A recent case has shown that company directors should be aware of any risk of personal liability in discrimination cases, particularly if the business itself is facing financial difficulties. In the recent case, Bungay and Paul v Chandel, two directors who were also board members, were held to be personally liable to pay compensation for discrimination. The events surrounding the case highlight the potentially wide liability directors can face whilst also emphasising the importance of ensuring relevant policies and guidelines are in place for equal opportunities amongst employees.
Mr Bungay and Mr Paul were the directors involved in the discrimination, which ultimately led to the dismissal of two employees at an advice centre, Mr Chandel and Mr Saini. Mr Chandel and Mr Saini (‘the Claimants’) claimed religious discrimination for their dismissals and pursued a claim under the Employment Equality (Religion or Belief) Regulations 2003 (now repealed but provided for under the Equality Act 2010). Under these Regulations, an employer could be vicariously liable for discriminatory acts by its employees unless it can demonstrate that it had taken all reasonable steps to prevent the discrimination. Based on the evidence, the Employment Tribunal (ET) held the dismissal was discriminatory. However, the company went into liquidation following the award for compensation and the Claimants maintained that the two directors should in fact be held jointly and severally liable for damages.
The directors appealed to the EAT but their appeal was dismissed by the EAT who deemed the two directors were responsible for the discriminatory action. The tribunal awarded a total of £37,000 in compensation for direct discrimination, injury to feelings and aggravated damages, and it was the two directors, Mr Bungay and Mr Paul, who were jointly and severally liable to pay those damages.
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