Appeal No. UKEAT/0318/07/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 4 October 2007
Judgment handed down on 20 December 2007

Before
HIS HONOUR JUDGE PETER CLARK
MRS A GALLICO
MR D J JENKINS OBE

CENTREWEST LONDON BUSES LTD	APPELLANT

MR H UKACHUKWU	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR I MACCABE
(of Counsel)
Instructed by:
Messrs Moorhead James
Solicitors
3 Dorset Rise
London
EC4Y 8EN	
For the Respondent	MR D LEADER
(of Counsel)
Instructed by:
Messrs Fisher Meredith
Solicitors
Blue Sky House 
405 Kennington Road
London
SE11 4PT	

SUMMARY

UNFAIR DISMISSAL

Reasonableness of dismissal

RACE DISCRIMINATION

Direct

The comparative exercise in race discrimination and victimisation claims.  Application of the CRE Code of Practice.  Applying the reverse burden of proof.

No error in ET approach to capability unfair dismissal.

HIS HONOUR JUDGE PETER CLARK

1.	This is an appeal by Centrewest London Buses Ltd, Respondent, before the Ashford Employment Tribunal against so much of the reserved Judgment of an Employment Tribunal chaired by Mr A D Druce, promulgated with reasons on 3 May 2007, (the liability reasons) as upheld in part the Claimant, Henry Ukachukwu’s complaint of direct race discrimination and victimisation arising out of an incident on 20 January 2006 and his further complaint of unfair dismissal.  Following a remedies hearing held on 18 June 2007 that same Employment Tribunal, by a Judgment registered on 6 July, awarded the Claimant £7,000 compensation for race discrimination and direct victimisation and a further £3,936 by way of compensation for unfair discrimination. (the remedies Judgment)

The issues
2.	At paragraph 2 of their liability reasons the Employment Tribunal set out the issues to be determined by reference to a case management order made by a Chairman, Mr M Kurrein, sitting alone on 3 January 2007.  That order was sent to the parties in writing on 11 January.

3.	Omitted from that summary of the case management order were the relevant comparators identified by Mr Kurrein.  They were (using his paragraph numbering):
“3.1.4	The comparator for the purposes of the allegation of victimisation was a person with all the same characteristics as the Claimant who had made complaints against another driver, other than a complaint of racial abuse
3.1.5	The comparator for the purposes of the allegation of direct discrimination was a person with all the same characteristics as the Claimant, save that they were not of black or African ethnic origin, who had made complaints of racial abuse against a colleague.”

We shall return to those comparators later in this judgment.

The Incident
4.	We take the relevant facts from the Employment Tribunal’s liability Reasons, supplemented, as both counsel invite us to do, by the documentary evidence which was before the Employment Tribunal.

5.	The Claimant, who is of black African ethnic origin, holding dual British and Nigerian nationality, commenced employment with the Respondent as a bus driver based at their Orpington depot, on 4 January 2005.

6.	On 20 January 2006 he was on duty at the depot as a standby driver.  Whilst he was in the table tennis room with two colleagues, Mr Masocha and Mr Kandeepan an incident occurred involving another driver, Mr Martin.  What is critical for the purposes of the relevant race discrimination/victimisation complaint is what various people said about the incident and we have been taken to the relevant reports.  We should set out those accounts, chronologically, in a little detail.

7.	Following the incident the Claimant first reported the matter to his controller Paul Adams.  Mr Adams prepared a written report dated 21 January.  It read:
“Mr Weekly was passing as the Claimant made his oral report to Mr Adams and Mr Adams suggested that he, Weekly, had better get Martin’s side of the story.  According to his written report dated 22 January, Weekly called Martin out of the rest room and asked him whether he had been involved in an incident.  He replied that he was and Weekly advised him to put in an occurrence report as the Claimant was already doing so.  Thereafter Martin said that he was too shaken to start off the second half of his driving duties.  He was told to find somewhere quiet and a replacement would be found.  Weekly then approached the Claimant and asked him to perform the second half of the duty.  The Claimant said that he had been hit by Martin and his arm hurt and he would not be able to drive. Weekly then suspended Martin due to the nature of the allegation (of physical violence).”

