Court of Appeal
The employment tribunal could not reasonably conclude that the acts of an employer were on racial grounds when they had found in the same case, in a similar situation of potential conflict of interest, that the employer had not acted on racial grounds.
The appellant employer (S) appealed against the finding of the Employment Appeal Tribunal, dismissing S's appeal, that the employment tribunal had applied the law correctly in concluding that the respondent employee (W) had suffered direct race discrimination. W, who was black African Caribbean, sold her fostering business to S and became its fostering manager. W had a say in recruitment but her decision to employ her step-daughter (M) was reversed by S. S required that W not be involved in the recruitment process for M's replacement. W later employed a temporary administrator (H), who was an ex-colleague. S mistakenly believed that H was a friend of W's and chose to recruit for H's job. S informed W that she would not be conducting the interviews for that position. W resigned and claimed constructive unfair dismissal and race discrimination. Her claim was upheld by the tribunal on the basis that, apart from race, there was no other explanation for the way that W was treated when, without explanation, she was excluded from the recruitment process for H's job. The tribunal found that the burden of proof had shifted to S to prove that W's race formed no part of its reason for her exclusion and it had failed to do so. S's appeal was dismissed by the EAT. S submitted that the tribunal had misdirected itself on the Race Relations Act 1976 s.54A(2) in that their conclusion was not supported by proven facts from which they could conclude, in the absence of an adequate explanation, that S had committed an act of discrimination against W. S argued that the tribunal was wrong to find that the failure to investigate the relationship between W and H and their lack of communication with her were sufficient to shift the burden to S.
HELD: S's bad treatment of W in relation to the recruitment of M and H fully justified the finding of constructive unfair dismissal but it could not, in all the circumstances, lead to a finding, in the absence of an adequate explanation, of an act of discrimination. The tribunal's findings in connection to M that they could not conclude that, in the absence of an adequate explanation, there was a case of race discrimination was contrary to their finding in relation to H's recruitment. There was no significant difference between the cases of M and H that the tribunal could reasonably regard as relevant to the alleged presence of racial grounds for S's actions in the instant case. The tribunal accepted that S genuinely believed that there was a relationship between W and H which led to a conflict of interest. That explained S's failure to communicate or discuss, a failure which had not led the tribunal to find a prima facie case of racial grounds in the handling of M's recruitment. There was a significant similarity between the two cases. S's state of mind meant that it was impossible for a reasonable tribunal to conclude that S had committed an act of discrimination by excluding W as they were contradicting their earlier finding in relation to M. The burden had not shifted to S.
 Eq LR 82
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