Nikolova v M & P Enterprises London Ltd (Race Discrimination: Direct) [2016] UKEAT 0293_15_0402

EAT
Nikolova v M & P Enterprises London Ltd (Race Discrimination: Direct)
[2016] UKEAT 0293_15_0402 · 2016-02-04
[1]This is an appeal from the Employment Tribunal (“the ET”) sitting at London (Central). The ET consisted of an Employment Judge (“EJ”) and two lay members. Over a four-day hearing the ET considered the Claimant’s claims for unlawful deductions from wages, for holiday pay, for a statement of employment particulars, for an itemised pay statement, for wrongful and unfair dismissal and, finally, for discrimination on the grounds of race. In a Judgment sent to the parties on 18 May 2015 the ET upheld all of the claims by a majority; however, it dismissed the discrimination claim unanimously. Background[2]In paragraph 1 of its Reasons the ET explained that the Claimant worked for the Respondent as a chambermaid or cleaner of the Continental Hotel in Norfolk Square, Paddington for 28 weeks, from 27 July 2013 until 7 March 2014 when she left. The ET identified the issues in relation to each of the various claims in section 4 of its Reasons. In relation to race discrimination, in paragraph 6 of the section at the beginning of the Decision headed “Judgment” the ET said:
“6. Unanimously, the respondent did not discriminate against the claimant on grounds of race.”
In paragraph 4.6 of the Reasons the ET said this:
“4.6. Race Discrimination. The claimant says that because of her nationality or national origin (Bulgarian) she was less favourably treated by (a) paying her less than the national minimum wage (b) getting her to sign false statements of pay received (c) forcing her to continue work and failing to address her concerns as to health and safety. The respondent denies such treatment; if they did so treat her in any respect, it was not because of race.”
[3]At paragraph 8 of the Reasons the Tribunal said, under the heading “Findings of Fact”:
“8. Many of the facts were disputed, and on some we could not agree. Given the interlinking of mutually contradictory assertions, we record the differences and make our findings when reviewing the evidence overall.”
[4]The ET summarised the background as follows. It recorded that the Respondent was a small family company and that its directors were Mr and Mrs Mason Moussoulides. They had owned and managed the hotel, a budget hotel with 72 rooms, for 37 years. Their two sons also worked in the business. The ET said that there was one receptionist on duty at the hotel 24 hours a day, either Ms Karytopoulou or Mr Dimopoulos (they worked 42 hours each per week) and sometimes Gentian Pulaki (who was said to work 23 hours per week, 8 of those on a Sunday). The receptionists made reservations, took money from guests, supervised deliveries and paid suppliers in cash. Sometimes supplies were ordered online and delivered and paid for by card. Asked if guests paid by card or in cash, one of the witnesses said mostly card, and the other said mostly cash. The receptionists also paid the cleaning staff in cash each week. This was usually Mr Dimopoulos, but Ms Karytopoulou said she paid the cleaning staff on five occasions during the time that the Claimant was employed.[5]From Monday to Saturday the cleaners, who at the material time were all Bulgarian nationals, worked during the days, first preparing and serving breakfast, then cleaning the kitchen and various other areas and changing the bed linen when the guests left. Temenuga Lefterova did the laundry on site as well as cleaning rooms. The ET recorded that there was a dispute both about the hours that they worked and the days when they worked those hours. The ET said that on Sundays the hotel employed Ali Baktiari for 16 hours and Gentian Pulaki for about 8 hours on reception and for cleaning. Both of those employees were British, one of Albanian origin.[6]The ET recorded that the Claimant travelled to the UK from Bulgaria in February 2013. She had very little knowledge of written or spoken English. She found out about the job in the hotel by word of mouth. She started at the end of July 2013, a few weeks after Silvia Todorova Stoyanova had left. Ruzhena Yordanova started in September 2013, though she had worked two weeks earlier than that in order to cover the holiday of another cleaner, Maya, who was still employed. Mia Angelova worked for two short periods, in December 2013 and January 2014, to cover for Ms Lefterova when she was on holiday in Bulgaria, although there were differences about the dates, and no documents. Ms Angelova said she also covered for an absence in September and October 2013. That was disputed.