CITIBANK N.A. & Ors v NIELS KIRK

We shall refer to the parties as the Claimant, First Respondent (or Respondent), Mr Isaac, Mr Falco, Mr Khullar and Mr Bardrick, as they were below. The Claimant, Mr Niels Kirk, was employed by the Respondent from 1 June 1991 until 27 November 2017. He was aged 55 at the date of his dismissal. He complained that his dismissal was both unfair and discriminatory on the grounds of age in that following a restructuring exercise, he was selected for termination whereas one of his peers, Ms Olive, who was aged 51 at the time, was appointed to the new Head of Department role.

By a corrected judgment promulgated on 2 January 2020 (the original having been promulgated on 19 July 2019) after a nine-day liability hearing held in March and April 2019 before the East London Employment Tribunal (“the Tribunal”), Employment Judge Goodrich presiding, the Claimant succeeded in his claim of unfair dismissal and in some of his age discrimination claims. (We refer to that judgment as “the Liability Judgment” or “LJ”). In particular, it was held that the Claimant’s dismissal was on the grounds of age discrimination. At the First Remedy Hearing held in June 2020, the Tribunal concluded (“the First Remedy Judgment” or “RJ1”) that any compensation should be reduced by 15% to reflect the possibility that the Claimant would have been dismissed in any event absent the unfairness or discrimination found by the Tribunal. At the Second Remedy Hearing on 30 November 2020, after considering the extent to which the Claimant had mitigated his loss, the Tribunal awarded compensation in the sum of just under £2.7m including interest (“the Second Remedy Judgment” or “RJ2”).

The Respondents appeal against all three judgments. The principal challenge to the Liability Judgment is that the Tribunal erred in not properly considering the Respondents’ explanation for the treatment of the Claimant in light of the marginal age difference between the Claimant and his comparator, Ms Olive, and the unchallenged evidence that all of the individual Respondents regarded the Claimant and Ms Olive to be in the same age bracket.

The Respondents are represented, as they were below, by Mr Bruce Carr QC, and the Claimant (as he was below) by Ms Schona Jolly QC. We are grateful to both Counsel and their respective legal teams for their helpful written and oral submissions.

The Respondent is a financial institution with approximately 5,000 employees in Great Britain. From 2011 until his dismissal, the Claimant worked as a corporate banker within the Respondent’s Energy and Natural Resources Department. He had the job title of ‘EMEA Head of CB Energy, Managing Director’, and managed a team of around 16 individuals. The Tribunal found that he was a high-performing senior employee earning substantial remuneration. His total remuneration in each of the four years prior to 2017 was £901,669 in 2013, £937,313 in 2014, £597,636 in 2015, and £534,613 in 2016.

Mr Isaac and Mr Khullar were the Claimant’s immediate line managers from April 2016 to September 2017, after which Mr Isaac was the Claimant’s sole line manager. Mr Falco, who was the head of the Respondent’s Corporate Investment Bank, EMEA, was the manager of Mr Isaac and (until September 2017) Mr Khullar. The Tribunal found Mr Isaac, Mr Falco and Mr Khullar to be the relevant decision makers in respect of the Claimant’s dismissal. Mr Bardrick heard the Claimant’s appeal against dismissal.

The Claimant’s position formed part of the Respondent’s Energy, Power and Metals & Mining franchises. The Claimant was Head of Energy, Ms Olive was Head of Metals & Mining, and a Mr Hanen was Head of Power. Each had the title, Managing Director (“MD”). There was a further MD, Mr Husband, whose title was also Head of Metals & Mining, although he reported to Ms Olive.

The Respondent operated a performance rating system whereby managers would be rated between 1 and 5, with 1 denoting “exceptional” performance, 2 as “highly effective”, 3 as “consistently strong”, 4 as “partly effective” and 5 as “not effective”. The Claimant was consistently rated a ‘2’ every year from 2006 to 2013. In 2014, he received a rating of ‘1’, but his ratings from 2015 and 2016 fell to ‘3’. Part of the explanation for these ratings appears to be that the Respondent started, from about the middle of 2014, to place greater emphasis on the development of relationships between institutional clients and partner teams within the Respondent. This has been referred to as “partner” or “partnership” skills. There had been a drop in the Claimant’s partner skills feedback in 2015. There had also been some negative comments made by some managers about the Claimant, including that he was “sometimes abrasive internally” and that he needed to “cure his narcissistic behaviour as its (sic) counter productive and a nightmare for others”.

The Respondent did not collect data on the ages of its workforce. However, some data in respect of ages was disclosed in response to applications made by the Claimant below. The Tribunal found that in 2015, there were 48 MDs in the Respondent of whom only one was older than 57, and that in 2016, there were 51 MDs of whom two were older than 57.

In 2016, Mr Isaac and Mr Khullar as Co-Heads of Corporate Banking for EMEA, considered ways of improving operational efficiency. They proposed a consolidation of the Energy, Power and Metals & Mining franchise and a reduction in the number of MDs in that franchise from 4 to 2 (although it has sometimes referred to as a reduction from 3 MDs to 1). Although a written report in support of this proposed restructure was produced, the restructure did not proceed at the time because adequate costs savings were achieved elsewhere. None of the four MDs had been consulted about the proposed restructure in 2016.

At some point in 2017 (the Tribunal not being able to find precisely when), Mr Hanen, Head of Power, decided to take up a new position with the Respondent in Dubai. In early August 2017, Mr Isaac and Mr Khullar decided, in light of Mr Hanen’s departure, not to replace him but to use this as an opportunity to save costs, and to review and streamline the current operating model. They proposed to create a consolidated natural resources team led by single senior MD. Unlike the proposed 2016 restructure, no written documentation or structure chart was produced to explain the restructure or the reasons for it. The Tribunal also found that there were no notes of any discussions between senior managers or with Human Resources (HR) about the restructure.

Mr Isaac and Mr Khullar decided that Ms Olive was more suitable for the proposed senior MD role. Two explanations were given for this: the first was that Ms Olive’s role included the role of Global Head of Commodities and they did not want that to be affected by the restructure; the second was that both Mr Isaac and Mr Khullar had concerns about the Claimant’s partnership skills. The Tribunal expressed “scepticism” about these explanations as the Global Head of Commodities role occupied slightly more than 5 to 10% of Ms Olive’s working time; it was accepted that both the Claimant and Ms Olive had the ability to be head; Ms Olive’s partnership feedback was “not unequivocally positive”; and neither Mr Isaac nor Mr Khullar had consulted Ms Olive’s manager, Mr Parker, about her performance or suitability.

The proposals were discussed with Mr Falco, who gave Mr Isaac and Mr Khullar, the “go ahead” to proceed. A job description was prepared and “stress testing” of the provisional decision to appoint Ms Olive was carried out.

Mr Falco and Mr Isaac wanted to notify the Claimant of the proposed restructure before undertaking any formal consultation. They decided to have what they described as a “heads up” meeting with the Claimant. That meeting was held on 25 September 2017 between Mr Falco, Mr Isaac and the Claimant. Mr Khullar did not attend as he had by this stage commenced a relocation to Hong Kong.

The Claimant was given no advance notice that the meeting was to discuss proposals that put his job at risk. The Claimant made a contemporaneous handwritten note of the meeting. He was informed by Mr Falco that there would be a reduction from 3 MDs to 1 and that Ms Olive would be the one. Of particular significance in this case is that the Claimant noted that Mr Falco said, “Your many years in the bank and hands on style counted against me. You are old and set in your ways”. Mr Falco denied making that remark about being “old and set in your ways”. The Tribunal found, however, that the remark was made.

Later that day, the Claimant sent an email to Mr Falco and Mr Isaac complaining that he was the best qualified candidate and that the decision to pass him over had nothing to do with skills or sector experience but rather his age. He did not, however, at that stage refer expressly to the remark made by Mr Falco. In further emails, the Claimant alleged age discrimination.

The Claimant made longer handwritten notes after the meeting on 25 September 2017. Although this did include a reference to the remark made by Mr Falco, it appeared from the way the note was written that the remark had been inserted after the first draft of the note had been completed. This was due to the fact that the remark was contained in a space between paragraphs, whereas there was no such insertion in the space between any of the other paragraphs in the note.

The first formal consultation meeting took place on 17 October 2017. The Claimant alleged at that meeting, which Mr Isaac attended by telephone, that Mr Falco had made the remark about being old and set in your ways. He was not challenged about this at the time. A further consultation meeting took place on 26 October. During that meeting, Mr Isaac referred at least four times to the need for a more “agile” approach and for greater “agility”.

The Tribunal further noted that no efforts were made to find alternative employment for the Claimant. A final consultation meeting took place on 9 November 2017. At that meeting, Mr Isaac referred again to the need for “agility” and stated that Ms Olive had prevailed in a benchmarking comparison between her and the Claimant.