8.	In his written report made on 20 January the Claimant alleged that Martin had shouted and called those present names and was kicking the table tennis table.  Martin had been talking on the telephone and took objection to the noise made by the table tennis players.  The name calling included expressions directed at the Claimant; ‘fucking bastard’ and ‘cunt’.  He said that Martin elbowed him in the arm.  In the rest room, the Claimant alleged, Martin called him a ‘coloured bastard’.  The Claimant reported Martin to Mr Weekly.

9.	Martin, in his written report agreed that during the incident, in temper, he called the Claimant a ‘fucking ignorant cunt’ and an ‘ignorant bastard’.

10.	As he left the room, said Martin, his arm accidentally brushed the Claimant.  The Claimant then accused him of assault.

11.	A witness to the incident, Driver Paul Beckett, wrote a report dated 23 January 2006.  He was sitting in the drivers room.  He heard strong language and added:
“As I have since heard there may have been a claim made of racial insult.  I would add that I heard no such utterance”.

12.	Driver Kandeepan, who had been in the table tennis room with the Claimant and driver Masocha, also completed a written report.  It is dated 24 January.  In it, Kandeepan refers to Mr X (Martin) swearing (‘fucking arrogant’).  He did not refer to any racial insult.

13.	The Claimant was interviewed by Peter Smith, Staff Manager, on 24 January.  It was a fact-finding meeting.  The note of that meeting records the Claimant saying, among other things:

“GM (Martin) was still swearing at us saying “you bastards, you cunts, you coloured shits.”  
… In the rest room he again called me a coloured bastard.  I then went straight to the controller to report this matter …”

14.	At the end of that meeting Mr Smith suspended the Claimant from duty.  The Employment Tribunal found (Reasons paragraph 8) that Mr Smith, based on the reports of Adams, Weekly and Beckett, believed that the Claimant was making a false allegation of racial abuse, leading to his suspension.

15.	On 25 January Mr Sheridan, Service Delivery Manager, reviewed Mr Smith’s decision to suspend the Claimant.  According to the note of that meeting, attended by the Claimant and his Trade Union representative, the Claimant repeated his allegations of racial abuse against Martin and stated that he had told the controller that he had been racially and physically abused.

16.	Mr Sheridan upheld Mr Smith’s decision to suspend the Claimant due to the seriousness of the allegation and insufficient evidence available on the allegation of racial abuse.

17.	Also on 25 January Driver Masocha was interviewed about the incident by Mr Smith.  Masocha referred to Martin’s use of industrial language (‘ignorant bastards) but made no mention of racial abuse of the Claimant by Martin.

18.	At about that time Driver Barrett prepared a written report.  He had been in the drivers room watching TV and heard someone saying ‘you ignorant bastard’.

19.	On 1 February Martin was invited by the Operating Manager, Mr Johnson, to attend a disciplinary hearing at noon on 7 February to answer an allegation of having physically assaulted and racially abused the Claimant.  He was warned that if proved this may be deemed gross misconduct leading to summary dismissal.  On the same day the Claimant was asked by Mr Johnson to attend a disciplinary hearing at 2 pm on 7 February to answer a charge of making a false allegation of racial abuse.  He was similarly advised as was Martin as to the potential consequences if the charge was found proven.

20.	On 7 February Mr John first conducted Martin’s disciplinary hearing.  Martin admitted using industrial language, but denied racially abusing the Claimant, or physically assaulting him.  Mr Johnson also heard evidence from:

(1)	Driver Kandeepan, who said that he did not hear Martin make any racist comments
(2)	Driver Masocha, who also said that he did not hear any racist comments, including ‘coloured shits’ or ‘coloured bastards’.
(3)	Driver Barrett who said that he heard raised voices, “it didn’t sound like racist comments to me.”
(4)	Driver Beckett, who said that he had not heard racist insults.

21.	Mr Johnson concluded, having heard that evidence, that Martin was not guilty of the charge of verbal racial abuse.  However, in view of Martin’s admissions that he made contact with the Claimant, verbally abused him and kicked the table tennis table he awarded him a disciplinary penalty of a written warning, live for 12 months.