[7]The evidence about the start of the Claimant’s employment was recorded by the ET in paragraph 14 of their Reasons. They said that Mr Moussoulides had said that he interviewed the Claimant, gave her a blank standard form contract of employment to read and had it translated via Ms Lefterova, who had been employed for about four years and spoke some English. The Claimant disputed that. She said she had never spoken to him in the seven or eight months that she was there except for one occasion when she had been asked to help carry some fridges. Her case was that all the introduction to the work had been done by Ms Lefterova and that she was not shown or given a written contract.[8]The ET observed that given the language barrier - Mr Moussoulides speaks no Bulgarian - there cannot have been very much effective communication between them. The Claimant’s case was that the terms and conditions were explained to her by Ms Lefterova and that she was to be paid £200 for six shifts, Monday to Sunday, with Tuesdays off. The ET recorded various other disputes in the evidence about almost every aspect of each of the different claims that had been brought by the Claimant.[9]It is fair to say that the ET considered the rival accounts in the evidence between paragraphs 14 and 16 of their Reasons in a very careful and methodical way. I do not need for the purposes of this Judgment to summarise the issues as revealed by that evidence. I will refer to only one or two passages in the Reasons.[10]At paragraph 22 the ET referred to an occasion when the Claimant said once she had asked why the hours had been incorrectly stated on a petty cash voucher and was told it was because she was part-time and to “speak to Mr Michael”. She did not in fact do so and continued to sign the petty cash slips because she feared not being paid or being fined if she refused. She said in evidence:
“It’s not right, but with my English, what should I do? I had no other work, only job I had, I had to pay the rent.”
[11]In paragraph 26 the ET observed that even by the standards of small businesses “this was a very document-light book keeping system”. They noted that there were very few records in the business and that Mr Moussoulides had claimed that the accountant kept many of the records, although “no record made by the accountant has been produced”. In paragraph 27 the ET said:
“27. The claimant says that after some weeks or months of working for the respondent she was talking to other Bulgarians working in London who asked what she earned, and was told that no one in London worked for £4 per hour (£200 net for 48 hours [sic] work, if her evidence is accepted, is £4.16 per hour). She did not take it up with her employer as in her view a pay increase was unlikely to be the result of any complaint, and it was better to have some income than none. She had queried the hours worked.”
[12]At the end of paragraph 30 of its Reasons the ET referred to a frequent problem with bedbugs in the hotel and to a dispute about how many times the pest control company was called out. The ET noted that it had not seen that contract or any payment record. The ET went on:
“30. … It is accepted that on occasion the claimant and her colleagues did have to do this. Other health and safety problems were mentioned in evidence - one of the many factual disputes was whether a dead rat was in fact a mouse, but as neither rodent was pleaded in relation to detriment or dismissal we do not need to decide the point.”
[13]The evidence that the ET recorded about the termination of the Claimant’s employment is important. In summary, the Claimant and a colleague had asked for a pay rise, and what Ms Karytopoulou had said was that she would ask “Mr Michael” - that is, Mr Moussoulides - if they could have a pay rise and if he did not agree “until what date will you work?” The Claimant and her colleague replied Friday, which was a payday. At paragraph 36 the ET said this:
“36. If there was such a conversation, why did they ask then? They said it was because they were having to take on additional duties (the bedframes and mattress spraying, changing lightbulbs, fixing televisions), and it was unfair that they were underpaid, and colleagues [were] getting more than them. They did not use the words “national minimum wage”, not knowing them in English. They are familiar with the concept, confirming there is a national minimum wage in Bulgaria, but did not know what it was in Britain. They did not ask for more than £250, believing that asking for more than the highest paid employee received was unrealistic. Paragraph 27 suggests this was close to what they would have received had statutory deductions been made.”
