Unite the Union v Nailard

The Court of Appeal held that the Employment Appeal Tribunal was correct to treat the lay branch officials as agents of Unite the Union for the purposes of section 109(2) of the Equality Act 2010, and therefore to treat their acts of harassment as acts of the Union. The court applied Kemeh and Heatons Transport and concluded that section 109(2), read with section 109(3), renders a principal liable for discriminatory acts done by an agent in the course of carrying out functions the agent is authorised to perform; those acts need not be directed at a third party to attract liability.

However, the court agreed with the EAT that the Employment Tribunal had misdirected itself in finding that the Union was liable for the conduct of its employed officials (their investigatory inaction and the decision to transfer the claimant). The ET had failed to focus on whether the employed officials' own conduct or mental processes were "because of" or "related to" the claimant's sex. The appropriate legal tests under sections 13 and 26 of the Equality Act 2010, read with the legislative history, require that an employer's own conduct be shown to be linked to the protected characteristic (or that the decision-maker's mental processes were influenced by it) before liability for inaction or a transfer decision can be established. The court therefore remitted those issues to the Employment Tribunal for determination.

Background and parties: The claimant was a regional officer employed by Unite the Union and worked at Heathrow. She complained of a prolonged course of offensive and bullying conduct by lay branch officials (convenor and branch chair). She alleged (i) sex discrimination and (ii) harassment related to sex under the Equality Act 2010, and (iii) constructive/unfair dismissal arising from a unilateral transfer decision by a senior employed official. The Union was sued in the Employment Tribunal, which found harassment by both the lay officials and by the Union's employed officials and held the Union liable. The EAT allowed in part the Union's appeal: it overturned the ET's finding that the lay officials were employees but upheld liability on the alternative basis of agency; it allowed the Union's appeal in relation to the employed officials and remitted that part of the claim.

Nature of the proceedings and relief sought: Claims under the Equality Act 2010 for unlawful sex discrimination and harassment, and related employment law claims for constructive/unfair dismissal and a declaration of liability against the Union.

Issues framed:

• whether the lay branch officials were agents of the Union such that their acts could be treated as acts of the Union under section 109(2);
• whether the Union (through employed officials) was liable for harassment or discrimination by reason of their investigatory inaction and the decision to transfer the claimant;
• how the statutory language "because of" (direct discrimination) and "related to" (harassment) should be construed, and the significance of the legislative history and repeal of sections providing for third‑party liability.

Court’s reasoning and disposition: On agency, the Court of Appeal agreed with the EAT: the lay officials carried out functions authorised by the Union (conducting branch meetings, representing the Union in negotiations, liaising with employed officers) and the Union was therefore liable for their discriminatory or harassing conduct under section 109(2). The court rejected the Union's submission that agency liability should be limited to acts directed at third parties and held that section 109(2) applies where agents discriminate in the course of carrying out authorised functions, even if the act is against another representative or fellow office-holder.

On the employed officials, the court held that the ET had erred by treating the employed officials' inaction and the transfer decision as "related to" sex merely because they arose in the context of complaints about sexual harassment. Under section 13 (direct discrimination) and section 26 (harassment) the tribunal must focus on the decision‑maker's own conduct and mental processes; negligent or mistaken inaction is not automatically discriminatory simply because the subject matter involved sexual harassment by others. The court therefore remitted the relevant issues for the ET to determine whether the employed officials' conduct was in fact influenced by the claimant's sex.

Contextual points: the court considered Kemeh, Heatons Transport, Pearce and Conteh and reviewed the legislative history leading to the "related to" formulation in the harassment definition and the subsequent repeal (in 2013) of statutory sub‑sections that had expressly provided for third‑party liability.

Appeal allowed in part. The Court of Appeal upheld the EAT’s conclusion that the lay branch officials were agents of the Union and that their acts of harassment could be treated as acts of the Union under section 109(2) of the Equality Act 2010. The court, however, agreed with the EAT that the Employment Tribunal had misdirected itself on the Union’s liability for the employed officials’ conduct (investigatory inaction and the decision to transfer): the tribunal failed to focus on whether the employed officials’ own conduct or mental processes were linked to the claimant’s sex. Those issues were remitted to the Employment Tribunal for determination. Rationale: statutory construction of sections 109, 13 and 26, authority in Kemeh and Heatons Transport, and analysis of the legislative history (including the 2008 Regulations and the 2013 repeal of third‑party liability provisions).

Employment Tribunal (Watford) — judgment 1 July 2015 (full reasons); Employment Appeal Tribunal — judgment allowing in part the Union's appeal, handed down 27 September 2016; Court of Appeal — judgment [2018] EWCA Civ 1203, 24 May 2018 (this judgment).