It is easy to dismiss some EAT decisions as a storm in a teacup, legally-speaking, all very traumatic for those bobbing about in them, but of little significance to the wider world of employment law or practice.

Steer – v – Stormsure Limited earlier this month is not one of those decisions. It has the potential to alter very significantly both the law relating to remedies for discrimination and in particular, the practical balance of power in the conduct of discrimination litigation. It is not law yet but there seems every chance of its becoming so within the next 18 months. All employers should keep their eyes open for this one.

Mrs Steer was dismissed on grounds which she said amounted to sex discrimination and victimisation. Unusually, she sought “interim relief” as a remedy i.e. an order continuing her employment until the Tribunal finally decided whether she was right about that or not. That application is unusual, in fact unprecedented, in discrimination claims largely because it isn’t allowed – the Contract Continuation Order remedy is limited pretty much to alleged whistleblowing dismissals and has no statutory relevance to discrimination. The Employment Tribunal therefore dismissed Steer’s application without breaking a sweat – she had applied for a remedy which the law did not allow for, and therefore didn’t get it.

Her appeal was not that the Equality Act did include a right to a CCO, which everyone agreed that it didn’t, but that it should. In not doing so, said Steer, the Act was not compatible with the requirements of the EU Charter and the European Convention of Human Rights that Member State laws should provide a remedy for discrimination which was effective and equivalent to those available for other similar claims. The EAT took whistleblowing as the similar claim. It noted that both claims were uncapped, neither required any minimum length of service and both allowed for compensation for injury to feelings irrespective of financial loss. However, while the Employment Rights Act allows interim relief as a remedy in whistleblowing cases, there is no equivalent provision in the Equality Act for discrimination claims. It therefore concluded that the omission of a CCO as a discrimination remedy was unlawful.

The matter is now likely to go to the Court of Appeal. That hearing will probably include submissions by the Government, being responsible for the implementation of EU law into our domestic legislation. It had been invited to participate in the EAT hearing too, but had neither attended nor explained why not. Perhaps, noted the EAT with uncharacteristic charity, “priority had to be given to other pressing matters”.

If the Government cannot justify why whistleblowing allows for interim relief and discrimination does not, the Court of Appeal will probably issue a formal Certificate of Incompatibility, essentially requiring a change in the law to add the CCO route into the Equality Act. [Note — That will not be affected by whether there is a Brexit deal or not. The EAT was aware that the influence of EU law in our domestic legislation is effectively frozen as at 31 December 2020. With alacrity for which it will not be remotely thanked by employers or the Government, it had therefore gone out of its way to get this matter heard and a decision issued before that date, even to the extent of the Judge admitting that he had had less time to reach his decision than he would have liked for such an important matter.]

What might that justification be? All that comes to mind immediately is: (i) by definition, whistleblowing involves acting in the public interest, and so requires particular protection, whereas discrimination in employment is usually a more individual affront of lesser concern to other people; (ii) even at the preliminary stage, a whistleblowing claimant still needs to show that he made a protected disclosure, whereas all a discrimination claimant requires is a protected characteristic, and whether it is our age, gender or ethnicity, etc., we all have those; and (iii) that the delays in the listing of ET hearings are now so great that the CCO becomes even more unashamedly penal in nature and that it is not appropriate for potentially completely innocent employers to be exposed to such costs.

Of course, any introduction of the CCO into discrimination law may not be in exactly the same form as it appears in the whistleblowing provisions, but is nonetheless worth taking a look at those to see what might be in store for employers:

  1. Under section 129 Employment Rights Act 1996, if a claimant can persuade the Employment Tribunal at a preliminary hearing that it is “likely that on determining the complaint” at a full hearing, it will find that he was dismissed for whistleblowing, then he is off to the races. His claim to the Tribunal must be made within 7 days of his dismissal (not the usual 3 months), but if he lodges it in time, the ET will expedite that hearing. If it agrees that he is likely to succeed, then it will request the employer to re-employ him on full pay and benefits, or if it won’t, make a CCO. Under section 130, the CCO means the continuation of full pay and benefits, including pension contributions, and with unbroken continuity of employment. That CCO will last until the determination or settlement of the dismissal complaint.
  2. If the employer does not turn up to the initial hearing (of which it may receive as little as 7 days’ notice) then a CCO will probably be made. If at the final determination of the decision it is found that the real reason for the dismissal was not the employee’s protected disclosure (and bear in mind that given a couple of interim case management hearings, this could easily be a year or more later), then the employee does not have to give any of the money back.
  3. Although the preliminary hearing is not a full hearing, no employer can risk going into it with anything less than its best case by way of rebuttal – it will not forgive itself if the ET gets over that “likely” hurdle in section 129 because it didn’t defend itself sufficiently robustly. There won’t be any scope for buying yourself time to do it all at anything less than breakneck speed – section 128(5) specifically prohibits the ET from postponing those hearings other than where special circumstances apply.
  4. Overall, the time and financial pressure on the respondent employer is immediate and unavoidable, and once the CCO is made there is of course very little incentive for the employee to settle, as he will no longer be under any financial pressure. Even the employer’s successfully knocking back the CCO application does not kill off the underlying claim. Building the CCO into the Equality Act would be a devastating tool for discrimination complainants.
  5. As and when this becomes law, we can therefore expect the Interim Relief/CCO application to become the default claim in discrimination cases. Steer was assisted in her claim by the Equalities & Human Rights Commission so there is no chance of its significance slipping under the radar. It won’t matter if the assertion of discrimination is substantially without evidence, since the employer still has to do all the work to prove that at the preliminary hearing. It would probably also be almost impossible for the employer to recover any of its costs – if you are a bona fide discrimination complainant, you must by definition believe that it is likely that your claim will ultimately succeed. Even if your CCO application is rejected, therefore, that does not mean that applying for it was the unreasonable conduct of proceedings. It takes a very brave employer to allege that a discrimination claim is brought in bad faith, because if the ET does not agree, there is a risk that that allegation itself will compound the injury to feelings claim and potentially also lead to suggestions of aggravated damages.

So what would be the answer? As the Government is no doubt asking itself about Brexit talks, COVID-19 and Arsenal’s season so far, how can we make this look less grim than it really is? As the Government has probably also already found, there is no easy answer. There are no realistic means of getting the average CCO application struck out before the initial hearing, so the employer has to do all the preliminary defensive work regardless. The only thing it can do is to ensure that it generates as much hard and contemporaneous evidence as it can to justify the employee’s dismissal on non-discriminatory grounds. That will have two benefits; first, it will be easier to show the ET that it is not “likely” under section 129 that the employee will ultimately win on discrimination. Second, if that evidence is presented to the employee at or before the point of his dismissal, he might, just might, recognise that the CCO claim is not a runner, and so be less inclined to sink any costs in bringing it.

On which profoundly depressing note for employers, our grateful thanks to the readers of this blog for their continued visits (do please consider subscribing, and then it will come to you!), and our best wishes for the festive season.