The Court of Appeal has finally pronounced on a long running sex discrimination claim against Nomura by ex employee Andrea Madarassy. Victoria Parry, who led the defence team for Nomura, reports on the learning points for employers.
On 26 January 2007, the Court of Appeal (CA) ruled in favour of City bank Nomura in the long-running alleged sexual discrimination claim brought against it by former employee Andrea Madarassy. The ruling not only provides clarity on the issue of sex discrimination but also builds a useful framework for employers, employees and the courts in determining future claims of discrimination.
In 2001, Madarassy was made redundant by the bank shortly after her return from maternity leave. At an employment tribunal, she claimed she had been unfairly dismissed and discriminated against throughout her pregnancy. She also claimed that this intensified on her return from maternity leave and that her pregnancy ultimately resulted in her redundancy.
The case was one of the first to be heard following an amendment to section 63 A(2) of the Sex Discrimination Act 1975, which, while amending the law, did not explain how it actually works in practice.
The amended section stated that where an employee can prove facts from, which a tribunal could, in the absence of an adequate explanation by the employer, conclude that discrimination had occurred, the tribunal must uphold the complaint unless the employer can show that it did not commit the act of discrimination.
In other words, if the employee can show a prima facie case of discrimination, the legal burden swings to the employer to explain and justify the treatment. If the employer is incapable of justifying that action on grounds other than sex or pregnancy then the employee will win.
The initial employment tribunal found in favour of Nomura, ruling that Madarassy's redundancy was made according to fair selection criteria, based partly on her performance compared with her peers. The Employment Appeals Tribunal agreed with this save to remit two matters back to the original tribunal for further review.
Madarassy appealed the case to the CA with backing from the Equal Opportunities Commission (EOC). In particular, the EOC was concerned with how far an individual has to go to prove a prima facie case of discrimination, before the burden of proof switches to the employer.
The importance of this threshold should not be underestimated. Lord Justice Mummery stated in the decision that he does "not underestimate the significance of the burden of proof in discrimination cases. There is probably no other area of the civil law in which the burden of proof plays a larger part than in discrimination cases".
At the CA, the EOC argued that the original employment tribunal had effectively placed the entire burden on the former banker to prove her discrimination, without affording Madarassy the benefit of the statutory reversal of the burden of proof. The EOC argued that once Madarassy had established two fundamental facts – namely a difference in status (sex) and a difference in treatment – then the tribunal was required to draw an inference of discrimination. The burden must shift to Nomura to prove that it had not committed an act of discrimination.
The CA disagreed with this approach. Mummery stated that merely establishing a difference in status and treatment is not enough to shift the burden of proof. The bare facts of a difference in status and treatment only indicate the possibility of discrimination. There needs to be something more i.e. more evidence of discriminatory treatment. The tribunal would need to form a view on all the evidence relevant to the comparators relied upon and evidence that the comparators were fair i.e. the comparisons were of like with like. Only if the prima case is established does the tribunal then move on to the second stage and consider whether the respondent has proved that it did not commit an act of discrimination. If the respondent cannot prove this then the complaint must be upheld.
In the case of Madarassy, status (being a woman and returned from maternity leave) and detriment (redundancy) were not sufficient in themselves to constitute a prima facie case for discrimination – there needed to be something more. After hearing all the evidence the tribunal was satisfied that there was no prima facie case of discrimination and in any event Nomura could justify her treatment on grounds other than sex or a pregnancy-related reason.
This decision reinforced the principles laid down in the decision of Igen v Wong and will, by analogy, apply to other types of discrimination claims. It must surely be sensible; otherwise it would be effectively mean that employers would be forced to justify their actions in every single case where discrimination is alleged, even where there is only the scantest evidence. Nomura fought its corner and has been proven right to do so. It successfully demonstrated in three courts that Madarassay's dismissal was based on grounds other than sex.
While it is true that no woman should be discriminated against for being a mother or being a woman, neither should this give her an automatic immunity from change management. Is that not the very act that the discrimination laws are there to prevent?