Artem Limited v K Edwins

Under section 136 of the Equality Act 2010, a tribunal may shift the burden of proof only if it could properly infer from all relevant evidence that the impugned treatment was because of the protected characteristic. Evidence pointing away from discrimination must be considered at that stage, although an exculpatory explanation is left for the later stage.

A finding that conduct was merely potentially motivated by sex or race does not apply that test. Where the tribunal has found a factual reason for the treatment, it must explain why that reason does not show that sex or race played no part, while recognising that a protected characteristic need only be an effective, not sole, cause.

The claimant, a finance director, resigned after the respondent's chairman told her at a meeting concerning a financial review that he had lost confidence in her. The Employment Tribunal at Watford held that this amounted to a repudiatory breach, so that she had been constructively and unfairly dismissed. It also upheld, by a majority, complaints of direct sex and race discrimination.

The employer appealed the discrimination findings and challenged the finding that it had not established a potentially fair reason for dismissal. It accepted that the unfair-dismissal appeal was academic in light of the remedy decision. The central issue was whether the tribunal had lawfully applied the burden of proof to the discrimination complaints.

1. Appeal allowed in part. The findings of sex and race discrimination were set aside and those complaints were remitted. The unfair-dismissal appeal was academic and did not require determination.
2. At the first stage of section 136 of the Equality Act 2010, the question is whether a reasonable tribunal could properly infer, from all relevant evidence and absent an adequate explanation, that treatment was because of the protected characteristic. The majority had instead relied on material showing only that the decision-makers’ conduct potentially could have been motivated by race or sex. It had not properly considered evidence pointing away from discrimination, including the claimant’s substantial history of promotion.
3. The race analysis was additionally defective. A predominantly white workforce was not, without more, a logical basis for an inference of race discrimination. The tribunal had not properly considered the distinct circumstances of the furlough arrangements involving SB, or the absence of findings that race-related comments had been made.
4. The tribunal also erred at the second stage. Its findings on victimisation and constructive dismissal identified the claimant’s reaction to the financial review and related emails as the reason for the criticism at the meeting. That did not exclude sex or race as an effective subsidiary cause. However, the tribunal had to explain why those findings did not establish that the protected characteristics played no part. It gave no such explanation.
5. There was not only one permissible outcome on a proper assessment of the evidence. The discrimination complaints were therefore remitted to the same tribunal, which retained substantial unchallenged factual findings. Further evidence was unlikely to be justified, subject to that tribunal’s case-management discretion.

• Employment Appeal Tribunal: Allowed the appeal to the extent of setting aside the findings of direct sex and race discrimination, and remitted those claims for redetermination.
• Employment Tribunal, Watford: Held that the claimant had been constructively and unfairly dismissed, rejected victimisation, and upheld direct sex and race discrimination complaints by a majority.