The Employment Appeal Tribune ('EAT') in Citibank NA v Kirk said that:
a) a marginal age gap between a claimant and their comparator is not fatal to an age discrimination claim. However, in the absence of a cut-off age (e.g. limiting benefits to those over a particular age) such a marginal difference will reduce the likelihood that any less favourable treatment is because of age. In these circumstances the Employment Tribunal (ET) should take particular care to scrutinise the facts and evidence; and
b) in principle, the value of a shareholding in a company in which a claimant works after the end of their employment with the respondent can be offset against their loss when calculating compensation. However, the burden will be on the respondent to show the value of the shareholding. If its evidence in relation to that valuation is unreliable, it will not be offset.
Legal Background
Age discrimination (similar aged comparators)
Under the Equality Act 2010 (EA), direct age discrimination occurs when one person (A) treats another (B) less favourably because of (B)’s age. To succeed in a direct age discrimination claim, (B) needs to show they have been treated less favourably than a real or hypothetical comparator whose circumstances are not materially different to theirs. The comparator must be from another 'age group', defined as a group of persons who are all of a particular age or who all fall within a particular range of ages.
If (B) can prove facts which show they have been less favourably treated than their comparator, the ‘burden of proof’ shifts to (A) and/or their employer to provide a (non-discriminatory) explanation for such treatment.
In ABN Amro Management Services Ltd and another v Hogben the EAT struck out Mr Hogben’s claim for age discrimination on the basis that it was ‘implausible to the point of absurdity’ for him to allege that he had not been offered an alternative position during a redundancy consultation because the successful candidate was nine months older than him.
Calculating loss (mitigation and shareholdings)
The aim of an ET compensation award for a successful discrimination claim is to put the claimant in the financial position that they would have been in, but for the discrimination.
The claimant has a duty to take reasonable steps to reduce or ‘mitigate’ their loss. This usually means looking for a new job. However, it may also be a reasonable step to start up their own business. Any earnings from this business can be offset against their loss. However, the burden of proof is on the employer to show the amount to offset.
Facts
Mr Kirk was employed as the Head of Energy in a franchise of Citibank. The other heads were Ms Olive and Mr Hanen. When Mr Hanen moved to another internal position, the franchise was streamlined into a consolidated natural resources team to be led by a (single) managing director.
Mr Kirk was informed of these changes during a meeting with his line manager (Mr Isaac) and a more senior manager (Mr Falco). A redundancy consultation process took place during which the managers told Mr Kirk that he was ‘old and set in his ways’ and that there was a need for more ‘agility’ within the department. Following the consultation, Mr Kirk was dismissed by reason of redundancy (age 55) and Ms Olive was appointed as the new managing director (age 51).
Mr Kirk brought a number of claims against Citibank and his managers including unfair dismissal and direct age discrimination. Ms Olive was his chosen comparator.
ET decision
The ET found that Mr Kirk's dismissal had been on the basis of age and that he had been subject to an ageist remark.
It awarded Mr Kirk nearly £2.7 million in compensation, including for financial loss.
When assessing this loss, the ET offset the salary, dividends and bonus that Mr Kirk had, and would likely, receive from the business he set up following his dismissal. However, the ET did not offset the value of his shareholding in that business as it considered that the evidence provided by Citibank (given by its Global Administrative Officer) was insufficient for a sensible valuation. In particular, the Officer was not an expert, had never conducted such a valuation and the ET would be making a ‘wild guess’ as to the value.
Citibank appealed and said that the ET:
- had failed to properly consider the managers’ (non-discriminatory) explanations for the difference in treatment between Mr Kirk and Ms Olive; and
- should have assessed the value of Mr Kirk’s shareholding and offset this against his loss.
EAT decision
Age discrimination (similar aged comparators)
The EAT agreed with Citibank and upheld its appeal. The fact that the manager had made remarks about Mr Kirk’s age did not absolve the ET from considering Citibank's explanation for his dismissal. It was Citibank’s evidence that the managers responsible for the redundancy believed Mr Kirk and Ms Olive to be in the same age bracket. The ET did not properly consider this and the EAT remitted the case back to the ET to do so.
In the absence of a cut-off age (e.g. limiting benefits to those over a particular age) a marginal age gap between a claimant and their comparator will reduce the likelihood that less favourable treatment is because of age. In these circumstances the ET should take particular care to scrutinise the facts and evidence.
However, the EAT did not agree with Citibank that Hogben meant that a marginal or relatively small age gap was fatal to an age discrimination claim. Age could still be the reason for less favourable treatment in these circumstances.
Calculating loss (mitigation and shareholdings)
The EAT dismissed Citibank’s appeal.
In principle, the value of a shareholding in a company in which a claimant works after the end of employment can be offset against their losses. However, the burden is on the employer to show the value of the shareholding. If its evidence in relation to that valuation is unreliable, it will not be offset.
In this case, the ET had been entitled to reject Citibank's evidence on the value of the shareholding as being unsatisfactory. Although it will not always be necessary for an employer to obtain expert evidence on the value of a shareholding, the evidence does need to be convincing.
Fladgate comment
Age discrimination (similar aged comparators)
This decision highlights the importance of never (or very rarely) ruling out the risk of age discrimination. Even a minimal age gap between an employee and their potential comparator(s) will not be fatal to a claim. However, at least if you do face a claim in these circumstances (when no cut-off age is involved) the ET will be expected to take particular care to scrutinise your evidence on the (hopefully) non-discriminatory reasons for any less favourable treatment.
It should also be comforting to know that even when (as in this case) a manager makes an ageist remark, it does not lead to certain loss at ET.
Calculating loss (mitigation and shareholdings)
This is a positive decision for employers in so far as it confirms, in principle, that a shareholding in a company in which an employee works after termination can be offset against their loss. However, it is also a warning that if employers want to persuade the ET to apply an offset, they will need to provide convincing evidence as to the value to deduct. In high value claims or particularly complex cases, using an independent valuation expert to provide evidence is likely to be a good investment.
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