The Claimant was dismissed by letter dated 20 November 2017. The reason for dismissal was said to be redundancy. He was notified of his right of appeal, which the Claimant exercised. The Claimant complained, amongst other things, about Mr Falco’s remark and that the decision to dismiss him was based on a perception that he was “old and set in his ways” rather than being “agile” and “flexible”.

The Claimant’s appeal was heard by Mr Bardrick on 21 December 2017. Mr Bardrick showed some incredulity that age discrimination could be part of the culture of the bank and was found to be dismissive of the Claimant’s allegation. This was notwithstanding Mr Bardrick’s knowledge of another complaint of age discrimination made against Mr Falco by another employee, Mr Graham, and that Mr Graham had intended to take the matter to the Tribunal.

By a letter dated 2 February 2018, the Claimant’s appeal was dismissed. Mr Bardrick concluded that Mr Falco had not said that the Claimant was “old”. The Tribunal noted that a draft of the appeal decision letter had also included the Claimant’s allegation that Mr Falco had told him he was “set in his ways”. However, those words were omitted from the final letter. Mr Bardrick could not explain the reason for the change.

The Claimant’s claim was lodged on 20 February 2018. He complained, amongst other matters, of unfair dismissal, direct and indirect age discrimination and age-related harassment.

The Tribunal found that, by the time Mr Isaac and Mr Falco met with the Claimant on 25 September 2017, they had already decided that Ms Olive would be appointed to the post and that the Claimant would be made redundant. Their reasons for so concluding were set out as follows:

As to the key factual dispute as to whether Mr Falco made the “old and set in your ways” remark attributed to him, the Tribunal found as follows:

At LJ [217], the Tribunal identified the key issue in the case as being “whether the Claimant was treated less favourably than his comparator, or a hypothetical comparator, because of his protected characteristic, namely his age”.

The Tribunal then went on to consider whether the Claimant had proved, on the balance of probabilities, facts from which the Tribunal could conclude, in the absence of an adequate explanation, that the Respondent has committed the act or acts of age discrimination of which the Claimant complaints. It also reminded itself that it should consider the reason why the Claimant received less favourable treatment. No issue is taken by the Respondents as to that self-direction.

The Tribunal concluded as follows:

Having so concluded, the Tribunal went on to consider whether the Respondents’ treatment of the Claimant was on the prohibited ground or whether the Respondents had proved, on the balance of probabilities, that the treatment was in no sense whatsoever on the grounds of age. As to the allegation that the awarding of lower grades in 2015 and 2016 was an act of age discrimination, the Tribunal concluded “narrowly” that the treatment was not on the prohibited ground. Their reasons for so concluding included the fact that: until the September meeting, the Claimant had never considered that he had been subject to any form of age discrimination; that the sophisticated appraisal system was based on largely objectively measurable data; the fact that the Claimant received a rating of ‘1’ in 2014 did not suggest that age discrimination was a factor in subsequent lower ratings; there were some negative remarks about the Claimant; and there was a greater emphasis on partnership working after 2014 which provided a reasonably plausible explanation for the drop in ratings thereafter.

The Tribunal upheld the complaint that Mr Falco’s remark amounted to unlawful harassment related to age.

At LJ [227] and [228], the Tribunal set out its conclusions on whether the decision to dismiss and the Claimant’s dismissal amounted to age discrimination:

The Claimant’s further complaints of victimisation were rejected.

As to the claim of unfair dismissal, the Tribunal found that although it was unclear whether the statutory definition of redundancy had been met, it was satisfied that the reason for dismissal was re-organisation, that being potentially fair as “some other substantial reason” within the meaning of s.98(1) of the Employment Rights Act 1996 (“ERA”). Finally, the Tribunal considered whether the dismissal was fair or unfair within the meaning of s.98(4), ERA and held as follows:

The purpose of the First Remedy Hearing was to consider whether the Claimant would have been dismissed in any event, absent the unfairness or discrimination found. It was therefore to consider whether there should be any reduction on “Polkey” (Polkey v AE Dayton Services Ltd [1987] IRLR 503 HL) or “Chagger” (Chagger v Abbey National Plc [2010] IRLR 47 CA) grounds. Although these were issues on which submissions and evidence had been heard at the Liability Hearing, it was decided to reserve adjudication on them to the First Remedy Hearing, partly because the Respondent had raised a “Devis v Atkins” issue which the parties had agreed should be reserved to the remedy hearing. The Respondent decided, in the event, not to pursue that issue. The Tribunal proceeded to determine the Polkey and Chagger issues on the basis of written submissions alone and without any further evidence.

The Tribunal directed itself as follows at [39] to [41] of RJ1:

The Tribunal went on to conclude that if there had been a genuine consultation exercise, the proposed restructure chart would have been likely to have shown the new head of franchise role to which Mr Husband was appointed soon after the rejection of the Claimant’s appeal against dismissal. Had this occurred, the Claimant and Ms Olive would probably have argued that Mr Husband’s proposed position be made redundant rather than theirs or at least that he should be placed in the pool for redundancy. The Tribunal considered that if such a request had been made:

The Tribunal also considered the Respondents’ submission that the discriminatory and unfair aspects of the dismissal ought to be considered separately for the purposes of the Polkey/Chagger assessments. The Tribunal rejected that submission, stating as follows:

The Tribunal noted that, although the Respondent stated that it had a redundancy policy, this had not been produced at the Liability Hearing. The Tribunal did not therefore know what criteria would have been followed had a fair and non-discriminatory procedure been applied, but found:

The Tribunal then considered the chance that the Claimant rather than Ms Olive would have been the successful candidate and concluded that he “would have had at least as good a chance of being successful as Ms Olive”. The Tribunal’s reasons were as follows:

Accordingly, a reduction of 15% was applied to the final remedy assessment.

The Second Remedy Hearing was listed to assess quantum. By the time of that hearing, the Claimant had set up a consultancy business with a Mr Lovegrove, by the name of Kirk, Lovegrove & Co Ltd (“KLC”), in which he had 35% equity stake. The Tribunal found that although KLC had not got off to as strong a start as expected by its founders, and had required emergency funding of £200,000 in March 2020, it was expected to be making substantial profits by 2021. Furthermore, those profits were likely to increase such that by 2025, the Claimant would be earning at least as much from KLC as his annual loss from losing his employment with the Respondent, namely £765,000.

The Respondent invited the Tribunal to take account of the increase in the value in that period to 2025 of the Claimant’s equity share in KLC as a further offset against his loss. The Respondent had sought to rely on valuations given in evidence by Mr Craig Wallace, Global Co Chief Administrative Officer for banking, capital markets and advisory.

The Tribunal found Mr Wallace’s evidence to be “less convincing” than that of the Claimant, that he had at times appeared “evasive, and that his evidence as to the value and profits of KLC was “grossly” and “wildly” over optimistic. Notwithstanding the limitations of the evidence and the speculative nature of the exercise, the Tribunal was able to conclude as follows:

Having so concluded, the Tribunal went on to consider whether any account should be taken of the value of Claimant’s equity shareholding in KLC. The Respondent’s case was that some value should be attached to the shareholding even if this involves speculation. The Tribunal found, however, that it was “unable to make any sensible valuation” of the shareholding as at the cut off point for loss of earnings. The Tribunal was critical of Mr Wallace’s evidence and noted that he was not an expert and had never conducted such a valuation. The Tribunal accepted that the burden was on the Respondent in this regard given that the valuation of the shareholding would be an offset against mitigation. That burden was not discharged, and the Tribunal would be making a wild guess as to value. It concluded as follows:

Accordingly, no further offset was applied based on the value of the Claimant’s shareholding in KLC.

There are three grounds of appeal:

Ground 1 – Failure to make proper findings of fact on points central to the issues in the case. This ground of appeal is based, essentially, on the contention that the Tribunal ought to have reached an express finding on whether the Claimant had subsequently inserted the words “old and set in your ways” into his second manuscript note of the September meeting, and that its failure to do so amounted to an error of law.

Ground 2 – Failure properly to apply the burden of proof provisions and to consider the Respondents’ non-discriminatory explanation for the Claimant’s dismissal. Although, this is numbered Ground 2, it was the primary ground of appeal in respect of the Liability Judgment. It is based on the inherent implausibility of there being age discrimination in circumstances where the difference in age between the Claimant and his comparator is a mere four years.

Ground 3 – Failure to consider, properly or at all, the comparator for the purposes of the complaint of age discrimination against Mr Bardrick.

We deal with each of these grounds in turn.

Mr Carr submits that it is tolerably clear that the words, “you’re old and set in your ways”, were inserted into the Claimant’s second manuscript note after it had first been drafted. If that is so then it raises a suspicion as to the authenticity of the inserted words. Given the central importance of those words to the Claimant’s case, it was incumbent on the Tribunal, submits Mr Carr, to make a finding of fact as to the provenance of the document. However, the Tribunal merely identified the possible insertion of words as a “concern” (at LJ [138.8] and [144]), without making any clear finding about it. Had an adverse finding been made, particularly in light of the Claimant’s denial that he had inserted the words, the Tribunal might have reached a different conclusion as to the Claimant’s credibility and the reliability of his evidence, the Tribunal’s positive view of which was clearly influential in its overall judgment.