22.	Mr Johnson interviewed the Claimant on 7 March.  He maintained that Martin had delivered a stream of swearing and racial comments.

23.	In the Claimant’s case, Mr Johnson concluded that he was unable to prove from the witness statements that Martin made racist remarks to him; on the other hand he was not satisfied that the Claimant had made a false allegation.  Accordingly the charge against the Claimant was dismissed.

Race Discrimination and Victimisation
24.	The Employment Tribunal upheld the following complaints of race discrimination and victimisation; in being suspending from work on 24 January 2006 and being subjected to disciplinary proceedings alleging that he had made a false allegation of racial abuse.  The discrimination/victimisation ended with the Respondent’s letter of 7 March 2006 (in fact 10 March) from Mr Johnson dismissing the charge against the Claimant.  Thus the relevant period is 24 January to 7 March.  Other complaints of discrimination/victimisation were dismissed.

25.	The material reasoning of the Employment Tribunal is set out at paragraphs 29-33 where they said:
29.	When Mr Smith suspended the Claimant on 24 January he had before him a complaint by the Claimant that Mr Martin had racially abused him, and a denial of that allegation by Mr Martin. The oral and written reports by the Claimant that were in respect of the complaint of racial abuse contained inconsistencies and the brief statement from one of the independent witnesses did not provide any support for the allegation of racial abuse. The Claimant was suspended for making a false allegation, that is one that had no basis in fact, and one, which the Claimant knew, had no basis in fact. Whereas there may have been sufficient evidence on which a reasonable employer could conclude that there was a possibility that the allegation of racial abuse had no basis in fact, there was no evidence on which a reasonable employer could have concluded that the Claimant knew his version of events had no basis in fact, or that he was being deceitful in making the allegation, as opposed to being confused or mistaken. The more serious the allegation, the more cogent the evidence should be to support that allegation. The Respondent failed to heed the CRE Code of Practice. The suspension from 24 January to 7 March following a complaint of racial abuse without adequate evidence to support a prima facie case that the Claimant was making it up is a fact from which the Tribunal concludes that the Respondent could have committed an act of racial discrimination and victimisation.
30.     Section 54A RRA places the burden on the Respondent to show that it did not commit an act of discrimination. The Respondent has not given any acceptable explanation of why it concluded that the allegation of racial abuse was false as opposed to mistaken and has not discharged that burden. The Claimant did suffer a detriment because although he suffered no loss of pay throughout the suspension, the fact that he was suspended for alleged misconduct would in practice carry a stigma, in that fellow employees would be likely to think that there was adequate evidence to support the suspension, and there would be the anxiety of having to prepare for and attend a disciplinary interview.
31.    There was also a disparity in treatment in the way that the Respondent dealt with the dismissal of the charge against the Claimant. The letter to Mr Martin following his disciplinary interview said “With regard to the Charge of verbal racial abuse I am confident this did not take place and therefore I am not taking any action on this matter”. The letter to the Claimant following his disciplinary interview, which is quoted in paragraph 12, was far more grudging and gave the impression that the Respondent still believed that the Claimant had made up the allegation of racial abuse even though they did not have the evidence to prove it. No explanation was given about why the letter was couched in these terms. We therefore find that the suspension and reluctance to accept that there was no proper basis for the allegation that the complaint was false was an act of race discrimination, which continued from 24 January 2006 until the Claimant received the letter of 10 March 2006, on 13 March 2006.
32.    The Claimant had made an allegation that Mr Martin had committed an act that would amount to contravention of RRA and we have found that the Respondent treated the Claimant less favourably because of that. The suspension and reluctance to accept that there was no proper basis for the allegation that the complaint was false also constitutes victimisation contrary to Section 2 RRA.
33.     The Respondent did not prove that it had taken such steps as were reasonably practicable to prevent the employee from doing the act of which complaint was made. Three separate employees were involved in the suspension, the review of the suspension and the letter advising about the dismissal of the charge.  None of them took into account CRE Code of Practice.  The fact that training had been provided does not absolve the Respondent from responsibility for these failings.”

