Unite the Union v Nailard

Factual and Procedural Background

This opinion concerns an appeal and cross-appeal against a decision of the Employment Appeal Tribunal ("EAT") dated 27 September 2016, which partially allowed an appeal against an Employment Tribunal ("ET") decision from 1 July 2015. The Claimant was employed by the Appellant trade union ("the Union") as a regional officer from June 2012, transferring to Heathrow in January 2013. The Claimant alleged harassment and discrimination related to her sex by locally elected lay officials at Heathrow (referred to as "the lay officials") and by employed officials of the Union ("the employed officials"). The lay officials were elected representatives who carried out union duties full-time but remained employed by Heathrow Airports Ltd ("HAL").

There was a history of conflict between the employed officers and the lay officials at Heathrow. The ET found that the lay officials harassed the Claimant in a manner amounting to harassment related to sex under the Equality Act 2010. The Claimant raised grievances which were investigated by employed officials, but the ET found the Union failed to deal adequately with the harassment. In August 2014, the Claimant was offered a transfer away from Heathrow, which she protested, and subsequently resigned.

The Claimant brought claims against the Union for sex discrimination, harassment, and constructive dismissal. The ET found harassment and unfair dismissal but did not find direct discrimination due to an "anti-overlap" provision. The Union appealed to the EAT, which upheld liability for the lay officials as agents but overturned findings regarding the employed officials' conduct, remitting that part for re-hearing. Both parties appealed to the Court of Appeal on these points.

Legal Issues Presented

1. Whether the Union is liable for the conduct of the lay officials as their agents under section 109(2) of the Equality Act 2010.
2. Whether the conduct of the employed officials constituted unlawful harassment related to sex under the Equality Act 2010.
3. Whether the Claimant's constructive dismissal can be regarded as a distinct act of sex discrimination.
4. The proper legal test for liability of a principal for acts of an agent under section 109(2), including the scope of "authority" and the requirement of acts being done "on behalf of" the principal.
5. The interpretation and application of harassment and discrimination provisions in the Equality Act 2010, including the relationship between harassment and discrimination claims and the effect of legislative amendments on third party liability.

Arguments of the Parties

Appellant's Arguments (The Union)

• The Union accepted the lay officials acted within their authorised functions but argued that liability under section 109(2) requires acts to be done towards third parties, and the Claimant is not a third party but a fellow union representative; thus, the Union should not be liable for harassment by lay officials directed at the Claimant.
• The Union contended the ET and EAT erred in treating all acts done by the agent in the course of their role as acts done on behalf of the Union, regardless of the identity of the recipient.
• It was submitted that principles of agency require that acts must affect the principal's legal relations with third parties to trigger liability.
• The Union challenged the finding that the employed officials’ conduct amounted to unlawful harassment, arguing the ET misdirected itself on the necessary ingredients for liability.
• It also challenged the finding that the constructive dismissal constituted a distinct act of sex discrimination.
• The Union noted an anomaly that principals under section 109(2) lack the "reasonable steps" defence available to employers under section 109(4), which supported a narrower scope of liability for principals.

Appellee's Arguments (The Claimant)

• The Claimant supported the EAT's reasoning that the Union is liable for acts of the lay officials done in the course of their authorised functions as the Union’s representatives, regardless of whether those acts were directed at fellow union members or third parties.
• It was argued that the agency relationship exists and liability attaches for "anything done" in connection with the exercise of the agent’s role.
• The Claimant contended that the Union’s failure to act decisively in response to harassment complaints and the decision to transfer her were conduct related to sex under the Equality Act and should attract liability.
• Policy considerations were invoked, emphasizing that if lay officials were employees, liability would be clear, and Parliament could not have intended a different result because they were not.
• The Claimant rejected the Union’s distinction between acts towards third parties and acts towards fellow representatives as artificial and unsupported by statutory language or case law.
• It was submitted that the absence of a reasonable steps defence for principals did not justify limiting liability under section 109(2).

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by analysing the Union’s liability for the lay officials’ conduct under section 109(2) of the Equality Act 2010. It emphasised that the liability of a principal for acts of an agent does not require the act to be directed at a third party distinct from the principal’s own members or representatives. The Court rejected the Union’s argument that liability only arises for acts done towards third parties, holding that agents acting within the scope of their authorised functions render the principal liable for anything done in that course, even if directed at fellow members. This aligns with the reasoning in Kemeh and Heatons Transport, which confirm that agency and authority must be understood in ordinary legal terms, encompassing acts done in the course of authorised functions irrespective of specific authorisation or knowledge.

The Court recognised the anomaly that principals lack the reasonable steps defence available to employers under section 109(4) but held that this does not justify narrowing the scope of liability under section 109(2). It noted that the legislative scheme extends liability for agents’ acts done within their authorised functions beyond common law agency principles, consistent with Parliament’s intent in discrimination law.

Regarding the employed officials’ conduct, the Court analysed the statutory definitions of direct discrimination and harassment. It highlighted that direct discrimination requires the protected characteristic to form part of the discriminator’s mental processes (the “reason why” the act was done), while harassment requires conduct to be “related to” the protected characteristic. The ET found that the employed officials’ inaction and the decision to transfer the Claimant were “tainted by discrimination” but made no finding that the employed officials were motivated by the Claimant’s sex.

The EAT correctly held that the ET misdirected itself by focusing on the nature of the complaints rather than the motivation behind the employed officials’ conduct. The Court agreed that liability for discrimination or harassment by the employed officials requires a finding that their own conduct was because of, or related to, sex. Mere failure to act on complaints of sexual harassment by others does not, without more, constitute discrimination or harassment by the decision-makers themselves.

The Court further examined the legislative history and case law on third party liability for harassment. It concluded that the Equality Act 2010 does not impose liability on employers for failure to prevent harassment by third parties unless the failure itself is motivated by the protected characteristic. The repeal of provisions imposing third party liability confirms that such liability must be explicitly provided for and is not implicit in the “related to” language of section 26.

Applying these principles, the Court held that the employed officials’ inaction and the transfer decision cannot be automatically attributed to discrimination or harassment without evidence of discriminatory motivation. The case must be remitted to the ET for findings on whether the employed officials’ conduct was motivated or related to sex. However, the Court expressed doubt that such findings would materially affect the Claimant’s compensation given the findings against the lay officials and for unfair dismissal.

Holding and Implications

The Court UPHELD the EAT’s decision that the Union is liable for the conduct of the lay officials as their agents under section 109(2) of the Equality Act 2010.

The Court ALLOWED the Union’s appeal concerning the employed officials’ conduct, holding that the ET erred in law by not requiring a finding that their conduct was motivated by or related to sex to establish liability for harassment or discrimination. The Court remitted that part of the claim for re-hearing to determine whether the employed officials’ conduct met the statutory tests.

The Claimant’s appeal against the EAT’s finding on the employed officials was dismissed to the extent it sought to uphold liability without such findings.

The direct effect is that the Union remains liable for harassment by the lay officials as agents, but liability for the employed officials’ conduct requires further factual findings. No new precedent was established beyond clarifying the application of section 109(2) liability and the interpretation of harassment and discrimination provisions in this context.