Employment Law – Unfair Dismissal – Race Discrimination – Foreign Employer

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A City banker launched a race discrimination claim against Dresdner Kleinwort (“DrK”). He alleged that he was treated less favourably whilst at work, and was eventually made redundant because he was neither German nor a German speaker.
The unfair dismissal and race discrimination claim could be worth close to £10m in the event of its success. The employee in this case, Malcolm Perry, was born in Australia. He was a former global head of fixed income and credit at DrK. During the hearing he told an employment tribunal that he became increasingly concerned about being excluded from key decision-making after the bank decided to merge its corporate and investment banking businesses in late 2005. Perry told the tribunal that:
“… There was a general feeling that the hidden objective was the creation of a niche German investment bank servicing Dresdner’s German corporate clients to the detriment of [its] international franchise… This left non-German and non-German speaking employees based outside Frankfurt and not aligned to the German business nervous about the outcome of [the new CEO’s] restructuring plans”.
In his witness statement, Perry said that the bank’s capital market committee had comprised 14 executives at the time of [the new CEO’s] arrival, five of whom were German as well as nine non-German or non-German speaking employees. Perry was made redundant in June 2006. He was told that he was no longer required in his existing role and was not going to be given a key position in the bank’s new structure.
Subsequently, he is suing DrK for both unfair dismissal and race discrimination. The bank has admitted the unfair dismissal element but denies the discrimination charge. In theory, since 2003 it has become easier for claimants to prove discrimination on the grounds of race or ethnic origin. This eventuality is due to the fact that the Race Relations Act 1976 was amended to bring in regulations concerned with the reversal of the burden of proof. Commentators on this matter have said:
“Nowadays, all a claimant has to do is to establish facts which could amount to discrimination. The burden then transfers to the employer to prove that discrimination had no part to play in his actions”.
This means that if Malcolm Perry can point to a comparable employee who was not made redundant but who happened to be German, that fact would be sufficient to mean that the burden of proof should pass over to the bank. With regards to this case, it has been speculated that there will be a great deal of evidence in the case as to the culture of the bank generally. This would attempt to demonstrate that German nationals were treated more favourably than non-German nationals. If such circumstances can be proven, then the claim is likely to succeed on the ground of direct discrimination. It is also interesting to note that the defence of justification is not available in direct race discrimination cases.
A precedent relevant to this case involved the London office of a Japanese company called Quick Corporation which provided online financial information from international capital and financial markets. The office was staffed by a mixture of locally recruited employees and employees from Japan. The local employees were made redundant and the Japanese employees were retained. In those circumstances the claims for unfair dismissal and direct racial discrimination succeeded.
This could mean that in this case the claim of less favourable treatment on the ground that he was not a German speaker would be more difficult to prove as a direct discrimination claim. It is also interesting to note that tribunals have held that English-speaking Welsh people do not constitute their own ethnic group. However, another tribunal found that where an English job applicant was refused employment because of an inability to speak Welsh, the claim for indirect discrimination succeeded because fewer of the English ethnic group than those of the Welsh ethnic group could comply with this requirement.
In this case, the bank could argue that Malcolm Perry has raised a discrimination claim only to try and recover his alleged losses. In an ordinary unfair dismissal claim, the maximum compensatory award that a tribunal may make is £60,600 or £58,400 if the dismissal occurred prior to the 1st of February 2007. There is no limit to damages payable for claims concerning discrimination.
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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.