Smith v Ideal Shopping Direct Ltd

Harassment based on sexual orientation requires consideration of both the purpose and the effect of unwanted conduct. A tribunal must not treat a claimant’s openness about their sexual orientation as making abusive references to it tolerable. It must assess the statutory test, including the claimant’s perception and the reasonable view of the effect.

Where unlawful dismissal is established, compensation may reflect the chance of a later lawful dismissal. A finding that dismissal was inevitable requires clear and adequate reasons, particularly where a disciplinary hearing offered a range of sanctions and the employment history points to alternatives to dismissal.

The claimant, a gay man, was summarily dismissed shortly after saying that he would raise a grievance concerning homophobic treatment. The Employment Tribunal upheld his victimisation complaint but held that he would inevitably have been dismissed four days later at a disciplinary hearing. It rejected his complaints of harassment based on remarks relating to his sexual orientation.

He appealed against the rejection of the harassment complaints and the finding that his loss was limited to four days’ dismissal. The central issues were whether the Tribunal had correctly understood the evidence and applied the statutory harassment test, and whether it had adequately justified its conclusion that later dismissal was inevitable.

1. Appeal allowed. The findings rejecting harassment and limiting loss arising from dismissal were set aside. The established finding that the claimant’s dismissal was unlawful victimisation remained binding.

2. The Tribunal had materially confused two separate harassment complaints. It conflated the speakers, recipients, wording and apology connected with comments by Ms Pearce and Ms Puttrich. That fundamental misapprehension of the evidence made its decision on those complaints unsafe.

3. The Tribunal also erred in law under the Employment Equality (Sexual Orientation) Regulations 2003. It focused on the speaker’s purpose or intention, without addressing the alternative question whether unwanted conduct had the prohibited effect. It further treated the claimant’s openness about his sexuality as placing abusive references to sexual orientation within a tolerable range. Those matters are distinct: openness may provide context, but it does not prevent abusive language amounting to harassment.

4. Applying Chagger v Abbey National Plc & Anor [2010] IRLR 47, the Tribunal could consider the chance of dismissal absent discrimination. However, its conclusion that dismissal four days later was inevitable lacked adequate reasons. The disciplinary invitation stated only that dismissal could result, other sanctions were available, there were no prior written warnings, and earlier employment difficulties had led to alternative roles rather than dismissal.

5. The appeal was remitted to a differently constituted Employment Tribunal to determine harassment and the loss flowing from dismissal. A fresh tribunal was required because of the original Tribunal’s trenchant findings and the need for factual assessment.

• Employment Appeal Tribunal: appeal allowed. The harassment findings and the finding that dismissal four days later was inevitable were set aside and remitted to a differently constituted Tribunal.
• Employment Tribunal, Leicester: upheld victimisation by dismissal, rejected harassment complaints, and held that the claimant would in any event have been dismissed four days later.