Directors personally liable for discrimination compensation

The EAT has recently ruled that two directors were personally liable to pay compensation for discrimination.

They were found to be jointly and severally liable, together with the employer, to pay compensation and aggravated damages for discrimination. As the employer went into liquidation after the compensation was awarded, the directors were left liable for the full amount.

The case of Bungay and Paul v Chandel and others concerned a claim under the Employment Equality (Religion or Belief) Regulations 2003 (now repealed but provided for under the Equality Act 2010)

Under the Regulations an employer could be vicariously liable for discriminatory acts by its employees unless it could show that it had taken all reasonable steps to prevent the discrimination.

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An employment tribunal found that two directors, Mr Bungay and Mr Paul, were the main individuals involved in the discrimination which led to the dismissal of the two employees, Mr Chandel and Mr Saini.

Following the dismissals it was alleged that the two directors had made malicious complaints to the police which resulted in Mr Chandel and Mr Saini being arrested

The tribunal awarded a total of £37,000 in compensation for direct discrimination, injury to feelings and aggravated damages, ruling that the employer, Mr Bungay and Mr Paul were jointly and severally liable.

The employer then went into compulsory liquidation and Mr Bungay and Mr Paul appealed but it was dismissed. The EAT dismissed the argument that Mr Bungay and Mr Paul were not agents of the company. It said they had the power to manage the business of the company and the discriminatory behaviour was carried out in the course of the company’s business.

The EAT also dismissed Mr Bungay and Mr Paul’s claim that other directors should also be jointly and severally liable on a pro rata basis. It found that the two directors were the “prime movers” in the discriminatory acts and that they had been instrumental in Mr Chandel and Mr Saini being arrested.

In addition, the EAT found that post-employment behaviour could be taken into account when awarding aggravated damages.