Fox v Ocean City Recruitment Ltd

An employer’s statutory defence to vicarious liability for discriminatory acts depends on reasonable preventive steps taken before the discrimination occurs. Investigatory or remedial action after a complaint cannot, by itself, establish the defence.

An employment tribunal must give adequate reasons for an uplift for failure to follow statutory dismissal procedures and for an award for injury to feelings. The uplift begins at 10%; any increase requires reasons showing why that starting point is inadequate. A complete failure to follow the procedures does not automatically justify the maximum uplift.

The Claimant appealed against liability and remedy decisions of the London South Employment Tribunal. The tribunal found that she had been sexually harassed by a manager, but held that the employer had established the statutory defence by suspending and investigating him after the complaint. It also found that her dismissal was an act of victimisation, awarded £1,500 for injury to feelings, and added a 10% uplift for failure to follow the statutory dismissal procedures.

The appeals concerned whether the employer’s post-complaint steps could establish the statutory defence, whether the uplift was adequately reasoned and correctly assessed, and whether the injury-to-feelings award was supported by sufficient reasons.

1. Appeals allowed in part and issues remitted. The Employment Tribunal had misdirected itself on the employer’s statutory defence. The relevant obligation is preventive. Steps taken after the discriminatory conduct has occurred may address the complaint, but they do not establish that the employer took reasonable steps to prevent the discriminatory act.
2. The liability issue was therefore remitted to the same Employment Tribunal for reconsideration on the correct basis. The employer’s argument that the misdirection made no difference was not accepted.
3. The award of £1,500 for injury to feelings could not stand. The Employment Tribunal gave no adequate explanation of how it reached that figure. On remission it must reconsider the award, taking account of the Claimant’s £3,500 settlement with the manager and the employer’s vicarious liability for the relevant conduct.
4. The 10% uplift was also inadequately reasoned. The Employment Tribunal did not explain why it selected 10% or address the relevant authorities. The statutory scheme requires the tribunal to start at 10% and then decide whether it is just and equitable to increase that percentage. An increase requires circumstances clearly justifying the conclusion that 10% is insufficient. A complete failure to comply with the procedures does not automatically justify an increase to 50%, although it may justify an increase beyond 10%.
5. The uplift and statutory-procedure issues were remitted for reconsideration, together with injury to feelings. The Employment Tribunal could determine the remitted matters on further written submissions, oral submissions or evidence, as it considered appropriate.

• Employment Appeal Tribunal: appeals from the London South Employment Tribunal were allowed to the extent that liability, the statutory-procedure uplift and injury-to-feelings award were remitted for reconsideration.
• London South Employment Tribunal: found sexual harassment, victimisation and liability for compensation, but held that the employer had established the statutory defence and awarded £1,500 for injury to feelings plus a 10% uplift.