[14]At paragraph 37 the ET recorded Ms Yordanova’s evidence that the next day she had seen two new people being trained and had rung the Claimant, who was out, to say it looked as if there would be no pay rise and they should look for other work. In paragraph 38 of the Reasons the ET recorded the evidence that the Claimant and her colleague had gone to collect their pay on the afternoon of 7 March, Ms Karytopoulou had been there and the money was the same; there was no mention of a conversation with Mr Moussoulides. According to the Claimant, Ms Karytopoulou had said, “this is your last day, right?” Ms Yordanova gave Ms Karytopoulou her telephone number so that she could telephone if Mr Moussoulides changed his mind and was told, “the choice is yours”, according to the Claimant; “it’s your decision not mine”. They took their money and left.[15]At paragraph 40 the ET recorded the evidence of Mr Curtis, who had seen part of what had happened and whose evidence, it turned out, was the critical factor which decided the minority and majority to make the decisions they made on the disputed evidence. At paragraph 44 they recorded the Claimant’s evidence that when she was looking for another job she saw on a Bulgarian website a post in Bulgarian that said, “urgently we are seeking people for cleaning in hotel in Paddington. Price for one week is £200”. A telephone number was given, which, it was agreed, was that of Maya, the Bulgarian cleaner who is still employed by the Respondent. At paragraph 45 they recorded the evidence of Mr Moussoulides that he usually recruited by asking existing staff if they knew anyone looking for work and failing that he kept a file of CVs left by people calling at the hotel looking for work. He said that he did not know until the Friday afternoon that either the Claimant or her colleague was leaving, and he then got out the file, telephoned a number for interview and found two people to start the next day: a Greek woman and a Bulgarian man.[16]At paragraphs 47 to 49 there is a section in the Tribunal’s Reasons headed “Tribunal Observations”. In summary, in this section of their Reasons the ET said that by limiting employees to part-time hours, an employer can save on tax and National Insurance contributions; 23 hours at the minimum wage was the most an employee could work without incurring substantial liability to National Insurance, and 28 was the number of hours worked where a liability to tax was incurred. If an employee worked for 23 hours, there was much less administration for the employer, but, the ET observed, there was also an incentive to an unscrupulous employer to understate the hours worked by an employee. Employers, the ET said, might be tempted to pay higher cash wages than are declared. That was the factual nexus in which the ET had to make its findings. The ET said that a cash-based system might satisfy a HMRC inspector, is hard to audit and that an employer could “fly beneath the radar”. Minimising the paperwork that was given to employees would in turn reduce the chances that an employer who was breaking the rules would be caught.[17]At paragraph 50, under the heading “Discussion of disputed facts”, the ET explained how they had resolved the various disputes in the evidence. At paragraph 51 they said this:
“51. Where we divided was over the significance of Mr Curtis’s evidence. So far as we know he has no interest in the proceedings. He is a reasonably regular guest at the hotel and stays when he has a London booking to run a disco at an office party. But for his evidence we would have agreed that probably the claimant’s account was right and the respondent’s wrong.”
[18]The ET then set out at paragraph 52 the reasons why Mr Simons believed Mr Curtis’ evidence and the effect that that in turn had on Mr Simons’ assessment of where the truth lay between the accounts given by the Respondent’s witnesses and the account given by the Clamant and her witnesses. At paragraph 53, under the heading “Majority Finding”, the ET set out the reasons why the EJ and Ms Flanagan had come to believe that Mr Curtis was mistaken in part of his evidence and why, as a result, they accepted the evidence of the Claimant and her colleagues that they had worked 6 shifts, 48 hours, and had received £200 (or a similar sum in some cases) and that in other respects they accepted that the Claimant was truthful and the Respondent’s witnesses were not.[19]The consequence, in effect, of those factual findings, although the ET with considerable care considered each of the legal aspects of the various claims in turn, was that all of the Claimant’s claims apart from the race discrimination claim succeeded on the basis of the majority finding. I should indicate that in the course of their discussion of the unfair dismissal claim, at paragraph 69 of their Reasons, the ET said this:
“69. The website post of 5 March is almost certainly the result of Mr Moussoulides following his usual recruitment practice of asking existing staff for suggestions and Maya making the post of her own initiative - not as a result of a decision by the respondent to advertise. It is of course possible, but unlikely, that it relates to another hotel in the area. The coincidence of the cash amount, without reference to hours, is striking. It is not credible (to the majority) that such an elaborate set up would be instigated by the claimant and her colleague, and while understandable that the claimant would not try to call someone (Maya) who remained in employment and so wary of giving evidence, it is hard to understand why the respondent should not at least make enquiries or arrange to call her, if this post was, as they say, nothing to do with them, to say so, or indeed to confirm their case on pay, pay packets, hours of work, and the rota. …”