26.	In so finding the Employment Tribunal paid particular attention to paragraphs 4.65 and 4.69 of the CRE Code of Practice relied upon by the Claimant.  They provide:
“4.65	“Employers must not discriminate on racial grounds in the way they respond to grievances or invoke disciplinary measures.  Disciplinary action is an extreme measure and should be taken fairly and consistently, regardless of the worker’s racial background.  Equally, allegations of racial discrimination or harassment must always be taken seriously and investigated promptly, not dismissed as ‘oversensitivity’ on the workers part.”
4.69		If an investigation into a grievance or disciplinary matter finds evidence that the grievance was brought in bad faith, for example, to get another worker into trouble, the employer should take steps to make sure that this does not happen again, either by recommending training or taking disciplinary action against the worker in question, as appropriate.  However, employers must be careful not to punish someone for having made a complaint that proves to have been unfounded but that was made in good faith as that could amount to unlawful victimisation…”

The Appeal: Direct race discrimination and victimisation
27.	In attacking the Employment Tribunal’s finding set out above Mr Maccabe has organised his submissions under the following headings:

(1)	The Employment Tribunal misunderstood the effect of paragraphs 4.65 and 4.69 of the Code of Practice (the Code)
(2)	It failed to consider appropriate comparators (Comparators)
(3)	It misunderstood the reverse statutory burden of proof (B of P)
(4)	It took a wrong approach to extending time (limitation)
(5)	It failed properly to consider the statutory defence raised by the Respondent (statutory defence)
(6)	It ought not to have given an indication (Reasons paragraph 45) at the liability stage that the starting point for compensation for injury to the Claimant’s feelings, following the Vento guidelines was £10,000.  (Remedy)

It is convenient to take these grounds of appeal in a slightly different order.

Comparators
28.	We have earlier referred to the hypothetical comparators for both the complaints of direct discrimination and victimisation identified by the Chairman at the case management discussion held on 3 January 2007.  Those comparators were not referred to by Mr Druce’s Tribunal in their reasons at paragraph 2 where the issues set out in the Chairman’s order are rehearsed.  Does it matter?

29.	Mr Maccabe rightly drew our attention to the judgment of Elias J in The Law Society v Bahl [2003] IRLR 640, particularly paragraph 104, on the question as to whether a failure by an Employment Tribunal to transparently construct the correct hypothetical comparator (in the absence of a true actual comparator) amounts to an error of law.  We acknowledge that the approach of Elias J sitting in the Employment Appeal Tribunal was strongly endorsed by the Court of Appeal in Bahl. [2004] IRLR 299

30.	It is perhaps worth taking a moment to analyse the effect of Elias J’s approach in Bahl on the comparator issue.  The relevant passage is to be found at paragraphs 104-115 of his judgment.
31.	The first point to make is that in formulating the proper approach for Employment Tribunals and for the appellate tribunal to the comparator question Elias J drew heavily on the speech of Lord Nicholls in Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] IRLR 285, paragraphs 7-12.  We repeat, the Employment Appeal Tribunal reasoning in Bahl was later approved by the Court of Appeal in that case.  It necessarily follows that it is an approach which we were bound to apply in the present case.

32.	That said and speaking for myself, it strikes me as counter-intuitive to conclude that it will not be an error of law for a tribunal to fail to identify a hypothetical comparator when the basis of the statutory torts of direct discrimination and victimisation is that very comparison (absent an actual comparator).

33.	By Section 1(1)(a) RRA 1976
“A person discriminates against another if on racial grounds he treats that other less favourably than he treats or would treat other persons”

And by Section 2
“A person … discriminates against another person … if he treats the person victimised less favourably than … he treats or would treat other persons (who had not done a relevant protected act).”

34.	If further seems to me that the approach of Lord Nicholls, adopted by Elias J, focussing on the ‘less favourable treatment’ issue and the ‘reason why’ issue, in any order, whilst enormously helpful to first instance tribunals, may have the unintended consequence of causing the statutory ‘comparison’ issue to be overlooked or even mistakenly decided.

