Employment Update June 2009: Post-termination victimisation/enforcement

10 June 2009

Employment Group

Failure to pay compensation may be victimisation

In Rank Nemo (DMS) Ltd v Coutinho the Court of Appeal considered the case of a claimant who had been awarded compensation of over £72,000 for race discrimination and automatic unfair dismissal, having been unfairly selected for redundancy three months before the sale of the business in which he worked. Liability for payment of that sum passed under the TUPE regulations to Rank Nemo, which was the buyer of the business. It failed to pay.

The claimant brought a tribunal claim against the respondent of victimisation under the Race Relations Act (RRA).

The respondent argued that:

  • the claimant was in fact simply seeking to enforce payment of the tribunal award and that had to be done through the civil courts, not the tribunal

and/or

  • his claim was not directly linked to his former employment and so could not form the basis of a victimisation claim.

The Court of Appeal decided that:

  • the claimant was not simply enforcing a debt. He was claiming that he was treated less favourably than other creditors because the debt arose out of his RRA claim. If so, that amounted to victimisation; and

  • the claim did arise out of his employment. The claim was only being made against the respondent because it was an employer's liability that had transferred under TUPE.
    This case was different from the case of D'Souza v Lambeth LBC cited by the respondent: Mr D'Souza had failed in a claim of post-termination victimisation when his ex-employer failed to comply with a tribunal order for re-instatement and the Court of Appeal said that case could not be said to arise out of the employment relationship, but out of a discretionary remedy granted by the tribunal and for which there was another exclusive statutory remedy.

The claim was allowed to proceed.

Points to note –

  • The Court of Appeal asked parliament to legislate on the issue of how far the discrimination laws will protect a former employee from victimisation after the employment relationship has terminated. At present there is only the House of Lords decision in Relaxion Group v Rhys-Harper which provides no clear guidance. Employers should be aware that they may still face victimisation claims from ex-employees if they ‘arise from the employment relationship’. Care should be taken, in particular, when giving references.

  • As far as tribunal awards were concerned, the court saw nothing wrong in claimants being able to enforce payment of tribunal awards in either or/both the county court or in the Employment Tribunal by way of a victimisation claim (with none of the cost implications of going to the county court to enforce payment), provided that the claimant only recovered his compensation once. 

  • The respondent company had never been the claimant’s employer. It only inherited liability to pay the compensation because, three months after he had been dismissed, it had purchased the business in which he worked. It is vital that all business purchasers get all the employee liability information to which they are legally entitled under TUPE before the purchase takes place.