A city banker filed a racial discrimination lawsuit against Dresdner Kleinwort (“DrK”). He claimed that he was treated less favorably at work and eventually fired because he was neither German nor spoke German.

The unfair dismissal and racial discrimination claim could be worth close to £10m if successful. The employee in this case, Malcolm Perry, was born in Australia. He was Global Head of Fixed Income and Credit at DrK. During the hearing, he told an employment court that he was increasingly concerned about being excluded from key decision-making after the bank decided to merge its corporate and investment banking businesses in late 2005. Perry told the court that:

“… There was a general feeling that the hidden goal was the creation of a niche German investment bank serving Dresdner’s German corporate clients to the detriment of [its] international franchise… This left non-German speaking employees and non-German speaking employees based outside of Frankfurt and not aligned with the German business nervous about the outcome of [the new CEO’s] restructuring plans.

In his witness statement, Perry said the bank’s capital markets committee had understood 14 executives at the time of [the new CEO’s] arrival, five of whom were German, as well as nine employees who did not speak German or who did not speak German. Perry was fired in June 2006. He was told that he was no longer needed in his current role and that he would not be given a key position in the bank’s new structure.

Subsequently, he is suing DrK for wrongful termination and racial discrimination. The bank has admitted the element of unfair dismissal but denies the charge of discrimination. In theory, since 2003 it has become easier for applicants to prove discrimination on the basis of race or ethnicity. This eventuality is due to the fact that the Race Relations Act of 1976 was amended to incorporate rules regarding the reversal of the burden of proof. Commentators on this matter have said:

“Today, all a claimant has to do is establish the facts that could constitute discrimination. The burden then shifts to the employer to prove that discrimination played no role in their actions.”

This means that if Malcolm Perry can point to a comparable employee who was not fired but happened to be German, that fact would be enough to mean that the burden of proof should shift to the bank. Regarding this case, it has been speculated that there will be a lot of evidence in the case as to the culture of the bank in general. This would attempt to show that German citizens received more favorable treatment than non-German citizens. If such circumstances can be proven, the claim for direct discrimination is likely to succeed. It is also interesting to note that the justification defense is not available in cases of direct racial discrimination.

An earlier case relevant to this case involved the London office of a Japanese company called Quick Corporation, which provided online financial information from the international financial and capital markets. The office had a mix of locally hired employees and employees from Japan. Local employees were fired and Japanese employees kept on. In these circumstances, lawsuits for unfair dismissal and direct racial discrimination prospered.

This could mean that, in this case, the claim of less favorable treatment for not speaking German would be more difficult to prove as a claim of direct discrimination. It is also interesting to note that the courts have held that the English-speaking Welsh do not constitute their own ethnic group. However, another court found that when an English job applicant was refused employment because of his inability to speak Welsh, the indirect discrimination claim succeeded because fewer people from the English ethnic group than from the Welsh ethnic group could meet this requirement. .

In this case, the bank could argue that Malcolm Perry has filed a discrimination lawsuit just to try to recover his alleged losses. In an ordinary wrongful dismissal claim, the maximum compensation a court can award is £60,600 or £58,400 if the dismissal occurred before February 1, 2007. There is no limit to the damages payable for claims related to discrimination.

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© RT COOPERS, 2007. This Information Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. Its sole purpose is to highlight general issues. Specialized legal advice should always be sought in relation to particular circumstances.