Vexatious litigants and the right to compensation

Under EU law, the Equal Treatment Framework Directive and the Recast Equal Treatment Directive (together, ‘the Directives’) prohibit discrimination in employment for a number of protected characteristics including age, disability, religion or belief and sexual orientation. This protection also extends to job applicants, covering a number of conditions for accessing employment such as the recruitment process and selection criteria used.

The Directives have been implemented in the UK through the Equality Act 2010. Sections 39 and 40 specifically deal with discrimination in recruitment. However, until recently, it was unclear whether someone who applied for a job only in order to seek compensation (not employment) was afforded the same level of protection. A recent case (Kratzer v R+V Allgemeine Versicherung AG) in the European Court of Justice (‘ECJ’) has clarified the issue.

The case

R+V Allgemeine Versicherung (‘AV’) advertised for a number of graduate trainee positions in a number of fields. Mr Kratzer applied for a legal position, emphasising that he fulfilled all the requirements for the job and, as a lawyer and a former insurance manager, also had relevant legal and management experience. AV rejected Mr Kratzer’s application and he subsequently sent a complaint demanding compensation of €14,000 for age discrimination. They explained that his rejection had been automatically generated and this had not been their intention. They invited him in for an interview with the Head of HR but he declined.

Mr Kratzer issued a claim in the German Labour Courts, and added a claim of sex discrimination to the original allegation, upon discovering that out of the 60 applicants including a similar amount of both sexes, all 4 posts were offered to female trainees.

After his claim was dismissed twice in the lower courts, the Federal Labour Court stayed the proceedings and referred the following question to the ECJ:

Does Article 3(1)(a) of the Framework Directive and Article 14(1)(a) of the Equal Treatment Directive provide protection against discrimination to an individual whose application makes it clear that they are not seeking recruitment or employment, but just the status of a job applicant in order to bring a claim for compensation? If so, should this be considered an abuse of rights under EU law?

The ECJ decision

The ECJ held that where an individual applies for a job with the sole purpose of claiming compensation for discrimination, this does not come within the scope of the Directives, and they would therefore not be entitled to claim protection or compensation. In particular, the ECJ noted  that the Directives provide protection to those ‘seeking employment’. Individuals like Mr Kratzer could not be said to be ‘seeking employment’, as they do not want the post they are applying for.

Further, the ECJ took the view that such individuals were not victims and had not sustained loss or damage, and therefore this type of situation was not covered under the Directives. It was also noted case law indicates that EU law cannot be relied on for abusive or fraudulent ends.

How can employers protect themselves against vexatious litigants?

This decision will be welcome reading for employers, and can be put to good use when dealing with ‘sham’ applications. This also reinforces the EAT decision in Keane v Investigo and others UKEAT/0389/09 – an applicant not interested in accepting a job offer cannot claim discrimination if their application is unsuccessful as they have suffered no disadvantage. It does also raise a number of issues that employers may wish to consider:

  • Employers should take caution in applying automated selection criteria to bulk job applications so as not to unintentionally discriminate.
  • Job applicants like Mr Kratzer are rare and employers should be wary of raising any suspicion that an applicant is not genuine unless there is compelling evidence otherwise.
  • All recruitment decisions need to be made fairly, in line with internal and external policies, and with an eye on how it may play out at an employment tribunal. This case reminds employers that the only relevant factors when making recruitment decisions are a person’s qualifications, skills and experience to carry out the role’s duties.

For further information on any of the above, please contact the Devonshires Employment Team.

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