[20]It is apparent from the ET’s careful analysis of the facts and in particular from the section of the Reasons headed “Tribunal Observations” that the ET was very much aware of the commercial and fiscal context and that it brought to bear on the disputed issues in the case its own knowledge and experience as an industrial jury. At paragraph 50 in their discussion of the disputed facts they said that they had to decide whether “viewed as a whole the factual picture convinced us that the claimant was right or the respondent”. At paragraph 51 they said that they differed over the significance of the evidence of Mr Curtis.[21]At paragraph 80 when considering the unfair dismissal claim the ET considered what the reason for the dismissal was, they found in paragraph 81 that the reason for the dismissal was the Claimant’s assertion of a statutory right, and the reasons why they came to that conclusion are explained in paragraphs 79 and 80 that precede the conclusion in paragraph 81.[22]I turn then to the ET’s consideration of the race discrimination claim, which is at paragraphs 84 to 87 of the Reasons. At paragraph 84 the ET said this:
“84. The claim is for direct discrimination under section 13 of the Equality Act, that the claimant was less favourably treated because if [sic] race, here, being of Bulgarian national origin or nationality. The comparator is hypothetical, and counsel for the claimant suggests a person of English origin, or more particularly that we should go straight to considering the reason for less favourable treatment. The detrimental treatment alleged is being forced to accept a salary less than the national minimum wage, being forced to sign petty cash vouchers (“Payslips”) falsely stating the hours and the sum paid, and being forced to work after raising health and safety issues (which should perhaps be completed by adding “without addressing those valid complaints”).”
[23]At paragraph 85 the ET recorded the Claimant’s argument that the Respondent relied on Bulgarian employees with poor English not being able to challenge this treatment. The ET then said this:
“85. … We are invited to consider that on the facts, namely that all (or most) of the cleaners were Bulgarian, that all were paid less than the national minimum wage and made to sign false vouchers, and all required to work without adequate protective equipment, despite protest, the Tribunal could conclude that discrimination occurred, unless the respondent can show that race was not the reason for the treatment, and discrimination played no part whatsoever in the treatment. We must have regard to the reverse burden of proof set out in section 136 of the 2010 Act.”
[24]At paragraph 86 they recorded the Respondent’s argument:
“86. … that there is no evidence of hostility to Bulgarians, indeed, if there were, why would he employ so many. They add, in view of the claimant’s argument that less favourable treatment occurred because these Bulgarians had very poor English, that poor English was not the reason for the treatment, as Silvia Todorova Stoyanova spoke English, and also Greek, having attended school in Greece, and Ms Lefterova had adequate English, translating for the others.”
[25]At paragraph 87 of the Reasons the ET said this:
“87. The Tribunal noted that many other nationalities seeking work in the UK have poor English, and many from Eastern European members of the EU, who will also accept low waged work which is still better than can be found at home. The fact that the respondent mainly employed Bulgarians is likely to result from word of mouth recruitment, rather than selecting Bulgarians because of their economic vulnerability - if the latter is the reason, why not Romanians? They do employ a few cleaners who are not Bulgarian, including it seems two who are British. The theory of a market economy, based on observation of practice, is that economically rational employers will pay for labour at the lowest wage obtainable, and that economically rational workers will seek the highest wage they can get, and strike a bargain at what becomes the going rate. For social and political reasons governments seek to regular the market in wages, as by imposing a legal minimum wage, to limit the misery that may otherwise result, and set health and safety requirements. Economically rational employers may still subvert this by taking advantage of whomever they can find who will accept less than the minimum wage rate, or poor safety standards, whether because of limited language skills making them unaware of their rights, low skill levels, irregular immigration status, homelessness, mental disability, and so on. This may include people with race as a protected characteristic, but also many without. Further, there may be many non-English nationals, or those for whom English is not a first language, who are not in the group prepared to take low paid work in poor conditions. There is no indirect discrimination claim, where poor language skills might be a better fit, but if there were, we do not have figures to assess comparative disadvantage. We concluded that an exploitative employer was not necessarily a race discriminatory employer, and so find against the claimant.”
