Rank Nemo (DS) Ltd and others v Coutinho: Court of Appeal

Key points

Employers should be aware that following this ruling, if they evade their obligations to pay tribunal awards, they could now face fresh victimisation claims where the reason for the non-payment of the award is connected to previous discrimination proceedings.

If a victimisation claim is successful in these circumstances, this could give rise to additional financial liability over and above the value of the award.

Since 1 April 2009, the government has been clamping down on employers that disregard tribunal rulings, and those that fail to pay tribunal awards will be publicly named and shamed. Defaulting employers’ names will be entered onto the Register of Judgments once the claimant has lodged the decision at court for enforcement. The government has also begun discussions to develop a service whereby creditors will be able to commission a High Court enforcement officer to enforce their award or out-of-court settlement as soon as the defaulting party fails to pay the sum due.

What you should do

If your employer is unlucky enough to face a tribunal award, arrangements should be put in place for the payment to be made at the earliest opportunity (but in any event before the 42-day time limit to pay a tribunal award expires, after which interest starts to accrue) to avoid the risk of fresh victimisation claims being brought.

The case

The Court of Appeal has held that the failure to pay a tribunal award for discrimination could in itself give rise to a separate claim for victimisation where the reason for the non-payment was related to the claimant having brought discrimination proceedings initially.

Lance Coutinho was an IT specialist of Asian origin. He suffered race discrimination and was automatically unfairly dismissed in connection with a TUPE transfer from his then employer, Vision, to Rank in 2004. He was awarded £72,000. The liability transferred to Rank under the provisions of TUPE but Rank refused to pay the award, even after Coutinho obtained a County Court Judgment (CCJ) to enforce it in 2006.

Coutinho brought a new claim against Rank, arguing that the failure to pay the award amounted to victimisation. Victimisation is a stand-alone form of discrimination that involves a person being treated less favourably as a result of carrying out a “protected act”, which includes, among other things, having brought a discrimination claim. The tribunal refused to hear the claim, saying that “it is a question of enforcement which is not a matter the employment tribunal has power to interfere with”.

Coutinho appealed to the Employment Appeal Tribunal (EAT) and won – the EAT held that the tribunal did have jurisdiction. Rank subsequently appealed to the Court of Appeal and lost. The Court of Appeal held that a tribunal had no jurisdiction to enforce an unpaid award, but it did not prevent it from investigating whether the reasons for failure to pay an award related to the claimant’s employment relationship to support a claim for victimisation. In this case, it disagreed with Rank’s argument that the claim was really an allegation that Rank had not paid the tribunal award or satisfied the CCJ.

The Court of Appeal supported Coutinho’s argument that the claim should be heard by the tribunal, given that it was not based on the fact of an unsatisfied judgment, but on the reason why Rank had failed to pay the debt. It held that it was necessary for the tribunal to inquire into the reason why Rank had not paid the award. If the claim had not been brought to enforce the award, rather it had been brought on the basis that the non-payment of the award was a continuation of the less favourable treatment as a result of the earlier discrimination proceedings, then there could be a possible link to the employment relationship, despite the fact that the employment relationship had, in this case, been terminated five years ago.

This could give rise to a fresh claim for victimisation if the reason for the non-payment was, in effect, retaliation for bringing and winning the original claim. The fact that Coutinho was also a judgment creditor did not sever links with his past employment and deprive him of a right to bring a victimisation claim. The case has been remitted to the tribunal.

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