Increase to compensatory award provided in discrimination cases


Here’s an important article recently published by the FSB (Federation of Small Businesses):

Despite all best efforts to provide work environments which are pleasant, inclusive and free from harassment and bullying, employers can sometimes still find themselves defending claims of discrimination.

Situations that may lead to complaints of discrimination are not always as a direct consequence of management actions or decisions. Sometimes complaints arise because of the behaviours or conduct of employee’s towards their co-workers. Unfortunately, in certain circumstances employers can be held vicariously libel for the actions of their employees. Undesirable, conduct or behaviour which makes an employee feel they have been treated unfavourably can occur in any number of situations. For example inappropriate comments at an office party, banter which causes a person to feel devalued, and embarrassing or derogatory comments.

If, the offensive comment, conduct or less favourable treatment is connected to any of the following 9 protected characteristics, the Equality Act 2010 may regard this as discriminatory:

  • age
  • disability
  • gender reassignment
  • marriage or civil partnership​
  • pregnancy and maternity
  • race
  • religion or belief
  • sexual orientation
  • sex

Consequently, this may then lead to a tribunal complaint on grounds of discrimination. If an employee successfully persuades a tribunal that the employer is vicariously liable for the discriminatory act or treatment, then the employer is likely to end up paying the employee compensation for their hurt feelings (otherwise known as an injury to feelings award).

Since 2003 the tribunals have awarded injury to feelings based on a three band tier system, lower, middle and upper. Serious discriminatory acts would fall into the upper band and in exceptional circumstances the upper band would be exceeded and any award which was considered just and equitable (fair in the circumstances) would be awarded. On this basis it is clear that the tribunal judges have a great deal of flexibility over the amount of compensation that may be awarded to an employee who brings a successful discrimination claim. Consequently, during any pre-hearing early settlement negotiations an employer is often left trying to guesstimate the possible band that a claim may fall into.

The flexibility which the tribunal judges hold in respect of these awards and the associated financial risks to employers recently increased, when new guidance was issued by the Presidents of the employment tribunals in England, Wales and Scotland. The guidance was prompted into existence by the findings in a recent Court of Appeal case, De Souza v Vinci Construction (UK) Ltd [2017]. Briefly the facts relating to that case are that De Souza was employed as a cleaner and her employment was transferred from her previous employer Rentokil to Vinci Construction in 2012. Whilst she was working with Rentokil she experienced in the region of 40 acts of disability discrimination bullying and harassment and other inappropriate treatment. She subsequently suffered depressive illness as a consequence of the conduct.

When Vinci acquired the services contract from Rentokil they also took on the liabilities arising from the poor employment relationship that existed between De Souza and Rentokil.  De Souza filed an employment tribunal claim against Rentokil and Vinci. However, Rentokil was removed from the proceedings and eventual liability of their actions because when Vinci acquired the services contract from Rentokil, they also took on the liabilities arising from the poor employment relationship that existed between De Souza and Rentokil.  De Souza was awarded compensation in respect of some of the claims she raised. The compensation which Vinci eventually paid to her was split into the following elements:​

– Injury to feelings: £9,000

– Psychiatric injury: £3,300

Unsatisfied with the sums awarded, De Souza appealed to the employment appeal tribunal arguing that the injury to feelings award should also include the same 10% uplift which was applied to the psychiatric injury award. The appeal was rejected and referred to the Court of Appeal.  Surprisingly, the Court of Appeal agreed with the argument. This decision then prompted the Presidents’ of the employment tribunals to launch a judicial consultation. The purpose of the consultation was to consider whether the current respective guidelines in relation the assessment for injury to feelings and psychiatric injury awards should be adjusted. ​

The outcome of the judicial consultation resulted in new presidential guidance being issued, which provided that with effect from 11 September 2017, the following increases will be made to the injury to feelings bands:

– Lower band, less serious cases                 £1,000 to £8,000

– Middle band, more than less serious          £8,000 to £25,000

– Upper band, serious cases                          £25,000 and £42,000

– ​Exceptional cases anything above              £42,000

The guidance on the band ranges will be reviewed annually, with the first review taking place in March 2018 and after that on 6 April each year. The guidance also confirmed that the 10% uplift should continue to be made to psychiatric injury awards in line with the modifications made by the Court of Appeal case Simmons v Castle & Ors [2012].

With the abolishment of employment tribunal fees in late July 2017 and the increase to the award bands available for injury to feelings, it is likely that we may well see an increase in employee’s filing more complaints with the employment tribunals. In view of this possibility, employers should now consider taking legal advice in relation to business transfers and HR issues.