Ms Jolly submits that this is a “non-point” given the unchallenged contemporaneous note of the September meeting, which also contains the same words without any hint of insertion or ex-post facto addition.

The key issue of fact here was whether or not Mr Falco made the remark. In respect of that issue, the Tribunal made a clear finding that he did and set out ample reasons for so doing. These included the fact that the Claimant had made a contemporaneous note of the meeting, those notes contained an unambiguous reference to Mr Falco having made the remark, and it had not been suggested in cross-examination either that those notes were not contemporaneous or that any of the contents were false. In these circumstances, the significance of the longer manuscript note, written up some time after the meeting, is somewhat diminished. That longer note is another item of evidence. The Tribunal is not obliged to set out every item of evidence that it considered in reaching its main conclusion or to set out every subsidiary conclusion of fact that was reached in respect of such evidence in deciding the key issue of whether Mr Falco made the remark. As this is fact-finding territory, this appellate tribunal would be very slow to interfere.

Of course, it would be surprising if an important detail had been omitted altogether from the subsequent write-up. That was not the case either: the words attributed to Mr Falco were in the later note. The only issue arises from the possibility, raised by the disputed words appearing between paragraphs, that they were subsequently inserted. The Tribunal did not “duck” this issue, as Mr Carr submits. It clearly had the point well in mind as it expressly identified it as a “concern”. It can reasonably be inferred from a fair reading of the judgment, and bearing in mind the Tribunal’s ultimate conclusion that Mr Falco did make the remark, that the Tribunal concluded that the possibility of insertion did not affect or undermine its conclusion that the remark was made. That may be because the Tribunal accepted the Claimant’s evidence on this issue, or because, even if there was some doubt about that evidence, it did not change the Tribunal’s overall view that the Claimant was “on the whole… the most convincing of the three witnesses”. The use of the phrase, “on the whole” is telling: the Tribunal was not suggesting that the Claimant was convincing in every single aspect of the evidence he gave, and in fact there may have been aspects which appeared less convincing, of which his denial that the words were inserted after the first draft, might have been one. These are quintessentially matters for the assessment and judgment of the Tribunal, and the fact that it did not expressly set out each and every such instance where the Claimant was believed and those where there was some doubt, does not begin to undermine the Tribunal’s conclusions or give rise to any error of law.

Mr Carr relied upon the following passage in Levy v Marrable [1984] ICR 583 in support of his contention that the Tribunal had failed to discharge its fact-finding duty:

In our judgment, the decision of the Tribunal does satisfy those requirements. As already stated, there was a clear decision that Mr Falco made the remark. That was the significant issue of fact in question; not whether a secondary note of the meeting contained an insertion after the event. The decision of the EAT in Levy v Marrable is not authority for the proposition that the Tribunal must expressly set out its conclusion on every single evidentiary question that might arise in the course of determining a significant issue of fact. The obligation is to ensure that the judgment is ‘Meek-compliant’ in that it sets out sufficient detail to tell the parties, in broad terms why they lost or why they won: see DPP LLP v Greenberg [2021] EWCA Civ 672 at [57]. In our judgment, the Liability Judgment is plainly Meek-compliant in respect of the Falco remark issue. Even if the insertion question was considered to be more than an evidentiary question and was a significant issue of fact (something which is doubtful given the existence of the unchallenged contemporaneous note containing the same words), there is sufficient detail in the judgment to infer that the Tribunal concluded that issue in the Claimant’s favour notwithstanding the concerns expressed.

This ground of appeal is not upheld.

Mr Carr submits that in light of the unchallenged evidence that all of the individual Respondents considered both the Claimant and Ms Olive to be in the same age bracket, there was no factual basis for concluding that his non-selection for the Senior MD role was because of age. Mr Carr had submitted below that the marginal age difference between the Claimant and Ms Olive rendered age discrimination “implausible” or “fanciful”, and relied on the analysis of Underhill J (as he then was) in ABN Amro v Hogben [2009] UKEAT/0266/09/DM, in which it was held that a tribunal had erred in not striking out a claim of age discrimination as being prima facie implausible where the difference in age between Mr Hogben (who was aged 42 at the time) and his comparators ranged from a few months to 7 years. However, this authority was not considered by the Tribunal and there was no attempt on its part to grapple with the unchallenged evidence as to the Respondents’ belief that Ms Olive was in the same age bracket as themselves and the Claimant. (Mr Isaac was 55, Mr Falco was 53, Mr Khullar was 52, Mr Bardrick was 55 and Ms Olive was 51). The Tribunal’s only reasons for concluding that there had been discrimination appear at [228.1] and [228.2], but these failed to explain why the marginal difference in age in this case did not render the claim implausible. The fact that Mr Falco had made an age-related remark in the September meeting did not absolve the Tribunal from considering his explanation for deciding to dismiss the Claimant instead of Ms Olive whom he considered to be a similar age or from determining whether age could really be the reason why he did so.

Mr Carr submits that the position is worse with regard to Mr Isaac as there appeared to be no evidential basis for concluding that age played any part in his decision other than the fact that he has supported Mr Falco’s account of the September meeting. Mr Isaac’s references to “agility” were clearly in relation to the team and not to individuals, and could not have been the basis for an age-related distinction drawn between the Claimant and Ms Olive given that he also considered them to be roughly the same age. The position in relation to Mr Khullar is the most egregious as there was no material identified by the Tribunal that could lead to a conclusion that age was a factor in his decision. In fact the Tribunal appears expressly to have concluded that the decision to restructure and move from 3 MDs to 1 was a genuine one in which age did not play a part: see LJ [228.3].

This was not a case, submits Mr Carr, where there was any “cliff edge” age-related practice or policy such that even a small difference in age might be relevant. This was a case where it was alleged that there was a perception that the Claimant was old and set in his ways but the Tribunal does not explain why age can be the differentiating factor when Ms Olive was perceived to be the same or almost the same age. Mr Carr further points out that a perception that someone is old and set in their ways can only properly support a case of age discrimination where that view is based on age as opposed to being based on actual experience of a person being resistant to change. Reliance is placed in this regard on the decision in Live Nation Venues v Hussain UKEAT/0234/08.

Ms Jolly submitted that this was one of those rare cases where an expressly ageist remark was made by a senior manager in explaining why the Claimant was being dismissed. Where such an inherently discriminatory reason for the treatment is evident, the significance of the comparator, and in particular whether she was considered to be of a similar age to the Claimant, is diminished. Ms Jolly submits that Mr Carr’s criticisms of the Liability Judgment fall foul of the requirement not to read passages from Tribunal Judgments in isolation and not to be hypercritical of certain words or phrases used. In this regard, she contends that Mr Carr is wrong to focus on the passages in LJ [228.1] and [228.2], and that a fair reading of the whole judgment, including those sections explaining why the burden of proof had shifted to the Respondents to prove that the reason for treatment was in no way related to age, provides a sufficiently clear and Meek-compliant explanation for its conclusions. Ms Jolly points out that the Tribunal clearly had in mind Ms Olive’s age: LJ [61.9]. Given that awareness and the fact that no issue is taken with the Tribunal’s self-direction in law, the EAT should, in accordance with the guidance in DPP v Greenberg, be slow to conclude that there had been any error in the application of those directions.

As to the difference in age itself, this was not marginal. Given that s.5 of the Equality Act 2010 merely refers to a person being a “particular age” or “age group”, there is no reason why a difference of 4 years cannot give rise to unlawful age discrimination. In this respect, ABN Amro is a very different case where there was no material other than a relatively small difference in age to support the claim. That case is plainly distinguishable, submits Ms Jolly, given the presence, amongst other matters, of Mr Falco’s ageist remark. Thus, whilst it might appear superficially attractive to say that a difference in age of only 4 years renders the claim implausible, in fact on closer analysis, it can be seen that, as the Tribunal found, there is discrimination on the grounds of age.

Section 5, EqA provides:

Section 13, EqA, which deals with direct discrimination, so far as relevant provides:

Thus, the prohibited act occurs if, because of age, a person treats another less favourably than he treats or would treat others. It is clear from s.5(2), EqA that “age” can refer to a person of a particular age or falling within a range of ages. Age discrimination can, therefore, arise where there is only a small difference in age between the person treated less favourably and his comparator. This is most likely to arise where the employer applies a particular age as a cut-off for some benefit or the imposition of some detriment. The person reaching the cut-off age may be subject to less favourable treatment whereas a person who is only a few weeks or months short of the cut-off age may not. However, in the absence of a cut-off age (or, as Mr Carr, puts it a “cliff edge”) a relatively small difference in age may render it less likely that the discriminatory treatment is because of age. Even then, the particular ages of those concerned might be relevant: a difference in age of two years between an 18- and 20-year-old might, for example, be considered much more significant than the same difference in age in those over the age of 40. A small difference in age between protagonists in their 50s might, without more, render it implausible that age is the reason for any difference in treatment. That is not to say that age could not be the reason in such cases, but a claim that it is would be subject to careful scrutiny.

