Unite the Union v Nailard

A principal is liable under section 109(2) of the Equality Act 2010 where its agent discriminates or harasses while carrying out authorised functions. Liability is not confined to acts directed at third parties with whom the agent may affect the principal’s legal relations.

Direct discrimination requires the protected characteristic to form part of the actual decision-maker’s mental processes, unless the criterion applied is inherently discriminatory. Harassment under section 26 requires the alleged perpetrator’s own conduct to be related to the protected characteristic. The repeal of the former express third-party harassment provisions does not leave an implied liability for an employer’s failure to prevent such harassment.

The claimant, a regional officer employed by a trade union, was harassed on grounds of sex by two elected Heathrow branch officials. The Employment Tribunal held the Union liable, both for their conduct and for the inadequate response of its employed officials, including a decision to transfer the claimant. It also upheld claims arising from her constructive dismissal.

The Employment Appeal Tribunal held that the elected officials were not employees but were agents of the Union. It upheld liability for their harassment. It allowed the Union’s appeal concerning the employed officials because the Tribunal had applied the wrong legal test, and remitted that part of the case.

The Union appealed on agency. The claimant cross-appealed on the claims based on the employed officials’ inaction and transfer decision.

1. The Union’s appeal and the claimant’s cross-appeal were dismissed. The Employment Appeal Tribunal was correct to uphold the Union’s liability for the harassment committed by the elected lay officials.

2. Under section 109(2) of the Equality Act 2010, read with section 109(3), a principal is liable where an agent discriminates in carrying out functions which the agent is authorised to perform. The statutory rule is not limited to the principal’s prior knowledge or approval of the particular act. Nor is it limited to wrongful acts done towards the third parties in dealings for which the agency relationship exists.

   The lay officials were authorised to represent the Union in branch meetings, dealings with the employer, negotiations and liaison with employed officers. Their harassment of the claimant occurred while they performed those functions. The Union was therefore liable for it.

3. The Employment Tribunal’s findings concerning the employed officials were legally flawed. For direct discrimination under section 13, the claimant’s sex had to be part of the mental processes of the employed official whose act or omission was impugned, unless that official applied an inherently sex-based criterion. The fact that the claimant’s complaints concerned sex-related harassment did not itself make inadequate action on those complaints direct discrimination.

4. The same essential focus applies to harassment under section 26. The Tribunal had to ask whether the employed officials’ own conduct or settled inaction was related to sex. It could not establish that connection merely from the sex-related character of the original harassment or complaints. Section 26 does not itself impose liability for failure to prevent third-party harassment where the alleged decision-maker’s conduct lacks that connection.

5. The former express third-party harassment regime in section 40(2)–(4) had been repealed. The legislation therefore contained no separate liability for failing to protect an employee from third-party harassment as such. Liability could nevertheless arise if the protected characteristic significantly influenced the relevant decision-maker’s mental processes, with section 136 available where appropriate.

6. The claims concerning the employed officials remained remitted in principle for findings under the correct test, although the court doubted whether any further liability would materially increase compensation.

• Court of Appeal (Civil Division): The Union’s appeal against the agency finding and the claimant’s cross-appeal concerning the employed officials were dismissed: [2018] EWCA Civ 1203 .
• Employment Appeal Tribunal: On 27 September 2016, the EAT allowed the Union’s appeal in part. It rejected the finding that the lay officials were employees, upheld their status as agents, and remitted the claims based on the employed officials’ conduct.
• Employment Tribunal: On 1 July 2015, the Tribunal found the Union liable for harassment by the lay officials and by employed officials, and upheld unfair and discriminatory constructive dismissal claims.