35.	Turning to the present case, at paragraph 29 of their reasons the Employment Tribunal make no comparison between the treatment complained of by the Claimant, namely suspending him and carrying out disciplinary proceedings on a charge of making a false allegation of racial abuse and that which would have been meted out a hypothetical comparator.  Instead, they appear to have applied the wholly inappropriate test of the ‘reasonable employer’.

36.	As to paragraph 31, the disparity in treatment comparison appears to have been made between the Claimant and Mr Martin.  Plainly Martin is not an appropriate comparator.  He did not make a complaint of racial abuse.

37.	Further, the finding of victimisation at paragraph 32 again makes no comparison with the hypothetical comparator identified at the case management discussion or any comparison.

38.	Thus, applying the approach in Bahl, this is a case where the Employment Tribunal not only failed to identify the relevant comparator; they simply overlooked the comparison question or took the wrong comparator.  That, in our judgment, amounts to a material error of law.

The Code
39.	The foundation for the Employment Tribunal’s finding of unlawful discrimination, applying the reverse burden of proof, appears to be (a) that whereas there was no evidence at the point at which the Respondent suspended the Claimant on 24 January and nor during the period of suspension, when a reasonable employer might conclude that the allegation had no basis in fact, there was no evidence on which a reasonable employer could have concluded that the Claimant knew his version of events had no basis in fact; that he was being deceitful as opposed to being confused or mistaken; and (b) failure to heed paragraphs 4.65 and 4.69 of the Code.

40.	As to ground (a), leaving aside the reasonable employer approach and assuming that a proper comparison was made, the criticism of the employer had no basis in fact.  It was never suggested by the Claimant that he was confused or mistaken as to what he said he heard Martin say.  He was adamant that Martin had used racially abusive language towards him.

41.	As to ground (b) we accept Mr Maccabe’s submission that the Employment Tribunal materially misunderstood the effect of the paragraphs of the Code relied on by Mr Leader on behalf of the Claimant.  Mr Leader submitted to us that, applying the Code, it was incumbent on the Respondent to complete their investigation into the charges against Martin before embarking on disciplinary proceedings against the Claimant.  We can find no warrant for such an approach within the Code and indeed it would, in the view of the very experienced industrial members sitting with me in this division, be contrary to good practice for a sequential approach to discipline to be taken where there was evidence of fabrication at the initial stage of investigation, leading to the Claimant’s suspension.  Further, the purpose of suspension is to assist the investigatory process; it is not a requirement that an employer is satisfied of the employee’s guilt before suspending him.  On the contrary, it is a neutral act which allows the employer to carry out a full investigation before reaching a final conclusion following a proper disciplinary hearing.

42.	That is precisely what happened on the facts of this case.

43.	Paragraph 4.69 of the Code envisages that an employee may bring a grievance in bad faith.  If the employer believes this may have happened, he may take disciplinary action; what he must not do is punish someone for making a complaint which proves to be unfounded, but was made in good faith.

44.	On the facts of the present case, far from breaching those principles the only conclusion, in our judgment, is that, whether knowingly or otherwise, the Respondent followed the guidance to the letter.  First, at the point of suspension, there was evidence before the Respondent that Martin had not racially abused the Claimant.  We return to the chronology of events.  The Controllers, Adams and Weekly gave accounts of conversations with the Claimant which did not include allegations of racial abuse against Martin and, leaving aside Martin’s own account, drivers Beckett and Kandeepan did not support the Claimant’s account.  The Claimant was then suspended.  By the time Mr Johnson held the Claimant’s disciplinary on 7 March he had heard the first hand evidence of drivers Kandeepan, Masocha, Beckett and Barrett, none of whom supported the Claimant’s account; indeed they contradicted it.  Even then Mr Johnson was not persuaded that the Claimant was guilty of the charge of making a false allegation and acquitted him of it.