Section 136, EqA deals with the burden of proof. So far as relevant it provides:

In the present case, in considering whether there was age discrimination, and in recognition of the fact that it is unusual for there to be clear, overt evidence of age discrimination, the Tribunal applied the well-established two-stage approach set out in Igen v Wong [2005] IRLR 258 in dealing with the burden of proof requirements under s.136, EqA:

The Court of Appeal in Igen v Wong set out some guidance in an Annex to its judgment. In respect of stage 2, so far as relevant the Court said as follows:

The requirement on Tribunals to assess the employer’s explanations and to examine them carefully is apparent from (12) and (13) above.

There is no dispute that the Tribunal in this case properly directed itself in accordance with that guidance. Express reference was made to Igen v Wong and to the Annex thereof: LJ [24]. As to the first stage, the Tribunal clearly found that the Claimant had proved facts from which the Tribunal could conclude, in the absence of an adequate explanation, that the Respondent had discriminated against the Claimant on the grounds of age. The Tribunal reaches that conclusion at LJ [218] to [220]. There is no appeal against that conclusion, which has the effect of shifting the burden of proof on to the Respondents. It is in respect of the second stage, and the consideration of whether the Respondents have proved that the conduct was not because of age, that Mr Carr contends that the Tribunal has erred. Once the burden of proof has shifted to the Respondent, a failure to adduce any or any credible evidence explaining the impugned treatment will almost inevitably lead to the conclusion that the burden has not been discharged, in which case the Tribunal is mandated by s.136(2), EqA to hold that there has been unlawful discrimination. Where, however, the Respondent adduces prima facie credible and/or unchallenged evidence relevant to whether or not s.13, EqA has been contravened, it is incumbent on the Tribunal to consider that evidence to determine whether the burden of proof has been discharged. A failure to undertake that task would amount to a failure to undertake the analysis mandated by s.136, and would deprive the respondent of the opportunity of discharging the burden.

The Respondents discharged that burden (albeit “narrowly”) in respect of the allegation that the awarding of lower grades in the 2015 and 2016 performance reviews was on the prohibited grounds: see LJ [222]. In coming to that conclusion, the Tribunal had regard to the Respondents’ evidence about these reviews, including the fact that they were based on objectively measurable data. However, in respect of the decision to dismiss and the Claimant’s dismissal, the Tribunal concluded that “the Respondent has fallen a long way short of satisfying the Tribunal, on the balance of probabilities, that the treatment was in no sense whatsoever on the prohibited ground”: LJ [228.5]. Mr Carr’s principal contention is that this conclusion was reached without giving proper consideration to the unchallenged evidence that all of the individual Respondents considered the Claimant and Ms Olive to be roughly the same age or in the same age bracket. Ms Jolly’s principal retort to that contention is that, this being one of those rare cases where there is direct evidence of an ageist remark being made to explain the Claimant’s selection, it did not matter what the comparator’s actual age was if she was not perceived by the Respondents in the same age-specific way. Ms Jolly relies upon decisions such as Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] IRLR 285 and, in particular, the observations on that case made by Elias J (as he then was) in Law Society v Bahl [2003] IRLR 640 at [111]:

Ms Jolly highlights the final sentence of that passage and submits that, although Elias J was there considering the hypothetical comparator, the existence of an actual comparator does nothing to diminish the significance of the finding that the treatment was on the impugned ground. We cannot accept that submission. The analysis in Bahl (and in Shamoon) was concerned with the situation where there was no actual comparator, the question being whether the treatment was less favourable than that which would have been meted out to a hypothetical comparator. In those circumstances, an adverse finding against the employer as to the reason for treatment could obviate the need for any extensive consideration of the position of the hypothetical comparator. However, where there is an appropriate comparator (and there is no suggestion here that Ms Olive’s relevant circumstances were materially different from those of the Claimant) the fact that she was perceived by the Respondents to be of a similar age to the Claimant cannot be said to be a matter of no significance or one that can be disregarded. If the Tribunal were to accept the evidence that the Respondents perceived both the Claimant and Ms Olive to be roughly the same age, then that could affect its conclusions as to the reason why question.

We accept that there may be circumstances where overt evidence of blatantly discriminatory conduct could lead to the conclusion that the treatment was on discriminatory grounds even though another person with the same protected characteristic is treated more favourably. Take the example of an employer giving an overtly racist explanation for refusing to promote a black person (A). The fact that another black person (B), who was considered by the discriminatory manager to be “not like the rest of them”, was given the promotion would not necessarily avoid a finding that the refusal to promote A amounted to direct discrimination because of A’s race. However, even in that case, there would have to be a careful consideration of the mental processes of the employer to determine whether, notwithstanding the racist remark (which could of course found a claim of harassment), race was in fact the reason for the failure to promote A.

Ms Jolly relies in the present case on the presence of the overtly ageist remark which the Tribunal accepted that Mr Falco had made. However, one does not see anywhere in the judgment any express consideration of the evidence that Mr Falco, Mr Isaac and Mr Khullar considered the Claimant and Ms Olive to be roughly the same age. The Tribunal does refer to the ages of each of the protagonists at [61.9]. It can and ought to be inferred therefore that the Tribunal had well in mind that the difference in age between them all was small. However, it seems to us that it was incumbent on the Tribunal to consider also the evidence given by each of the Respondents as to their perception of the age difference (or lack thereof) between Ms Olive and the Claimant, as this was part of the Respondents’ case that the Claimant’s treatment was not age-related, and therefore part of the material to be considered by the Tribunal at stage two of the Igen v Wong analysis. This does not appear to have been done. We bear in mind of course that the Tribunal is not required to refer to each item of evidence before it and that “what is out of sight in the language of the decision is not to be presumed to be non-existent or out of mind”: DPP v Greenberg at [57(3)]. However, in the present case, if that evidence as to perceived similarity in age was taken into account, then one might have expected to see something in the Tribunal’s reasons explaining why that perception did not go towards discharging the burden on the Respondents to show that age was not the reason for dismissal. In fact, the explanation for rejecting the Respondents’ case is said to include those matters set out at LJ [228].

At LJ [228.1], the Tribunal refers to Mr Falco’s perception that the Claimant was old and set in his ways but that Ms Olive was not. However, one does not see any factual finding in the Judgment to the effect that Mr Falco perceived Ms Olive as not “old” or not in the same age bracket as the Claimant. Mr Falco’s statement for the hearing provided that he “did not perceive a material difference in age between Mr Kirk and Ms Olive; in fact I considered Mr Kirk, Ms Olive, Mr Isaac and I were in the same broad age bracket”. Of course, it might be said that the Tribunal’s generally negative view of the Respondents’ evidence, leads to the reasonable inference that this evidence was rejected. However, it is difficult to see why, when the difference in age was marginal, such evidence should be rejected, at least without some explanation for such rejection. Ms Jolly submits that one cannot hive off the reference to being “old” from the rest of Mr Falco’s remark and that it should all be considered in the round. We accept that there is a danger of being overanalytical in respect of a remark that was clearly found to have been made. However, given that the “set in your ways” part of the remark is not inherently ageist – a younger person could also be perceived as being resistant to change – the critical part of the remark for the purposes of a claim of age discrimination is the reference to being old. As such, we see no difficulty in considering whether there was evidence before the Tribunal, or any finding, to support the conclusion that Mr Falco’s perception was that Ms Olive was, as compared to the Claimant, not old. It does not appear that there was any such evidence or that there is any such finding of fact.

This was not a case where the Respondents’ evidence that Ms Olive and the Claimant were considered to be in the same age bracket was implausible. The difference in age – 4 years – was, in the context of a group of employees all in their 50s, marginal. That being so, a question is raised as to whether age can realistically be the reason for the difference in treatment. It is contrary to common sense (in a non “cliff edge” type of case) to treat any difference in age, however small, as providing a proper basis for concluding that the difference on treatment was based on that difference. Mr Carr relied on ABN Amro v Hogben below in support of the contention that a case involving a 4-year age difference rendered the case “implausible” or “fanciful”, and complains that the Tribunal appears not to have considered the ABN Amro case. In our view, the failure to refer to that case does not of itself give rise to any error. ABN Amro does not, in our judgment, establish any principle of law that wherever there is a marginal age difference Tribunals should approach the claim from the standpoint of it being implausible or fanciful. Underhill J (as he then was) stated in that case:

It is quite clear from that passage that where there is material (“some very particular reason”) to believe that the impugned decision was influenced by the difference in age, then the fact that the difference is marginal or relatively small would not of itself be fatal to the claim. As Ms Jolly rightly points out, here there was ‘some very particular reason’, namely Mr Falco’s ageist remark, which could lead one to conclude that even the marginal age difference influenced the decision to dismiss. However, the existence of that remark does not absolve the Tribunal from giving proper consideration to the evidence adduced by the Respondents in support of their case that age was not the reason for the decision. The Tribunal ought to have assessed and carefully examined the evidence as to the perception of the difference in age (or lack thereof). If that evidence is accepted then it would render it less likely that the reason why the Claimant was dismissed was the fact that he was 55 and Ms Olive was a few years younger. In respect of Mr Falco, we consider that that exercise was not carried out. We consider that to be a material error of law.

