Appeal No.	 EAT/293/98

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 27 October 1998
Judgment delivered on 26 March 1999

Before
HIS HONOUR JUDGE H J BYRT QC
MR J A SCOULLER
MR A D TUFFIN CBE

NICEDAY LTD	APPELLANTS

MS V OYOLU	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR D TATTON BROWN
(of Counsel)
Messrs Bolitho Way
Solicitors
13/18 King’s Terrace
Portsmouth
PO5 3AL	
For the Respondent	MS K MONAGHAN
(of Counsel)
Instructed by:
Miss P Grant
Legal Officer
Commission for Racial Equality
Elliott House
10-12 Allington Street
London
SW1E 5EH	

	JUDGE BYRT QC:		This is an appeal against a decision, promulgated on the 29th December 1997, of an Employment Tribunal sitting in Southampton. By that decision the Tribunal held that the employers had discriminated against Ms Oyolu on the ground of her race. The employers appeal.

	The Appellants are a large national company engaged in the provision of stationery to the business world and employing some 1,400 staff. Ms Oyolu is a black Nigerian with dual nationality - British and Nigerian. She is highly qualified in sales and marketing, having acquired her business qualifications both in Nigeria at Port Harcourt University and in the United Kingdom at Durham University.

	On the 24th October 1996, she saw an advertisement in the Daily Telegraph, placed there by the Appellants. It announced an expansion of their national team of “Account Managers” and sought applications from people who would wish to be considered for employment in that role. Ms Oyolu applied.

	The employers were seeking to recruit a particular grade of account manager, namely a Field Service Manager, a sales representative whose task was to secure repeat business from customers already spending rather less than £100,000 per annum, and to win new customers. When Ms Palmer, the Appellants’ personnel manager, saw Ms Oyolu’s application, she immediately recognised that her qualifications potentially fitted her for a position with higher responsibility, namely that of a Key Accounts Manager, a sales representative who handled specified large customers with an annualised spend of over £100,000. Although Ms Palmer knew that, at the time, Ms Gould, the Sales Director East, was more interested in the recruitment of Field Service Managers, she was so impressed with Ms Oyolu’s CV that she passed the application on to Ms Gould in case she wished to see Ms Oyolu and possibly recruit her as a Key Accounts Manager.

	Ms Oyolu was invited to an interview with Ms Gould on the 20th December. Ms Gould was very impressed with the applicant, and decided that she should be recruited as a key account manager. She asked Ms Palmer to send her a formal written offer of the job. This reached Ms Oyolu after a little delay on the 18th January 1997. She immediately accepted the written offer, signifying her acceptance by signing the document in the appropriate space and returning it to the employers.

	She then with the employers’ agreement and blessing, went to Nigeria for her brother’s wedding. It was agreed that she would contact the employers on her return to the United Kingdom in mid-February and arrange the date she would start her new job.

	On her return in mid-February , Ms Oyolu did contact Ms Gould and was told there had been a change of plan and that the employers no longer required her services. This message was confirmed in a letter dated the 26th February from Ms Palmer. This said:

“... I understand that we are currently reorganising our sales force. As Sue [that is Ms Gould] is now unable to determine whether or not she is going to require additional Key Account Managers at this time, it would be sensible if we withdraw this initial offer to you and contact you again when we are in a better position to do so. ... We will keep your details on file and as soon as we are in a position to do so, we will contact you again.”

Ms Oyolu replied complaining that, as a result of her acceptance of the Appellants’ offer of employment, she had turned down another job offer and had aborted another application. She sought compensation. The Appellants sent her the equivalent of one week’s pay. Sending the payment, Ms Palmer wrote:

“... we hope very much that, after we have reorganised the salesforce, there may be an opportunity for you and I intend to retain your details on file for future vacancies.”

	On the 24th April 1997, whilst looking through the newspapers to find alternative employment, Ms Oyolu saw an advertisement, placed by the Appellants in the Daily Telegraph, in almost identical terms to that which had appeared the previous October. Ms Oyolu thought it significant that the Appellants had not warned her that the advertisement was about to appear nor invited her to apply. She consulted the Citizens Advice Bureau. The Bureau contacted the Appellants who said that the advertisement was seeking recruits for the lesser position of Field Service Manager. It is Ms Oyolu’s case that this was the first time she had heard of that position or of the distinction between Field Service Manager and Key Accounts Manager. She alleged she had been discriminated against because of her race in that the Appellants had broken their contract with her in unilaterally cancelling her employment, and had broken faith with her in failing to contact her at the time of the second advertisement when they had her details on file. On the 23rd July 1997, Ms Oyolu lodged her originating application with the Employment Tribunal.