Burden of Proof
45.	In our judgment the Employment Tribunal properly understood the effect of Section 54A RRA, as applied to the complaint of direct discrimination (no point was taken in this case that Section 54A did not apply to the victimisation complaint; see now Oyarce v Cheshire County Council [2007] UKEAT/557/06).  However, they misapplied it to the facts.  They concluded that the Claimant had passed stage 1 of the test explained by the Court of Appeal in Igen v Wong [2005] IRLR 258; Madarassy v Nomura International PLC [2007] IRLR 246 by showing that the Respondent failed to heed the Code.  As we have sought to show on the facts found no breach of the Code is made out.  Secondly, they found that the Respondent had not given any acceptable explanation for concluding that the allegation of racial abuse was false as opposed to mistaken and thus had not discharged the burden placed on them at stage 2.  There are two insurmountable difficulties with that finding, in our view; the first is that the Respondent’s conclusion at the end of the disciplinary process was that the Claimant had not made a false allegation, notwithstanding the evidence of 5 witnesses that Martin had not used racist language;  secondly, the Claimant never took the position that he might have been mistaken; he was absolutely adamant that such language was used, directed towards him, during a heated exchange.  Mr Johnson’s rationale for dismissing the charge was not that the Claimant might have been mistaken, but that the witnesses may have either missed the remarks or chosen not to repeat what they heard.

Conclusion
46.	In these circumstances we uphold the 3 grounds of appeal discussed above.  We do not find it necessary to remit the issues of direct discrimination and victimisation for rehearing.  On the plain facts of the case we are satisfied that an appropriate comparator, as identified in each instance at the case management discussion would have been treated in precisely the same way as the Claimant.  In any event, the Respondent put forward an explanation for taking the disciplinary course which it did, including suspension which had nothing to do with race or the doing of a protected act.  A prima facie case of making a false allegation was raised;  it was properly investigated and despite the quantity of evidence against the Claimant the charge against him was dismissed at the end of that process.  There was no breach of the Code by the Respondent.  In these circumstances we shall reverse the decision of the Employment Tribunal, set aside the finding at paragraph 2 of the Employment Tribunal’s Judgment and dismiss the claim of race discrimination and victimisation.

47.	It follows that it is unnecessary for us to consider Mr Maccabe’s further grounds relating to limitation and the statutory defence, neither of which strike us with any degree of force.

48.	Finally, since we set aside the Employment Tribunal’s award of £7,000 compensation under these heads of claim, Mr Macabbe’s objection to the indication given at paragraph 45 of the liability reasons becomes moot.  Having said that, we can see nothing exceptionable in that indication.  In the event the Employment Tribunal awarded £7,000, having indicated a starting point of £10,000.  The final figure plainly could go up or down following argument at the remedies hearing.

Unfair Dismissal
49.	Having formed a firm view as to the strength of the appeal in relation to the finding of discrimination/victimisation in favour of the Respondent we say at once that we have formed an equally strong view adverse to their cause in relation to the finding of unfair dismissal.

50.	The Claimant was signed off sick on 26 January 2006 (2 days after his suspension) with work related stress and never returned to work prior to his dismissal on 17 August 2006.

51.	The sequence of events following the disciplinary hearing held on 7 March is set out at paragraphs 13-25 of the Reasons.  A series of review meetings took place and medical evidence was obtained.  At paragraphs 35-38 the Employment Tribunal expressed their conclusions on this aspect of the claim.  They accepted that the Respondent had made out a potentially fair reason for dismissal, ill health capability, but concluded that the dismissal was unfair under Section 98(4) ERA on the ground that a reasonable employer would not have dismissed the Claimant without obtaining up-to-date medical reports.

52.	Mr Maccabe takes what may be described as jury points in challenging that conclusion.  They do not, in our view, give rise to a finding that the Employment Tribunal fell into error as a matter of law.  We entirely accept Mr Leader’s submission that the Respondent has not cleared the high perversity hurdle as explained by the Court of Appeal in Yeboah v Crofton [2002] IRLR 634, as they must do to succeed in this part of the appeal.
53.	We say no more about this aspect of the case.  In our judgment the Employment Tribunal reached a permissible conclusion that the Claimant was unfairly dismissed.  Consequently this part of the appeal fails and the Employment Tribunal’s award in respect of unfair dismissal (£3,936) stands.