As for Mr Isaac, the conclusion that he too was influenced by age stems (it would appear from LJ [228.2]) from three matters: the first is that he shared Mr Falco’s perception of the Claimant although probably not to such a conscious extent; the second is that he supported Mr Falco’s denial of the remark; and third that he perceived the Claimant to be less “agile” than Ms Olive. As to the first of these points, there is the same difficulty as with Mr Falco in that nowhere is it apparent that the Tribunal engaged with Mr Isaac’s evidence that he considered the Claimant and Ms Olive (as well as himself and the other decision makers) as being “all roughly in the same age bracket”. That evidence, which was neither challenged in cross-examination nor explicitly rejected by the Tribunal, does not sit with the finding that Mr Isaac shared Mr Falco’s perception that the Claimant was old and set in his ways and that Ms Olive was not. As to the second point, the fact that Mr Isaac supported Mr Falco’s denials could lend some support to the Claimant’s case, but still does not address the fundamental difficulty that there was not perceived to be any material difference in age between the Claimant and his comparator. The final matter relied upon is Mr Isaac’s repeated references to the need for agility. The Tribunal said this about “agility” at [156]:

An emphasis on “agility” could be a conscious or unconscious device by which to favour a younger candidate over an older one. However, it would be odd, in our judgment, to consider that the term (which was clearly not being used to denote physical agility, that being wholly irrelevant to the role in question, as Mr Isaac made clear during his evidence) was being used here to favour a 51-year old over a 55-year old because of the difference in age. Given the inherent unlikelihood of the term being used in that sense, it was all the more important to give proper consideration to the evidence adduced by Mr Isaac as to his perception that there was no material difference in age between the Claimant and Ms Olive. However, as with Mr Falco, it is difficult to glean from the judgment, even on the most benevolent reading of it, that that was done.

As for Mr Khullar, he too gave evidence that the majority of senior bankers were of a similar age to him (52), although he did not refer specifically to Ms Olive’s age, and nor was he asked about it. Mr Khullar was also adamant that age played no part in any of the decisions in which he was involved, claiming to be “baffled” by the allegation. There is no reference to any of this evidence in the Judgment. The only reference to Mr Khullar in LJ [228] is at LJ [228.3] and (by implication) LJ [228.4].

Mr Carr submits that those passages are exculpatory in that, far from explaining why Mr Khullar had not discharged the burden on him, they in fact appear to accept that none of his actions was influenced by age. We do not read them quite so benevolently for the Respondents. It is tolerably clear that the Tribunal is here seeking to explain why it considers that there were reasons other than age that contributed to the dismissal, including the opportunity to restructure presented by Mr Hanen’s departure. However, even though not quite exculpatory, we agree with Mr Carr that there is nothing in these two paragraphs that begins to address Mr Khullar’s evidence as to the similar ages of those concerned or as to why age might have been a factor in his mind in respect of the stages at which he was still involved. We are conscious of the need, as with the case of Mr Falco and Mr Isaac, not to focus unduly on these passages and to consider the Judgment as a whole bearing in mind that the failure to refer to evidence does not mean that it was not considered. Even taking that approach, there does not appear to be anything to indicate that Mr Khullar was influenced by the Claimant’s age. We recognise that at this stage of the analysis, the burden is on him to prove that age was not a factor. However, he did adduce evidence of that; furthermore, such evidence was prima facie credible, given the marginal age difference and his perception that the majority of senior bankers are of a similar age. He was entitled to have that evidence taken into account and, insofar as it was rejected, for there to be some explanation for that. A finding that the evidence of the Claimant was on the whole more convincing does not negate all of the evidence given by the Respondents. Indeed, the Tribunal found in RJ1 that “Although we did have a number of criticisms of the evidence of the Respondents’ witnesses we find that the evidence is not so inherently unreliable that no sensible prediction can be made”: RJ1 [43]. The Tribunal’s view of the evidence did not therefore provide a broom with which to sweep away all of the Respondent’s evidence.

Ms Jolly submits that the Tribunal was entitled to reach the conclusion that it did in respect of Mr Khullar. That is because Mr Khullar was jointly involved in the decision to appoint Ms Olive instead of the Claimant, which decision had, as the Tribunal found, been taken before the September meeting. Furthermore, Mr Khullar had been instrumental in requesting the steps taken to give credence to that decision. However, these are matters that gave rise to the shifting of the burden of proof; they do not address Mr Khullar’s explanation that none of it could be age-related because all concerned were thought to be around the same age.

The only other passage in LJ [228] relevant to Messrs Falco, Isaac and Khullar is [228.5] where the Tribunal states as follows:

Here, the Tribunal refers back to the matters which led to the burden shifting in the first place. It then concludes that the Respondent has “fallen a long way short” of discharging that burden. However, the Tribunal does not add anything further to the reasoning already mentioned in the preceding sub-paragraphs as to why that is the case. In particular, there is no material from which one could reasonably infer that the Tribunal grappled with the Respondents’ case, clearly put in its evidence and in submissions, that there could not be age discrimination because of the marginal age difference and the perception that both the Claimant and Ms Olive were in the same age bracket.

Although we are reluctant, as any appellate tribunal ought to be, to disturb the conclusions of an experienced Tribunal which has directed itself correctly in law, we are persuaded, not without some misgivings, that the Tribunal did err at stage 2 of the Igen v Wong analysis.

Ground 2 of the Appeal is therefore upheld.

Mr Carr submits that in relation to Mr Bardrick, the Tribunal failed to determine the case against him by reference to an appropriate hypothetical comparator. It is said that the Tribunal failed to consider whether, in respect of a comparator who was materially younger, Mr Bardrick would have had an open mind, been more credulous as to the possibility of age discrimination or would not have supported Mr Falco. As a result, the Tribunal’s analysis is said to be defective, and its conclusions not adequately explained.

Ms Jolly submits that there was ample evidence (including the negative findings on credibility) on which the Tribunal could conclude that Mr Bardrick had not discharged the burden placed on him to prove that age did not influence his decision to uphold the appeal. In particular, the Tribunal had concluded that Mr Bardrick had held or shared, consciously or subconsciously, the ageist views expressed by Mr Falco.

There was no actual comparator in respect of the complaint that Mr Bardrick had discriminated against the Claimant because of age. A hypothetical comparator had to be considered.

As in any case involving a hypothetical comparator, the circumstances of that comparator must be materially the same as those of the Claimant. We agree with Mr Carr that one of the relevant circumstances in this case is that the complaint of age discrimination is made where treatment is considered less favourable than that meted out to someone only a few years younger than the complainant: a complaint of age discrimination where the difference in age is 10 or 15 years or where the difference is 4 years but in respect of a 25 year old complainant, would be very different in character from the Claimant’s claim. A further relevant circumstance is that a similarly ageist remark was made by a manager in the course of proceedings.

There were two complaints in respect of Mr Bardrick: the first was that he dismissed the Claimant’s appeal; and the second was that his questioning of the Claimant during the appeal was in itself discriminatory. The Tribunal did not expressly identify a comparator for the first complaint, but did do so in respect of the second, identifying the question to be considered as follows:

The Tribunal’s identification of the hypothetical comparator did no more than state that he would be a younger complainant; it is certainly not apparent that any account was taken of the nature of the age discrimination complaint being brought.

Although no comparator is expressly identified in respect of the dismissal of the appeal, we think it appropriate, bearing in mind the principles set out in DPP v Greenberg, to assume that the Tribunal had the same comparator in mind for both complaints. Having identified an appropriate comparator, it was incumbent on the Tribunal to consider whether the impugned treatment of the Claimant – i.e. the way he was questioned during the appeal hearing and the dismissal of his appeal against the decision to dismiss – was less favourable than that which would have been meted out to the hypothetical comparator. The Tribunal’s analysis of this is set out at LJ [228.6] (in respect of the decision to dismiss the appeal), and at LJ [238] (in respect of Mr Bardrick’s questioning during the appeal).