	On the 4th November 1997, the Employment Tribunal heard, as a preliminary issue, the question whether Ms Oyolu had lodged her complaint out of time. They held that she was in time. Two days later, the Employers offered her a position as a Key Account Manager. Ms Oyolu interpreted that offer as a cynical attempt to protect their image, and she rejected the offer.

	In formulating their decision, the Tribunal began by setting out the law which they considered applied. They did not specifically refer to the Race Relations Act itself but did take account of a number of interpretative authorities, principal among them being King v The Great Britain China Centre [1991] IRLR 513.

	They found that Ms Oyolu, a black Nigerian, had suffered a detriment in that the Employers had unilaterally terminated her employment in February 1997, and had failed to invite her to re-apply in the following April when the second advertisement was re-inserted. In the absence of any evidence to the contrary, they were prepared to find that all the recruits enlisted as a result of the October advertisement were of a different race to Ms Oyolu and, though the Reasons are none too clear about this, that none of them had been subjected to the same or similar detriment.

	They considered that this disparity in treatment called for an explanation from the Employers. They found the explanation given, namely that their Managing Director had overridden Ms Gould’s decision to employ Ms Oyolu in pursuance of a policy to employ more Field Service Managers and less Key Account Managers, was “unsatisfactory”, bearing in mind the factors they set out in paragraph 35 of the Reasons. In summary, the explanation was unsatisfactory because Ms Gould did not appear to have argued Ms Oyolu’s case with the Managing Director, the suspect change in the alleged recruitment position between January and mid-February and the contradictory evidence given by Ms Gould  that there was always a place in the Company’s organisation for a candidate of the right calibre. In paragraph 39, the Tribunal considered Ms Gould’s evidence that three Key Account Managers had left the Company between January 1997 and the following September and had not been replaced. They felt that this evidence did “not lie easily” with the evidence she had given earlier that “a suitable candidate could have been slotted in at any time whether or not there was a vacancy.”

	In short, they do not seem to have been satisfied with the evidence of Ms Gould.

	On the strength of the above, the Tribunal considered it appropriate to infer that the employers had discriminated against Ms Oyolu on the ground of race.

	Mr Brown, for the employers, criticised the Tribunal’s decision in a number of ways. He submitted that they made no or no proper finding with regard to certain crucial facts. They made other important findings for which there was no evidence. He further submitted they erred in selecting the recruits enlisted as the result of the October 1996 advertisement, as the appropriate comparator. Their circumstances were materially different from those which applied to Ms Oyolu. He further argued that, in coming to their decision, the Tribunal took into account a range of peripheral matters which though prejudicial to the Company’s credibility, were not, on the facts of this case, evidence of racial discrimination. The fact that they took these into account in support of their decision, would suggest that they failed to focus on the proper statutory test set out in Section 1(1)(a) of the Race Relations Act. In those circumstances, the fact that, in their reasons, the Tribunal failed to address themselves to that section, when directing themselves on the law, attracts added significance. The parties are unable from a reading of the Reasons to be assured that the Tribunal came to a proper decision.

	Finally, Mr Brown relied on perversity.

	Ms Monaghan, for Ms Oyolu, cautioned this appellate Tribunal against overzealously seeking out an error of law. The decision, she says has to be read as a whole, and on doing that, it is clear the Tribunal came to a decision they were entitled to make and which was the correct one. Having found the “detriment” and the difference in race of those they selected as their comparator, they were entitled to find such less favourable treatment as called for an explanation. The employers’ explanation was advanced through the evidence of Ms Gould, and, after due consideration, rejected by the Tribunal. If the Tribunal rejected the explanation, it was open to them on their assessment of the facts to infer that such discrimination as there was, was racially motivated. There was no ground for suggesting their decision that Ms Oyolu was the victim of racial discrimination, was perverse.

	These summaries are but a bare outline of the respective submissions advanced in a carefully argued case. How does this Tribunal find?

	This could not have been an easy case for the Tribunal below to decide in view of the conflicting messages about possible racial discrimination coming through from different parts of the evidence. For instance, the only two witnesses representing the Employers before the Tribunal were Ms Palmer and Ms Gould. Ms Palmer was the agent of the Company who, acting on the instructions of Ms Gould, caused Ms Oyolu the detriment by unilaterally terminating her contract of employment in February 1997; and yet this was the same pair who only weeks earlier had manifested their support, in a way and to a degree which belied any suggestion of racial discrimination, for her employment in a role which fitted their assessment of her high calibre. If the Tribunal at the conclusion of the hearing were to make a finding of racial discrimination, that finding would have to be based on evidence of surrounding circumstances which demonstrated a different company story. To justify such a finding, it was incumbent on the Tribunal to set out clearly the law they were seeking to apply, and likewise their findings of the primary facts from which the requisite inferences and conclusions were drawn so that each of the parties could read and understand why they had won or lost.

