Case of the week: Employer liable for victimisation case acquired via TUPE

Rank Nemo (DMS) Ltd and others v Coutinho


Lance Coutinho is a British Asian who was employed as an IT specialist by Vision Information Services. In 2004, Vision’s business was transferred to a subsidiary of the Rank Organisation, now known as Rank Nemo (DMS) Limited. However, a few months before the transfer took effect, Coutinho had been dismissed, ostensibly for redundancy. Eventually he won a claim against Rank Nemo (to whom liability had been transferred under TUPE) for unfair dismissal and race discrimination.

Rank Nemo did not pay up, so he brought proceedings in the county court to enforce the award, and obtained judgment for more than £72,000. When Rank Nemo failed to satisfy the judgment, he brought further proceedings in the employment tribunal claiming, among other things, that withholding the money was an act of victimisation that infringed the Race Relations Act 1977 (RRA). The employment tribunal struck out his claim, which was ultimately the subject of an appeal to the Court of Appeal.


Section 2 of the RRA outlaws discrimination by way of victimisation if a claimant is treated less favourably because of a “protected act”. Protected acts include the bringing of proceedings under the RRA. Section 2 does not specify whether ex-employees are protected, but since the Rhys-Harper group of appeals heard by the House of Lords in 2004, it has been clear that former employees can be protected in certain circumstances.

Since that decision, the RRA and other discrimination legislation has been amended to make it clear that ex-employees continue to be protected after their employment relationship has ended where the act of discrimination or harassment “arises out of and is closely connected to that relationship” – see, for example, section 27A of the RRA. However, these new provisions do not extend to victimisation.

The Court of Appeal reversed the employment tribunal’s decision and ruled that Coutinho’s case should proceed to a full hearing. It agreed with the Employment Appeal Tribunal (EAT) in dismissing the argument that the case should not proceed because he was seeking to use the RRA to by-pass the normal enforcement process.

The Court of Appeal held that all the 2004 House of Lords’ decision required was a sufficiently close connection between the act complained of and the employment relationship. There was no reason in principle why such a connection could not be established in this case, though this would be a matter for the employment tribunal to decide, having heard all the evidence. If such a connection were established, Coutinho could both enforce the judgment debt and obtain damages on top of that for any additional detriment he had suffered because of victimisation.


This case will make employers think twice about withholding payment of tribunal awards where discrimination is involved. That applies even if, as in this case, the organisation liable to make the payment was not responsible for the discrimination, but inherited the liability to meet the resulting tribunal award because of TUPE. This was particularly vexing for Rank Nemo because Vision became insolvent soon after the transfer, rendering any indemnities it obtained from Vision worthless.

This lesson is reinforced by another recent case, McLean v TLC Marketing, where the former employers had failed to make the payment stipulated in an Acas conciliated settlement of a sex discrimination claim until after enforcement proceedings had been begun in the county court. In this case too, the EAT ruled that a claim for victimisation could, in principle, be brought. Since April 2009, employers who fail to meet tribunal awards have been named and shamed on the register or judgments, once county court enforcement proceedings are taken. This decision shows that it may not only be their reputation that could suffer.

By Stuart Craig, partner, Mills & Reeve

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