As to the dismissal of the appeal, the Tribunal found that the decision was “tainted with age discrimination” because: Mr Bardrick chose to support Mr Falco’s and Mr Isaac’s views of the Claimant; closed his mind or was incredulous as to the possibility that the Claimant was dismissed because of his age, notwithstanding the strong possibility that he believed that Mr Falco had made the ageist remark; and accepted Mr Falco’s and Mr Isaac’s denials without any great scrutiny. However, there is no express reference to how the hypothetical comparator would have been treated. It must be assumed that the Tribunal concluded that in the case of a younger complainant (also relying on a minimal age difference) Mr Bardrick would not have chosen to support Mr Falco’s or Mr Isaac’s views of the Claimant. However, there appears to be no identifiable reason why Mr Bardrick would have acted any differently in this regard. The Tribunal appeared to find that it was the “close working relationship over many years” between Mr Bardrick and Mr Falco, which lay behind Mr Bardrick’s loyalty to Mr Falco. It is difficult to see why such loyalty would not also have manifested itself in a case involving a younger employee making a similar complaint. Similarly, the incredulity expressed by Mr Bardrick at the possibility of age discrimination might have been just as likely (or possibly even more likely) had the complainant been younger. There is, unfortunately no analysis of these issues by reference to comparator; instead there is a conclusion that Mr Bardrick’s support for Mr Falco and Mr Isaac must mean that Mr Bardrick’s decision-making is also tainted by age-discrimination. However, support born out of loyalty does not necessarily translate to age-related less favourable treatment of a hypothetical comparator in similar circumstances.

As for the second part of the complaint, namely the questioning of the Claimant during the appeal hearing, the Tribunal’s reasons for concluding that a younger employee would have been treated differently are set out at LJ [238.1] to [238.3]. However, these hark back to the reasons set out previously at LJ [228.6]. They suffer from the same flaw which is that there appears to be no attempt to compare the Claimant’s treatment with that which would have been meted out to the hypothetical comparator. We acknowledge that the burden of proof at this stage was very much on Mr Bardrick and that the Tribunal had been critical of his evidence. However, such criticism does not obviate the need to ensure that the appropriate comparative exercise is conducted. Even on a benevolent reading of the Judgment, it is not apparent that this was done.

Ground 3 of the appeal is upheld.

There are four grounds of appeal against the First Remedy Judgment:

Ground 1 – Failure to address the Respondents’ case on certain key aspects;

Ground 2 – Perversity in proceeding on the basis that Mr Husband, who was subordinate to Ms Olive, would have been included in the selection pool with Ms Olive and the Claimant, for a role that was senior even to them;

Ground 3 – Failure to distinguish between the Polkey and Chagger exercises;

Ground 4 – The Tribunal’s speculation as to what would have occurred went too far.

Mr Carr’s submissions focussed on the first two grounds, with particular emphasis on the second and the Tribunal’s assessment that a fair and non-discriminatory process would have resulted in Mr Husband being included in the pool for selection. This was “preposterous”, submits Mr Carr, given that Mr Husband was junior to Ms Olive, and his inclusion in the pool would have meant that he was competing with his bosses to be their superior, a proposition which Mr Carr submits was clearly perverse.

Mr Carr further submits that the Tribunal was not loyal to its findings in the LJ in assessing what would have happened in the absence of discrimination and unfairness. As a result, the Tribunal wrongly approached the Polkey/Chagger analysis on the basis that all aspects of the process, including the decision to reorganise and to move from 3 MDs to 1, were tainted by discrimination. In the circumstances, the minimal 15% reduction of compensation on Polkey/Chagger grounds, which was based largely on the assumption as to Mr Husband’s inclusion in the pool, was wrong and should be remitted for reconsideration.

It was further submitted that the Tribunal was wrong to reject the Respondents’ contention that the Polkey and Chagger exercises should be conducted separately and was wrong / perverse to consider that the Respondent, a global financial institution, would have applied selection criteria such as those set out in Williams v Compair Maxam.

Ms Jolly submits that the Tribunal was entitled to assess compensation on the basis that it did. The evidence of what had happened to Mr Husband had only emerged at the hearing when Mr Isaac had referred during his cross-examination to there being a reduction from 4 MDs to 2 rather than from 3 to 1. In those circumstances, there was clearly some evidence on which to presume that a fair and non-discriminatory process could have resulted in Mr Husband being considered alongside Ms Olive and the Claimant, notwithstanding the fact that he reported to Ms Olive. It was certainly a long way short of perverse to have so concluded.

The Tribunal had concluded that the unfair dismissal and discriminatory acts were intertwined such that a separate analysis of the Polkey and Chagger reductions was not justified. In any event, the Respondents’ submission that the Tribunal was disloyal to its own findings as to when discrimination commenced was based on a misunderstanding of the Tribunal’s decision. Finally, in relation to Williams v Compair Maxam, Ms Jolly submits that on a proper reading of the Judgment, the Tribunal was not suggesting that inappropriate selection criteria would have been used.

It appeared to us that, save in respect of one matter, Mr Carr’s submissions in respect of RJ 1 largely comprised a series of disparate and “nitpicking points” which did not undermine the Tribunal’s judgment. We can deal with these briefly as follows:

Disloyal to findings – We did not discern any such disloyalty to the conclusions in the LJ. Mr Carr submitted that the Tribunal’s finding in RJ1 at [59] that, “At all stages of this process the Respondent’s actions were influenced by age discrimination…”, was necessarily inconsistent with the finding in the LJ at [228.3], where the Tribunal held that “The Claimant’s age was not, however, the only factor in the decision to dismiss him”, as the latter means that the processes prior to the decision to appoint Ms Olive were not considered discriminatory. However, the passage from RJ1 [59] quoted above needs to be read with the preceding sentence, which provides:

Reliance upon Williams v Compair Maxam – At RJ1 [63], the Tribunal said as follows:

“Influence causation” – At RJ1 [60], the Tribunal said as follows:

Mr Husband – Mr Carr also criticised the Tribunal’s approach to the evidence and the Claimant’s late inclusion of Mr Husband as a comparator. Mr Carr contends that Mr Husband had not been identified as a comparator and if he had been the position would have been properly addressed in disclosure and statements. Whilst the Tribunal will be astute not to permit late amendments without careful scrutiny, we note in this case that the significance of Mr Husband’s position only emerged during the cross-examination of Mr Isaac when he posited that the restructuring was “4 MDs going to 2 MDs not 3 going to 1”, the fourth MD in that scenario being Mr Husband. In circumstances such as this, where significant evidence emerges at a late stage, the Tribunal was entitled to consider submissions on it. The fact that, in the circumstances of this particular case, the Tribunal decided to take that evidence into account cannot be said to amount to an error of law.

The one area where Mr Carr’s submissions had more merit was in relation to the Tribunal’s view that in a fair and non-discriminatory process, Mr Husband might have been included in the pool for selection along with the Claimant and Ms Olive. Mr Carr submits that this was clearly perverse as it would involve Mr Husband, who was subordinate to the others, competing with his boss (Ms Olive) to be her boss. This would, says Mr Carr, have been guaranteed to set Mr Husband up to fail and would have been unfair to him, or, if by some chance he had been successfully appointed, undoubtedly unfair to the others.

The conclusion that Mr Husband ought to have been included in the pool is certainly surprising, but is it perverse? We remind ourselves that there is a high threshold to be crossed for a perversity challenge to succeed:

We have come to the conclusion that, whilst the conclusion as to Mr Husband is surprising, it does not quite cross the high threshold for a perversity challenge to succeed. The starting point is Mr Isaac’s evidence, from which the Mr Husband issue emerged. His evidence was that there was to be a reduction from “4 MDs to 2”, the fourth MD being Mr Husband. Whilst Mr Isaac was at pains to point out that Mr Husband was not at the same level as the other MDs – a fact which was not lost on the Tribunal (LJ [116]) – that evidence does provide some foundation for the Tribunal’s subsequent conclusions in RJ1 about Mr Husband’s suitability for inclusion in a hypothetical selection pool. The Tribunal was also aware that success for Mr Husband in the selection process, if included in the pool, would mean a promotion (RJ1 [56]). Although it is unusual for employees of different ranks to be included in a selection pool, it can occur and is not necessarily unfair when it does, if there is a realistic prospect of the lower ranked person succeeding. Mr Husband had the same title of MD as the Claimant and Ms Olive, albeit he reported to Ms Olive, and following the restructuring, he was appointed to the level at which the Claimant had worked. There was therefore a realistic prospect of Mr Husband being selected for a role at that level. It was certainly far less likely that Mr Husband would be appointed to a more senior role, but we do not consider that that reduced likelihood, in the circumstances of this case, renders the Tribunal’s conclusion perverse.

The Tribunal considered that if there had been a consultation exercise, and the employees had been told that Mr Husband’s role was earmarked for deletion, then Mr Husband would have argued for inclusion in the pool or that “Ms Olive and probably the Claimant would have argued … at least that he should have been placed in the pool for selection for redundancy” (RJ1 [55]). Whilst it is right to say that it is unlikely that any employee would argue for inclusion in a selection pool from which he had poor prospects of emerging successfully, it is not perverse for the Tribunal to conclude that he might.

