The Industrial Tribunal concluded that Glasgow City Council had acted unreasonably in failing to advise Mr Zafar of the nature of complaints made against him, in delaying in dealing with the complaints and in failing to give him an earlier warning.
This was an unreasonable way to treat an employee and fell far short of the standards of a reasonable employer, said the tribunal. This led to a presumption that that person has been treated in a way different from the way in which others have been or would be treated, and that this constitutes less favourable treatment for the purposes of the Act.
The House of Lords disagree. The Tribunal had erred in drawing these inferences.
They say the correct test to establish less favourable treatment is whether it is less favourable than was or would have been afforded by that employer to others in the same circumstances. It is not whether the treatment complained of is less favourable than would have been afforded by a reasonable employer in the same circumstances.
It means an employer who behaves unreasonably to all employees, regardless of race, is not guilty of less favourable treatment. It adds up to a legal defence of: "I'm not racist, I'm horrible to everyone."
The House of Lords went on to look at the question of when it is proper to infer that less favourable treatment was "on racial grounds".
The Court approved the guidance given by the Court of Appeal in King v Great Britain-China Centre 1991 IRLR 513 CA to the effect that where the employer offers no explanation of the treatment complained of, or where the Tribunal consider the explanation given to be inadequate or unsatisfactory, it is legitimate for a Tribunal to infer that the discrimination was on racial grounds.
The previous authority of Khanna v Ministry of Defence 1981 IRLR 331 EAT and Chattopadhyay v Headmaster of Holloway School 1981 IRLR 487 EAT that an inference in these circumstances should be drawn put the matter too high and should not be followed.
In approving King the Court clearly approves Neill LJ's comments that it is "unnecessary and unhelpful to introduce the concept of the shifting evidential burden of proof".
Clearly the European Council disagrees. In the light of the EC Directive on burden of proof in discrimination cases it is doubtful whether the second arm of this decision will stand. Whilst the Directive concerns itself only with the burden of proof in sex discrimination cases it will inevitably impact on UK case law in the field of race discrimination.