The Appeal[26]There were three grounds of appeal. The first was that the ET did not “carry out the correct test as to direct discrimination”. This ground elaborated that the ET gave a lengthy discourse on economic theory without comparing the Respondent’s treatment of the Claimant with an actual hypothetical comparator as required by section 23(1) of the Equality Act 2010 (“the 2010 Act”) and subject also to the burden of proof provisions in section 136. The ET should have asked if a hypothetical comparator would have been subjected to the same detriment. Alternatively, it was argued that if the ET had not erred in that respect the ET’s Reasons were not “ Meek -compliant” (see Meek v City of Birmingham District Council [1987] IRLR 250 ). It was argued that the ET had asked the wrong question by focusing on recruitment and that it had asked the wrong question and incorrectly said that a lack of intention to discriminate was a defence. Its reference to “why not Romanians?” was no defence, as Romanians are an ethnic minority as well and that was a bizarre justification. Thirdly, the two comparators were also from ethnic minority groups, they were receptionists, and the Claimant only did cleaning.[27]Permission to appeal was given by Wilkie J. He said that ground 1 was arguable as it was arguable that it was hard to see what the reasoning of the ET was or any real addressing of the position of the hypothetical comparator. He said that the other grounds were not arguable. The Law[28]The law in this area is well known. Section 13 of the 2010 Act provides, so far as is relevant:
“ Direct discrimination (1) A person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others.”
[29]Section 23 of the 2010 Act is headed “Comparison by reference to circumstances”:
“(1) On a comparison of cases for the purposes of section 13 … there must be no material difference between the circumstances relating to each case.”
[30]I was referred to four relevant passages in the authorities. As a matter of logic, the first is the decision of the Supreme Court in R (E) v Governing Body of JFS [2009] UKSC 15 ; [2010] 2 AC 728 . This was a case about the admissions criteria of a school. The only passage I need to read is in the judgment of Lord Phillips. At paragraph 20 he said this:
“20. … Whether there has been discrimination on the ground of sex or race depends upon whether sex or race was the criterion applied as the basis for discrimination. The motive for discriminating according to that criterion is not relevant.”
[31]The second relevant passage to which I was referred is in the decision of the EAT in O’Neill v Governors of St Thomas More Roman Catholic Voluntarily Aided Upper School [1997] ICR 33 . I was referred to a passage in the Judgment of Mummery J, as he then was, on page 43E-H. He said this: “The relevant principles are these:(i) The tribunal’s approach to the question of causation should be “simple, pragmatic and commonsensical.”(ii) The question of causation has to be answered in the context of a decision to attribute liability for the acts complained of. It is not simply a matter of a factual, scientific or historical explanation of a sequence of events, let alone a matter for philosophical speculation. The basic question is: what, out of a whole complex of facts before the tribunal, is the “effective and predominant cause” or the “real or efficient cause” of the act complained of? As a matter of common sense not all the factors present in a situation are equally entitled to be treated as a cause of the crucial event for the purpose of attributing legal liability for consequences.(iii) The approach to causation is further qualified by the principle that the event or factor alleged to be causative of the matter complained of need not be the only or even the main cause of the result complained of, though it must provide more than just the occasion for the result complained of. “It is enough if it is an effective cause” …” (Original emphasis)[32]The third passage to which I was referred was in the decision of the Court of Appeal in Chapman v Simon [1994] IRLR 124 . At paragraph 43 of his Judgment Peter Gibson LJ said this:
“43. … More often racial discrimination will have to be established, if at all, as a matter of inference. It is of the greatest importance that the primary facts from which such inference is drawn are set out with clarity by the Tribunal in its fact-finding role, so that the validity of the inference can be examined. Either the facts justifying such inference exist or they do not, but only the Tribunal can say what those facts are. A mere intuitive hunch, for example, that there has been unlawful discrimination, is insufficient without facts being found to support that conclusion.”