In our view, Mr Carr makes a strong case that no reasonable tribunal would have reached the same conclusions as the Tribunal did, but it is not an “overwhelming” case. There are, as we point out above, some factors providing some support for the Tribunal’s approach, in particular Mr Isaac’s evidence. In coming to this conclusion, which we reach with some misgivings, the EAT has found the views of the Lay Members, who have decades of Human Resources and Industrial Relations experience between them, particularly helpful.

Grounds 1 and 2 of the First Remedy Appeal do not succeed and are dismissed.

This ground was not developed in oral submissions. In short, the contention is that the Tribunal was bound to distinguish between the bases on which the Claimant had succeeded respectively in his claims of age discrimination and unfair dismissal when assessing the compensation due for the discrimination claim. The basis for Mr Carr’s contention that there was an error here is that the Tribunal was not loyal to its findings in the LJ and had departed from those findings by expanding the range of acts considered to be discriminatory. For reasons already discussed under Grounds 1 and 2, we reject that submission.

The difficulty with this ground is that the Tribunal expressly rejected the Respondents’ suggested separation because it considered the discrimination and unfair dismissal claims to be “intertwined”. That was a conclusion that the Tribunal was entitled to reach. We were not taken to any authority requiring a strict separation between the Polkey and Chagger analyses in every case where there is discrimination and an unfair dismissal. There may be cases where such separation is warranted on the facts: for example where a discrete act of discrimination is found to have occurred that is distinct from procedural steps leading to a dismissal that was considered unfair. However, there will be other cases, such as the present one, where such a separation may not be as easy because the acts of discrimination and those giving rise to unfairness are interrelated.

Ground 3 fails and is dismissed.

This ground was also not developed in oral submissions. In our judgment it adds nothing to the matters already considered under Grounds 1 to 3 of the First Remedy Appeal above. The exercise in which the Tribunal was engaged at this stage was necessary speculative. Mr Carr argues that in certain respects, that speculation went too far. However, short of the speculation being perverse or wholly ungrounded in the evidence, it is difficult to say that the degree of speculation gives rise to any error of law. The examples of “over speculation” set out in the Notice of Appeal (at [21]) amount to little more than an attempt to reargue the case below as to what the Tribunal ought to have found. We can discern no error of law in the Tribunal’s approach to the speculative exercise in which it was necessarily engaged or as to the conclusions it reached.

Accordingly, this ground is also dismissed.

For the reasons set out above at [100] to [111], Grounds 1 to 4 of the First Remedy Appeal fail and are dismissed. There is a Cross-Appeal by the Claimant in respect of the RJ1. However, this Cross-Appeal is said to be brought on a “contingent basis”, that contingency, as we understand it, being that the Respondents’ appeal against RJ1 is upheld. As that appeal has not been upheld, the Cross-Appeal does not arise.

Although there are two grounds of appeal in the Notice of Appeal, both Counsel dealt with the principal issue in the round. That issue is whether the Tribunal erred in failing to ascribe a value to the Claimant’s shareholding in KLC for the purposes of assessing loss. The Tribunal decided not to ascribe any such value because it was “unable to make any sensible valuation of the Claimant’s shareholding at the cut-off point”. It considered that the burden of proof in this regard was on the Respondent and that Mr Wallace’s evidence was unsatisfactory in a number of respects such that any valuation would amount to “wild guesswork”.

Mr Carr submitted that it was incumbent on the Tribunal to make an assessment of value no matter how difficult and speculative it may be to do so. In circumstances where the Tribunal has concluded that KLC will be sufficiently successful by 2025 to generate income by way of salary, bonus and dividends in the sum of £662,000 per annum, it was not open simply to disregard the increase in the value of the company. Mr Carr submits that there was evidential material on which the Tribunal could have come to a valuation, rough and ready though it might be, such that by taking that value into account the Claimant would have entirely mitigated his loss.

Ms Jolly submits that as the valuation of the shareholding is an aspect of mitigation, the burden lies with the Respondent. That burden was not discharged because of the wholly unsatisfactory evidence of Mr Wallace. Whilst the increased value of a shareholding may be taken into account, whether or not the Tribunal can do so in a particular case will depend on the evidence. Here, that evidence was lacking with the result that the Tribunal was being asked to conduct the difficult task of valuation with no sensible evidential basis for doing so. Ms Jolly further submits that it is important to note the Tribunal’s findings as to the purpose of setting up KLC, which was to build a company that the shareholders could be proud of and which generates good returns rather than primarily to achieve a quick capital sale, and that a capital sale was “unlikely to happen for a good 8-10 years even if the opportunity presented itself earlier” (RJ2 [124]). Ms Jolly submits that in light of such findings, it was open to the Tribunal to take the course that it did.

In principle, the increase in value of a shareholding acquired after termination is something that may be taken into account in assessing loss. In Lavarack & Woods v Colchester [1967] 1 QB 278, CA - better known for the principle that a contract breaker may be assumed, in assessing what would have occurred had there not been a breach, to have performed the contract in the manner least onerous to himself - the Court of Appeal also considered whether the increased value of two shareholdings acquired by the plaintiff after termination should be taken into account in assessing loss. In that case, the plaintiff had obtained new employment on a low salary with a company called Martindale, in which he had acquired a 50% shareholding. He had also invested money in another company, Ventilation, with which there was no employment connection. Lord Denning MR held as follows:

A number of points emerge from that aspect of the decision in Lavarack:

The equity value in a shareholding acquired after termination may be taken into account as an aspect of mitigation;

However, it is only where the benefit from the investment is the direct result of the dismissal that it may be taken into account;

An increase in value of a shareholding where such increase had nothing to do with dismissal or which can be said to be a collateral benefit will not be taken into account;

The exercise of assessing the amount to take into account will involve “a high degree of estimation”.

Their Lordships in Lavarack did not expressly consider the burden of proof in establishing the equity value to be set off against the plaintiff’s loss. The general position is that the burden of establishing a failure to mitigate lies with the employer. The relevant principles when dealing with mitigation of loss were helpfully summarised by Langstaff P in Cooper Contracting Ltd v Lindsey UKEAT/0184/15/JOJ:

Whilst the burden of establishing a failure to mitigate does lie with the employer, it is less clear whether that burden also extends to showing that a reasonable mitigating step (in this case the setting up of KLC) has had the result of reducing or extinguishing all loss. In our judgment, there is no reason in principle why the burden should not so extend. The burden of establishing the fact of loss and the amount thereof clearly lies with the Claimant. However, it seems to us that the burden of proving facts asserted by the guilty party with a view to avoiding or abating such loss (of which an alleged failure to mitigate is an example) must also lie with that party. In the present case, the burden therefore lay with the Respondents to establish any failure to mitigate and any facts relied upon as abating the level of loss claimed.

The Respondents do not dispute that the setting up of KLC was a reasonable mitigating step to take. Their complaint is that the Tribunal did not have regard to the full extent to which setting up KLC mitigated the Claimant’s losses. In particular, it is said that the increase in the value of the Claimant’s shareholding ought to have been taken into account.

The Tribunal appreciated the force of the contention that, in principle, the value of the Claimant’s shareholding ought to be taken into account:

However, it went to conclude (at RJ2 [180] and [181]) that there was a “conceptual difference” between the value of the Claimant’s shareholding in KLC and the remuneration earned whilst working there, such that the shareholding should not be taken into account unless the Claimant was deliberately depressing his earnings in order to inflate the compensation received. The Tribunal’s reasoning for this “conceptual difference” appears to be that decisions as to when to recoup the benefits of an investment will be governed by separate considerations that will not always align with decisions about employment (such as the decision when to retire). If, by that, the Tribunal meant that the value of a shareholding should never be taken into account (except in cases of deliberately depressing the amount earned) then it was probably inconsistent with the decision in Lavarack (to which, incidentally, its attention had not been drawn). However, the Tribunal had already concluded (at RJ2 [158]) that the evidence was such that it was unable to make “any sensible valuation” of the shareholding.

On the basis of the principles set out above, it is for the Respondent to prove the value of the shareholding by adducing evidence about it. The Respondents did purport to do that by adducing the evidence of Mr Wallace. However, the Tribunal was highly critical of that evidence and made the following findings:

The Tribunal’s approach to mitigation and the burden of proof (as mentioned in RJ2 [158.7] was correct. The Tribunal was entitled to conclude that the evidence was inadequate to discharge the burden on the Respondents such that no sensible evaluation could be reached.

