In what circumstances can sexual discrimination be inferred?

July 2019

Judges are often said to be reluctant to draw any inference of sex discrimination in workplace from the mere fact of employers’ unreasonable behaviour. This is sometimes misunderstood to mean that sex discrimination cannot be inferred without concrete evidence. In Tan Shaun Zhi Ming v Euromoney Institutional Investor (Jersey) Ltd [2019] HKCA 523, the Court of Appeal discussed in what circumstances discrimination can be inferred.

Mr Tan was accused of sexually harassing a female colleague. His employer asked him to apologize to the colleague. He refused, as he said he had not done anything wrong. His employer investigated the matter and terminated his employment by payment in lieu of notice pursuant to his employment contract.

Mr Tan lodged a claim in the District Court against the Employer under the Sex Discrimination Ordinance. The employer applied to strike out his claim on the ground that the claim was frivolous. The employer explained that termination of the employment by payment in lieu of notice was lawful, and this rendered previous events, such as its manner of investigating the sexual harassment complaint and its treatment of Mr Tan, irrelevant. The employer’s application to strike-out was allowed by the trial judge, but was dismissed by the Court of Appeal on appeal.

Madam Justice Yuen JA, who delivered the leading judgment of the Court of Appeal, took the view it is at least reasonably arguable that the mode of termination of employment does not determine the issue whether the termination of employment was lawful or not under the Sex Discrimination Ordinance. A hypothetical example was given by Madam Justice Yuen to explain the above principle—if an employer were to terminate a female employee by payment in lieu of notice whilst saying to her that she was dismissed due to her gender alone, it cannot possibly be argued that the termination is lawful because the wages in lieu of notice has been fully paid.

This brings us to the trial judge’s consideration of the factual evidence. The trial judge noted that there was nothing to show that but for Mr Tan’s gender, the employer would not have dismissed him. The trial judge suggested that an inference of sex discrimination cannot be drawn from the fact that the employee happens to be male or that the employer has acted unreasonably or unfairly in the investigation. When his judgment was first published, it was mistaken by some commentators as an authority for a somewhat misleading proposition that sex discrimination should not be inferred without concrete evidence of unreasonable treatment.

On Mr Tan’s appeal, the Court of Appeal set aside the trial judge’s order and dismissed the employer’s application to strike-out. The Court of Appeal clarified when inference of discrimination can be drawn—where there is no explanation for unreasonable behaviour or treatment, it is not the mere fact of unreasonable behaviour or treatment which entitles the court to infer discrimination, but rather the fact that there is no reason advanced for it (The Law Society v. Bahl (EAT 1056/01) [2003] IRLR 640).

In the present case, the employer’s lawyers wrote to Mr Tan, stating that he was terminated as a result of his “conduct during and following the investigation” of the complaint, where it “became clear” that his continued employment “justified” a termination within section 32K of the Employment Ordinance. However, there was no evidence at the hearing before the trial judge to substantiate such reason for termination, or to explain why the employer placed such importance on his refusal of an apology to his female colleague even without admission of fault. According to the Court of Appeal, if no explanation is forthcoming, then it would be legitimate for the court to infer that there was discrimination against Mr Tan by reason of a pro-female bias.

As Madam Justice Yuen acknowledged in her judgment, it is well-established that it is unusual to find direct evidence of discrimination. What the court must do is to consider primary facts, and then see what inferences may be drawn from them.

The takeaway is clear: when facing with a claim of sex discrimination, it is not enough for the employer to say that there is nothing to show that but for the employee’s gender, the employer would not have dismissed him or her. The employer should take a step further to adduce evidence to explain or justify its conduct, as in the present case why it wrote to the employee referring to his “conduct during and following the investigation” and why it insisted that the employee had to apologize to the female colleague. In the absence of such explanation or justification, the court is entitled to infer discrimination if it thinks fit in the circumstances.