Artem Limited v Mrs K Edwins

The Employment Appeal Tribunal allowed the appeal in part and remitted the claimant’s sex and race discrimination complaints to the Employment Tribunal for redetermination. The EAT held that the majority of the tribunal had erred in law in its application of the burden of proof under section 136 of the Equality Act 2010 and associated guidance (including Igen v Wong), and that the full tribunal erred in concluding that, if the burden had shifted, the respondent had failed to discharge it. The EAT also confirmed that the claimant had been constructively dismissed and that the unfair dismissal findings were academic for the purposes of this appeal.

Key legal principles:

• The tribunal must apply the two-stage burden of proof approach in discrimination claims, considering whether primary facts permit an inference of discrimination and, if so, whether the employer then shows the treatment was "in no sense whatsoever" because of the protected characteristic (section 136 EQA and Igen v Wong guidance).
• In constructive dismissal claims the reason for dismissal is the employer’s reason for the conduct constituting the repudiatory breach (section 95 ERA and authorities such as Berriman).
• Employment tribunal findings on primary facts must be analysed consistently and the tribunal must consider not only facts supporting an inference of discrimination but also material that points against it.

The claimant, employed since 1996 and promoted to finance director and board member, resigned following a meeting on 12 August 2020 when the chairman stated he had lost confidence in her. The Employment Tribunal (Watford) found constructive dismissal and that the dismissal had been unfair, and a majority found sex and race discrimination based on the shifting of the burden of proof. The respondent appealed.

(i) Nature of the claim: Appeal against Employment Tribunal findings that the claimant’s constructive dismissal was because of sex and race discrimination and that her dismissal was unfair.

(ii) Issues framed:

• Whether the Employment Tribunal correctly identified the factual reason for dismissal and, if so, whether that reason constituted a potentially fair reason under section 98 ERA.
• Whether the tribunal correctly applied the burden of proof in discrimination claims and properly analysed whether primary facts permitted an inference that the treatment was because of sex or race.

(iii) Court’s reasoning: The EAT reviewed the factual findings of the Employment Tribunal, accepting the finding of constructive dismissal (that the chairman’s loss of confidence amounted to a repudiatory breach). On discrimination, the EAT concluded the majority’s reasons for shifting the burden of proof were legally flawed: reliance on the workforce being predominantly white or male or on isolated workplace comments without adequate analysis was insufficient. The majority had used language that facts "potentially" could indicate discrimination rather than establishing that a reasonable tribunal could properly conclude from all evidence that treatment was because of sex or race at stage one. The EAT also found the tribunal had not adequately considered evidence pointing against discrimination (for example, the claimant’s long promotion history and the context of a disputed finance review and emails). The EAT held there had been errors of law both in the stage one analysis and in the unanimous conclusion that the respondent had not discharged the burden if it shifted. Given there could be more than one proper outcome on a full analysis, the EAT remitted the discrimination complaints to the same Employment Tribunal for redetermination. The unfair dismissal point was not finally determined on appeal as it was academic in light of the remedy decision.

Appeal allowed in part. The EAT held that the Employment Tribunal erred in law in its approach to the burden of proof for the sex and race discrimination complaints and in concluding that the respondent had failed to discharge any shifted burden. Those discrimination findings were set aside and the complaints were remitted to the same Employment Tribunal for redetermination. The EAT accepted the finding of constructive dismissal but did not finally determine the unfair dismissal ground on appeal as it was academic.

Appeal to the Employment Appeal Tribunal from the Employment Tribunal (Watford) hearing of 18-31 January 2023; Employment Tribunal judgment sent 17 July 2023. EAT neutral citation: [2024] EAT 136 (Case No: EA-2023-000937-BA).