	The statutory test of racial discrimination is set out in Section 1(1)(a) of the Race Relations Act which says:

“A person discriminates against another in any circumstances relevant for the purposes of any provisions of this Act if-
(a)	on racial grounds he treats that other person less favourably than he treats or would treat other persons.”

The comparison envisaged by that section is set out in Section 3(4) which provides:

“(4) A comparison of the case of a person of a particular racial group with that of a person not of that group under section 1(1) must be such that the relevant circumstances in the one case are the same or not materially different in the other.”

Whilst the Tribunal took trouble to quote from some interpretative decisions, and in particular King v The Great Britain China Centre [1991] IRLR 513, they did not or did not say they applied their minds to either statutory test. This may be important because Section 1(1) is limited in the conduct it condemns as being of a racial nature. It does not, for instance, condemn unreasonable conduct per se. When referring to the case of Glasgow City Council v Zafar (The Times, 8th December 1997) the Tribunal picked up this very point. However, there is a further point which the Tribunal may have missed. The section does not, in so many words, attach liability to racial prejudice. It is racial prejudice giving rise to differential treatment which is condemned in the statute. There is nothing in the Reasons to assure the Appellants here that their liability to Ms Oyolu was based on this element of differential treatment.

	In our judgment, the more serious criticism of the Tribunal’s decision is that which says they selected an erroneous comparator, again possibly due to their failure to remind themselves of the terms of the above quoted section 3(4). They selected the recruits who were enlisted following the October advertisement. The Tribunal assumed the difference in race on the basis that Ms Oyolu is a black Nigerian and the others who accepted employment in response to the advertisement “were of a different race”. There was no evidence before the Tribunal that this was so but, in the Reasons paragraph 32, the Tribunal says this:

“The Respondents have not given any evidence to the contrary as to their nationality or race, and in any event have told us that they do not keep records of the ethnic backgrounds of the applicants for position.”

If the Tribunal’s assumption about this is wrong, the Employers have little cause for complaint as Ms Oyolu’s questionnaire asked them for details of the applicants who applied in October with specific reference to race, qualifications, experience and position held if the applicant was a current employee. Ms Palmer answered merely by asking her secretary to highlight the names only of those sales persons on a full list of employees’ names, a response which was less than helpful.

	However, the Tribunal went on in their Reasons to record that Ms Oyolu alleged “no other applicants for jobs ... as the result of the advertisement had been treated in the same way and had their job offers withdrawn.” Whilst proof of such a fact would have been a necessary element in any case based on differential treatment, it was not understood by Counsel or ourselves where this allegation is said by the Tribunal to have featured. It was not put to any witness in cross-examination or alluded to in the questionnaire. But, of more importance, the Tribunal never made a finding that this allegation was true. Without such a finding it would be difficult to contend that the claimant had reached first base in a claim relying on differential treatment.

	However, on the assumption that Ms Oyolu had reached that first base, there remains an even more fundamental criticism of the Tribunal’s selection of the comparator. On what basis could it be contended that the October recruits were an appropriate group of fellow employees to select for comparison? Apart from race, were their relevant circumstances the same as those of Ms Oyolu or not materially different? Ms Oyolu’s employment was that of a Key Account Manager. The October entrants were all, except Ms Oyolu employed as Field Services Managers. On the evidence, it was not disputed that the qualifications sought for the former category of sales representative were of a higher order than those required for the latter. Further, to some extent, the jobs were in competition, one with another, since clearly within a company operating on the basis of the appellants’ structure, the one category had to be kept in balance with the other so far as numbers were concerned.

	Mr Brown submitted that it is an error of law to select a comparator where the members or members of that group are doing a different job to that of the claimant since any difference in treatment is at least as likely to be explained by the difference in the two jobs as by any other factor such as race.

	Ms Monaghan submitted that the Tribunal were entitled to select the October recruits as the comparator since at no time prior to the Citizens Advice Bureau’s enquiry in April 1997 had the employers presented their case on the basis of there being any difference between any of the October recruits including Ms Oyolu. The advertisement had been for “Account Managers” and all, including Ms Oyolu, had applied for jobs in response to that advertisement. Accordingly, they were all aptly to be regarded as part of the same group job-wise, from which Ms Oyolu alone lost her job.

