Handling Capability Issues - A Cautionary Tale for Employers

...that, even where there is a seemingly clear case for a sanction or dismissal, if this is handled unreasonably or unfairly, an employee with a protected characteristic under the Equality Act 2010 may be able to establish a sufficient prima facie case of discrimination, shifting the burden of proof on to their employer to defend it.

The Facts

Mr Iwuchukwu was a surgeon employed by the Trust. A number of concerns were raised about both his capability and his conduct, including in relation to a serious incident where a patient was set on fire and badly burnt during an operation. There were also concerns raised about the "significant complication rate" arising from breast reconstruction procedures he had undertaken. There was an investigation, including an external formal Royal College of Surgeons investigation and restrictions were placed on his practice, involving no contact with patients. These restrictions remained in place until Mr Iwuchukwu was dismissed some 20 months later and were not kept under any proper or adequate review.

He twice raised grievances alleging race discrimination but the Trust declined to investigate either of these, claiming that they were outside time limits. He was eventually dismissed on capability grounds.

The Employment Tribunal (ET) found that the decision not to investigate Mr Iwuchukwu's grievances was direct race discrimination. Furthermore, it held that as the grievances themselves alleged race discrimination they were protected acts and therefore the failure to investigate them constituted acts of victimisation. The ET also found that Mr Iwuchukwu's dismissal was unfair for a number of reasons, including failure to follow reasonable procedures and failure to adequately explore remediation or retraining for someone as skilled as him as alternatives to dismissal.

The Employment Appeal Tribunal (EAT) overturned these decisions. It found that the decision not to investigate the grievances was because the Trust saw the grievances as an attempt to derail the capability investigation, not because of race discrimination, and that this was not victimisation because there was no reason to think that the content of the grievances was relevant to that decision.

It also found that the ET had taken the wrong approach to the question of unfair dismissal. It had considered the process leading up to the decision, when it should have considered whether the decision to dismiss was reasonable in all the circumstances at the time the decision was made, and it failed to consider the detailed reasons given for rejecting alternatives to dismissal.

Mr Iwuchukwu appealed to the Court of Appeal.

The Court of Appeal's Decision

The Court of Appeal overturned the EAT's decision and restored the order made by the ET.

On the issue of direct race discrimination, the EAT had made two key errors. Firstly, it was wrong to accept the capability process as the basis of the Trust's reasoning for failing to investigate the first grievance, as this had not begun at the time the first grievance was raised.

Secondly, it had failed to appreciate that Mr Iwuchukwu had established prima facie evidence of discrimination sufficient to shift the burden of proof to the Trust to show there had not been any unlawful discrimination.

Further to Mr Iwuchukwu's unfavourable treatment and protected characteristic, the ET had pointed to additional factors such as the lack of review of the restrictions on Mr Iwuchukwu's practice and the conflation of conduct issues with capability issues, which meant that Mr Iwuchukwu had a prima facie case of discrimination. The burden of proof therefore shifted to the Trust, who were required to provide a non-discriminatory explanation for their actions. As the Trust's explanation based on the capability proceedings was inadequate, the claim of direct race discrimination was made out.

On the issue of victimisation, the Court of Appeal agreed with the ET that the content of the grievances (being allegations of race discrimination, and therefore protected acts) materially influenced the decision not to investigate them, and therefore that this was victimisation.

Finally, on the issue of unfair dismissal, the Court held the ET was right take into consideration the circumstances leading up to the decision as a relevant factor in considering the reasonableness of the dismissal. The ET's finding of unfair dismissal was also upheld.

Best Practice

In discrimination claims, the burden of proof is on the Claimant to prove facts from which a tribunal could decide, in the absence of any other explanation, that unlawful discrimination occurred. The burden then shifts to the employer to provide an alternative non-discriminatory explanation for the unfavourable treatment. If they are unable to provide a satisfactory explanation, the presumption of discrimination will stand.

This case is a cautionary tale for employers that even where there are clear and non-discriminatory reasons for dismissal, if this is handled in a way that is unfair or unreasonable, this may be sufficient for a Claimant to shift the burden of proof in a discrimination claim.

For more information, please contact Eleanor Boyd in our Employment Law team on 020 7665 0940, or complete the form below.