DIRECTORS’ LIABILITY - 11.10.2006

Personal liability extended?

Hidden danger

With all types of discrimination there’s always been the ability to make a claim against individual employees as well the employer. What’s a bit more unusual is where one employee “aids the discriminatory acts of other employees”. Where this happens, it too can lead to individuals being held personally liable for discrimination. For example, s.42(1) of the Sex Discrimination Act 1975 (SDA) makes this possible where someone has “knowingly aided another to do an unlawful act”. Although the section has been little used and is therefore little known, it potentially spells danger for directors and employees in senior positions because it could make them personally liable to meet any financial awards made to affected employees. Could you be found to have aided discriminatory acts of employees under your control if you’ve turned a blind eye to acts of discrimination or been unaware of them?

Court of Appeal muscles in

In the recent case of Miles v Gilbank 2006, the Court of Appeal gave some helpful guidance on the meaning of s.42 of the SDA, as well as upholding the tribunal’s earlier decision that where a director “has knowingly aided the discriminatory acts of other employees” they can be made jointly and severally liable for any financial payments to the employee. In other words, they can be made to personally foot the bill. G was employed by Q Limited as a senior stylist. M, a director and major shareholder, had always had a good relationship with G but all this changed when she announced she was pregnant. The Court of Appeal agreed with the tribunal that M had committed a number of discriminatory acts, e.g. no risk assessment, failed to alter her working patterns, demoted G etc. M had tried to argue that the SDA didn’t apply by using the “it wasn’t me defence” - she blamed other managers for things they had said and done without her being involved. The court had none of it and said that M was caught by s.42.

Learning the lessons

It’s easy but dangerous to dismiss this case as a one-off. However, the message coming out loud and clear is that if you allow and actively encourage discrimination, then you can expect to become financially liable to pay out large sums. This is especially the case if you’re a director with staff under you.

Tip 1. When it comes to pregnant employees, always remember that they enjoy additional protection and extra rights no matter how annoying or inconvenient this might be. A risk assessment must always be carried out, their job should be analysed to see if changes are required to assist their condition, e.g. extra rest breaks etc. Don’t treat and judge them against the standards of a non-pregnant employee.

Tip 2. Make sure that if you manage staff, you know what goes on and what is said in the workplace - this means trying to be as hands-on as possible. If you get to hear of anything that might be classed as discrimination, e.g. derogatory remarks, investigate and, if necessary, take action by disciplining the employee. It’s essential that you’re seen to show zero-tolerance of such behaviour. This also applies if other managers are involved.