Mr Carr submits, however, that notwithstanding any views as to inadequacy of the evidence, the Tribunal ought to have conducted an evaluation nevertheless. He relied upon the judgment in Scope v Thornett [2007] IRLR 155, where Pill LJ said as follows at [34] and [36]

Scope v Thornett is an unfair dismissal case where the Tribunal is required by s.123 of the 1996 Act to award such compensation as is “just and equitable” in all the circumstances having regard to the loss sustained in consequence of dismissal. The decision confirms that that assessment cannot be avoided merely because it might involve speculation based on very little evidence. Mr Carr also ought to rely on the following passage from the judgment of Elias LJ in Wardle v Credit Agricole [2011] IRLR 604 at [50] and [53]:

These decisions confirm the common sense principle that the difficulties inherent in assessing future loss do not provide a reason for avoiding that assessment altogether. However, in our judgment, they are not authority for the proposition that irrespective of whether the burden of proof is discharged in respect of a failure to mitigate or other factor relied upon to abate the award of compensation, the Tribunal is bound to come to some assessment in respect of such failure or factor. If that were not so then the burden of proof would be reduced to nil, and it would be open to the wrongdoing employer merely to assert some abating factor without adducing evidence in support, in the expectation that the Tribunal will nevertheless make some assessment of the value of that factor. We do not consider that to be a proper application of the burden of proof.

In our judgment, the Tribunal was entitled to say, in respect of the evidence as to valuation, that it was too unreliable, and that any estimation would be the result of “wild guesswork”. The mere fact that there could, on the evidence that was available, have been one valuation at 23 times annual profits and another at twice the annual profit, appears to confirm that remark. We do not see any inconsistency between the Tribunal’s approach to that evidence and its ability to engage in the speculative exercise of assessing earnings from KLC over the next few years. There were several items of evidence that enabled the Tribunal to make the latter assessment. These included the following:

The evidence of the Claimant himself, which the Tribunal considered to be “measured, thoughtful, concise and plausible”: RJ2 [153];

The track record of KLC to the date of the hearing, including evidence as to salaries paid, salary sacrifices, emergency funding, retainers and success fees;

The strategy documents produced by KLC;

The Claimant’s forecasts and estimates of future performance and the increased confidence in KLC by the time of the Second Remedy Hearing: RJ2 [135] and [150];

Mr Lovegrove’s “scenarios” document and potential outcomes: RJ2 [142] to [143]; and

The management report produced in September 2020: RJ2 [145].

In our judgment, that provided ample material on which the Tribunal could reach sensible conclusions (albeit involving a degree of speculation) as to future earnings from KLC. All of this contrasts sharply with the Tribunal’s view of Mr Wallace’s evidence, which, apart from a single internal email from Mr Lovegrove, comprised the bulk of the evidence on shareholding value.

Ms Jolly submits that such cases would invariably require expert evidence of the sort adduced in two clinical negligence cases she cites, XYZ v Portsmouth NHS Trust [2011] EWHC 243 and Johnson v Roux Fourie [2011] EWHC 1062. We do not go as far as to suggest that in tribunal cases involving an evaluation of shareholding (which are likely to be uncommon) parties would invariably have to go to the expense of obtaining and adducing (with permission) expert reports. However, respondents can expect that, in a case where a complex shareholding evaluation is required, they will need to adduce cogent evidence before they could discharge the burden upon them.

Mr Carr criticises the Tribunal’s comment at RJ2 [158.8] where it stated that it ought not to make a determination of value lest it be treated in future cases as a judicial determination of value. We agree with Mr Carr that that is not a proper reason for not engaging in the evaluation, which would be conducted for the specific purpose of assessing compensation in an employment dispute and would not necessarily bind any party for other purposes. However, we do not consider that this comment undermines the Tribunal’s conclusion at RJ2 [158.7] that the Respondents had not discharged the burden of proof. The reasons given by the Tribunal for rejecting Mr Wallace’s evidence on this issue were detailed and extensive. These were findings that could only be set aside if the high threshold of perversity were crossed. Mr Carr did not seek to argue that the Tribunal’s assessment of Mr Wallace’s evidence was perverse. In our judgment that contention would have been unarguable in any event.

For all of these reasons, it is our view that the Tribunal’s decision not to attempt to value the Claimant’s shareholding was one that it was entitled to reach in the particular circumstances of the case, and no error of law is disclosed.

Grounds 1 and 2 of the Second Remedy Appeal fail and are dismissed.

For the reasons set out above:

The Liability Appeal is allowed in respect of Grounds 2 and 3 only;

The First Remedy Appeal is dismissed; and

The Second Remedy Appeal is dismissed.

It is clear to us that the matter shall have to be remitted, as further findings of fact may be necessary to reach final conclusions on the issues covered by Grounds 2 and 3 of the Liability Appeal. Ms Jolly submits that the matter should be remitted to the same Tribunal as any other course would be deeply unfair to the Claimant given that the majority of the LJ remains undisturbed. Mr Carr submits that the only fair option would be to remit to a freshly constituted tribunal. He points out the passage of time since the judgment and the difficulties of recollection, the practical difficulties of remitting to the same Tribunal given the Judge’s retired status, the risk of partiality and bias and the flawed nature of the LJ which diminishes any confidence that the Tribunal would, even with the EAT’s guidance, get it right the second time round.

The principles to be applied in determining whether remittal should be to the same or freshly constituted tribunal are well-established and were summarised by Burton J in Sinclair Roche Temperley v Heard [2004] IRLR 763:

Dealing with each of these, the position as it appears to us is as follows:

Proportionality – The size of the claim and the award in this case means that it would not necessarily be disproportionate to remit to a freshly constituted tribunal, if it were otherwise appropriate to do so.

Passage of Time – We do not accept Mr Carr’s submission that the passage of time since the LJ renders it unrealistic for the Tribunal to be able to assess the necessary issues on remittal. Whilst it will be nearly 4 years since the original Liability Hearing, the Tribunal made extensive and detailed findings of fact which it can use to refresh its memory. Moreover, the Tribunal has already had to refresh its memory on two separate occasions since the LJ: first when considering RJ1; and second, in November 2020, when considering RJ2. Thus, this is not a case where the Tribunal has not turned its mind to the matter for years. Even though the RJs raised distinct issues, we note that in both judgments, the Tribunal did, as one would expect, refer back to aspects of its findings in the LJ and based its judgments on remedy on those findings. We note that the Judge did state, in July 2021, that his recollections were “a great deal less fresh than they would have been nearer the time” and that he could not remember a particular item of evidence about which he was asked. However, those difficulties, which are to be expected, are not such as to render the task of reconsidering the narrow issues on remittal unreasonably challenging for this experienced Tribunal.

Bias or Partiality – We agree with Ms Jolly that there is no real risk of bias or partiality here. The Claimant did not succeed on all of his claims, and it is evident that the Tribunal approached its task in a fair and balanced way. Mr Carr relies on the apparent decision by one of the Lay Members to recuse themselves from another subsequent case involving the First Respondent because of a “conflict of interest” arising out of their involvement in another Citi case. The Respondents “understand” that other case to be this one. However, there is no firm indication of that, and there appears to be a degree of speculation as to the precise basis on which the Lay Member decided upon recusal. Even if it is the involvement in this matter that caused the Lay Member concern, it would not follow that the fair minded independent observer would consider that there was any real risk of bias in the Lay Member revisiting a case in which they had already been involved. In any case, if there is an issue in this regard, the Lay Member would have the opportunity to raise it if they so wish; that would be preferable to the EAT seeking, on the basis of incomplete information, to pre-empt what course the Lay Member might wish to take;

Totally Flawed Decision – The LJ was not, on any view, “totally flawed”. Whilst we have found that the Tribunal did not properly address the second stage of the Igen v Wong test, perhaps because of an over-reliance on the finding as to Mr Falco’s remark, we remain confident that the Tribunal would be able to complete that aspect of the analysis with the guidance of this judgment.

Second Bite – We do not consider that the Tribunal is irrevocably wedded to its conclusions such that it would not be willing or able, having properly considered those matters omitted from its analysis on the first occasion, to come to a different conclusion, if so advised.

Professionalism – There is no doubt about the Tribunal’s professionalism. The only point raised by Mr Carr in this regard is as to the Lay Member’s position. However, for reasons already discussed under (c) above, we do not regard that as a difficulty in this case.

Taking all of the above into account, it is our view that the matter should be remitted to the same Tribunal. We recognise that there may be practical difficulties, not least arising out of the Judge’s retirement, in remitting to the same Tribunal. However, those are matters that can considered by the Regional Employment Judge, should it prove necessary, and our Order directing remittal to the same Tribunal will allow for the REJ to direct otherwise if considered appropriate.

For these reasons, the matter shall be remitted to the same Tribunal (subject to any direction that may be made by the Regional Judge by reason of the Employment’s Judge’s availability or otherwise) to reconsider the Respondents’ alleged reason for the impugned treatment, having regard to the EAT’s decision in respect of the Liability Appeal. Whether or not further evidence may be adduced to consider that aspect will be a case management matter for the Tribunal.