[33]The fourth passage to which I was referred was paragraphs 8, 11 and 12 of the speech of Lord Nicholls of Birkenhead in Shamoon v Chief Constable of Royal Ulster Constabulary [2003] UKHL 11 ; [2003] ICR 337 . At paragraph 8 he said:
“8. … Sometimes the less favourable treatment issue cannot be resolved without, at the same time, deciding the reason why issue. The two issues are intertwined.”
[34]At paragraphs 11 and 12 he said this:
“11. This analysis seems to me to point to the conclusion that employment tribunals may sometimes be able to avoid arid and confusing disputes about the identification of the appropriate comparator by concentrating primarily on why the claimant was treated as she was. Was it on the proscribed ground which is the foundation of the application? That will call for an examination of all the facts of the case. Or was it for some other reason? If the latter, the application fails. If the former, there will … usually be no difficulty in deciding whether the treatment, afforded to the claimant on the prescribed ground, was less favourable than was or would have been afforded to others. 12. The most convenient and appropriate way to tackle the issue arising on any discrimination application must always depend upon the nature of the issues and all the circumstances of the case. There will be cases where it is convenient to decide the less favourable treatment issue first. But, for the reason set out above, when formulating their decisions employment tribunals may find it helpful to consider whether they should postpone determining the less favourable treatment issue until after they have decided why the treatment was afforded to the claimant. …”
Discussion[35]Mr Ward, who represented the Claimant on this appeal, accepted first of all that the ET had considered the facts in this case with extraordinary care. He said that the ET’s decision was a model decision apart from paragraph 87, and he accepted that the ET had analysed the facts carefully. He also accepted that the ET had correctly directed itself in law. He accepted that there was nothing wrong with the approach of the ET in paragraph 54. It seems to me that in this paragraph the ET, encouraged perhaps by the Claimant’s advocate, decided, as was perfectly open to it on the authority of Shamoon , to go straight to the “why” question, although it is fair to say that it made observations about possible comparators en passant .[36]Mr Ward was disposed to submit that the ET’s decision was perverse. He did not have permission to appeal on that ground; so, that ground was not open to him. Even if it had been, I would have had no hesitation in rejecting it. The ET in this case carefully analysed the hotly disputed evidence, its task being made particularly difficult by the fact that nearly every aspect of the case was in dispute, and it made nuanced findings about the primary facts, having taken into account as an industrial jury its knowledge and experience of the practices of employers who “fly beneath the radar”. In my judgment, it was open to the ET to decide on those findings that there was not enough material from which to draw an inference that the Claimant’s treatment was because of a protected characteristic: that is, Bulgarian nationality.[37]The real question and the issue on which permission to appeal was granted is whether there is enough in paragraphs 84 to 87 of the ET’s Reasons to show why it decided that the race claim failed. There is some force in the criticism that paragraph 87 of the Reasons is somewhat discursive, and there is some force in the criticism that the language of the last sentence of paragraph 87 is rather elliptical. However, I consider that the ET had said enough to explain why it was not prepared to draw an inference that the treatment that the Claimant experienced was on the ground of her race. In a nutshell, in the ET’s view, the Respondent was an exploitative employer and would have exploited any vulnerable employee in just the same way whatever the reason for that employee’s vulnerability might have been, for example poor English, “low levels of skills, irregular immigration status, homelessness, mental disability” or any other ground on which an employee might be vulnerable. The fact that the Claimant happened to be Bulgarian, as did all the full-time cleaners, was explained, in the view of the ET, by the word of mouth recruitment practices of the employer. As the ET noted, two employees who did cleaning as well as other duties were British citizens, albeit that one was of Albanian origin.[38]Though it is right to say that the ET do not say so expressly, the effect of paragraph 87 is that some Bulgarians would not have taken this sort of job. The ET’s reasoning was that the Claimant was treated in the way that she was not because of her protected characteristic but because her economic position was such that she was prepared to take a job with this employer with the very disadvantageous terms that were described by the ET in its Reasons. As the ET noted, the Respondent found two replacements for the Claimant and her colleague, who had left on the same day, one of whom was a Greek woman and the other a Bulgarian man (see paragraph 45 of the ET’s Reasons). Conclusion[39]For those reasons, I consider that the ET did explain sufficiently in order to enable the Claimant to understand why the ET had dismissed her claim for discrimination because of her race. I therefore dismiss this appeal.