TUPE (Regulation 5(2) and Regulation 8(1)) stands in the shoes of the transferor and can, in principle, be the respondent to a post-termination victimisation claim.

The claimant, formerly employed by Vision Information Services (UK) Limited, obtained ET awards for automatic unfair dismissal and race discrimination, later transferred in liability to Rank Nemo by virtue of Regulation 5(2) of the Transfer of Undertakings Regulations. Despite a county court judgment enforcing the ET award, Rank Nemo did not pay. The claimant issued a fresh complaint to the ET alleging victimisation under the Race Relations Act 1976, based on less favourable treatment and deprivation of benefits compared with other creditors.

The ET refused to accept the claim on 2 May 2008 on jurisdictional grounds, considering the matter an enforcement issue outside tribunal powers. The Employment Appeal Tribunal (HHJ McMullen QC) allowed the claimant's appeal and directed that the claim be accepted for investigation. Rank Nemo appealed to the Court of Appeal.

The Court of Appeal (Mummery LJ, Rix LJ, Moses LJ) dismissed Rank Nemo's appeal. The court explained the issues as:

• Nature of the claim: whether an ET has jurisdiction to adjudicate an allegation of victimisation based on a former employer's refusal to honour an ET award and county court judgment.
• Legal questions framed: (i) whether the claim merely sought enforcement of judgments (an ET does not have enforcement powers); (ii) whether the alleged treatment was sufficiently linked to the previous employment relationship to amount to victimisation under the 1976 Act.

The court reasoned that on a jurisdictional challenge the claimant's pleaded facts must be assumed true. The claim was not a mere attempt to enforce a judgment but alleged that the reason for non-payment was retaliatory less favourable treatment linked to the protected act of bringing discrimination proceedings. The court distinguished the House of Lords' decision in D'Souza (concerning failure to reinstate) because the reinstatement remedy has its own statutory treatment and sanctions; that reasoning did not automatically preclude a victimisation claim based on non-payment of compensation. As the transferee under TUPE, Rank Nemo could be treated as the party responsible for the award. The court therefore held that the ET erred in rejecting the claim on jurisdictional grounds and remitted the matter for factual investigation and legal assessment by the ET.

Appeal dismissed. The Court of Appeal agreed with the EAT that the ET erred in law in refusing to accept the victimisation claim for lack of jurisdiction. The court held that the claimant's pleaded case — that the respondent, a TUPE transferee, had not paid an award for reasons linked to retaliation for protected acts — raised a potentially justiciable victimisation complaint under the Race Relations Act 1976 which should be investigated by the ET; the case was distinguishable from D'Souza (failure to reinstate) where a distinct statutory remedy applied.

The claimant's victimisation complaint was rejected by the Employment Tribunal on 2 May 2008 for want of jurisdiction and the ET refused a review on 20 May 2008. The Employment Appeal Tribunal (HHJ McMullen QC, UKEAT/0315/08/LA) allowed the claimant's appeal on 16 September 2008 and directed that the claim be accepted. Permission to appeal to the Court of Appeal was granted by Pill LJ on 18 December 2008. This Court of Appeal judgment dismissed Rank Nemo's appeal on 20 May 2009 ([2009] EWCA Civ 454).