	We accept Mr Brown’s submission, and reject Ms Monaghan’s contentions. The date the Tribunal have to have in mind when considering the appropriateness of a suggested comparator is that at which the claimant suffers his/her detriment. In this case, that date was February 1997. At that point in time, Ms Oyolu was employed as a Key Account Manager, and, in our judgment, it is an error of law, when considering differential treatment, to compare her job with that for which different levels of qualifications were required and for which the levels of need within the business might, at any one time, be different.

	Having reached this conclusion, we see no alternative but to allow the appeal and remit the matters to a differently constituted Tribunal to rehear the claim. Such a Tribunal would have to consider whether this might be one of those cases where a hypothetical comparator has to be constructed where he/she is doing the same job as Ms Oyolu, namely that of a Key Account Manager, with a view to considering what would have been the relative position of Ms Oyolu in February 1997. There were other Key Account Managers in post at that time. What was happening to them then? Selection of the appropriate comparator is a matter for the Tribunal below. When this matter is remitted, it will be for the new tribunal to make their selection on the basis of the evidence they hear, and there is now no need for us to say more.

	There remains however two other areas of criticism about which we think we should express our views before concluding.

	First, Mr Brown submitted that the Tribunal never made findings of primary facts which would have indicated whether they found the employers’ “explanation” to be true or false. If they accepted it as true, why did they not expressly consider whether it rebutted the allegation of racial discrimination?

	In our view, the Tribunal’s conclusion that the explanation was “unsatisfactory” is comment and  no proper substitute for a finding of fact. Nowhere does the Tribunal expressly accept or reject that what is alleged by the employers to have happened, did happen. One part of paragraph 35 presupposes that the Managing Director did intervene because they criticise Ms Gould for not presenting to him the strengths of Ms Oyolu’s case that she should be retained. Another part, however, suggests that the explanation “does not lie easily” with another part of Ms Gould’s evidence. Again, here is another comment rather than a finding of fact but is it not implicit in the quoted phrase that they are questioning the veracity of the explanation?

	Having considered the Chairman’s notes of evidence, it would seem unchallenged that the Managing Director did intervene to introduce a new or to enforce an existing policy of increasing the number of Field Service Managers; that, as a result, between January 1997 and the following September, three Key Account Managers’ posts fell vacant and were not replaced; and, more specifically, that no one was employed to fill Ms Oyolu’s job after hers had been terminated. That is not a comprehensive list of all the primary fact finding the next Tribunal should consider, but those facts are the essence of the Employers’ “explanation”. If as seems the case, that evidence was not challenged, then the Tribunal should have had no difficulty in finding them to be proved facts, and, with respect, we think the Tribunal should have made such findings. Had they done so, they would have had the opportunity of deciding whether in the light of those facts the “explanation” was true or false. If on the balance of probabilities, they had found it to be true, it would have been necessary for them then to spell out how they considered their finding of racial discrimination was consistent with an acceptance that the explanation was probably true.

	In our judgment, the Tribunal’s approach, principally set out in paragraphs 35 to 45, obfuscated their view as to the issues relating to the explanation and deprived the parties of the opportunity to see for themselves why the explanation was of no avail to the employers. It also probably distracted the Tribunal from focusing on the crucial issue in the case, namely whether the employers’ conduct, albeit unsatisfactory and unreasonable, was also racially discriminatory.

	Mr Brown’s last point relates to the relevance of those matters set out in paragraphs 40 to 55 which the Tribunal say they took into account on their way to a decision. It is clear from those paragraphs that the Tribunal attached some importance to the employers’ failure to answer the questionnaire accurately, to the failure to apply the CRE Code of Practice, and to their personnel department’s lack of racial awareness and equal opportunities training. The burden of Mr Brown’s criticism is that the Tribunal’s reasons do not spell out how they took these matters into account. The way the Tribunal have catalogued these sins and misdemeanours in successive paragraphs without explicitly stating what inferences they have drawn from them individually, exposes them to the charge that they used their accumulation to an effect which was purely prejudicial. A Tribunal is entitled to draw inferences from any part of the evidence before them but before applying any such inference as a part of their decision, it behoves them to ensure that it is of evidential and probative value in determining some issue germane to what has to be decided.

	In this case, it is not easy to see the relevance of any of the matters raised within the above mentioned paragraphs but we think it would be wrong for us to be specific about this now. Since we are of the view that there must be another hearing of this case, we think the relevance, if any, of these matters to the issues before the new Tribunal would best be left to that new Tribunal, and accordingly we do so.

	In conclusion, we allow this appeal, and direct that the case be remitted to a differently constituted Tribunal for a rehearing.