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Remedies in employment disputes: Compensation and recommendations

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This page does not apply outside Great Britain.
Last updated 6th September 2017 (part update 7th April 2021).

If an Employment Tribunal finds there has been a breach of the Equality Act, the main remedy it can award is compensation. A tribunal can also make recommendations. There is a separate page on Resolving disputes.

Summary

  • A tribunal can order compensation, make a recommendation, and/or make a declaration as to the rights of the parties (EqA s.124(2)). There is a longer summary in the Employment Code (15.40-43).
  • By far the most important remedy is compensation. Unlike unfair dismissal, there is no statutory limit on the amount a tribunal can award under the Equality Act.
  • Compensation is partly to compensate the claimant for financial loss, mainly loss of earnings.
  • Compensation is also awarded for injury to feelings. The courts have set ‘Vento bands’ as a guide to how much this should be. The minimum award may be about £900. The lowest ‘band’ goes up to potentially £9,000, with higher bands for more serious cases.
  • It is a good idea to consider whether you are likely to actually receive any compensation that may be awarded.
  • A tribunal can also make recommendations benefiting the claimant.
  • Interim relief for discrimination claims is not currently available, but may become so depending on a case which is going the Court of Appeal.

Compensation

Compensation can include

  • financial loss (particularly loss of earnings),
  • injury to feelings,
  • personal injury, including psychiatric illness (not dealt with on this page), and
  • aggravated or exemplary damages.

No statutory maximum

Unlike unfair dismissal, there is no statutory limit on the amount of compensation that can be awarded.

  • As regards financial loss, including loss of earnings, the Michalak case below illustrates how there is no limit on compensation for this (though really high awards will be rare and mainly relevant for high earners and/or long-term loss of earnings and pension).
  • The ‘Vento bands’ (below) developed by the courts set limits for injury to feelings.

Injury to feelings: the ‘Vento bands’

A Court of Appeal case called Vento v Chief Constable of West Yorkshire Police (bailii.org), 2002, said that injury to feelings includes

“subjective feelings of upset, frustration, worry, anxiety, mental distress, fear, grief, anguish, humiliation, unhappiness, stress, depression and so on”.

The court distinguished three bands of compensation for injury to feelings. These are normally called the ‘Vento bands’. They have subsequently been increased to reflect inflation (Da’Bell v NSPCC (bailii.org) 2009, AA Solicitors v Majid (bailii.org) 2016). They have also been increased by a 10% uplift (below), at least in England in Wales.

The three compensation bands, including inflation and the 10% uplift, are now set out annually in ‘Presidential guidance’. The figures in the guidance apply in England and Wales, and also in Scotland subject to the proviso that it is for the Scottish court to decide whether the 10% uplift (below) applies there. For claims presented on or after 6th April 2021 the three bands are as follows (links to older figures are below):

  • £900 to £9,100 – lower band for less serious cases;
  • £9,100 to £27,400 – middle band for cases that do not merit an award in the upper band;
  • £27,400 to 45,600 the most serious cases, but with the most exceptional cases capable of exceeding £45,600.

Those figures are from the ‘Fourth Addendum to Presidential Guidance originally issued on 5 September 2017’ (pdf, judiciary.uk), 26/3/21. Previous figures are at:

Some notes on the three categories:

  • Less serious cases in the lower band might include for example where the act of discrimination is an isolated or one-off occurrence (though as discussed below, a one-off or isolated act can sometimes fall within the middle band). The lowest award within the bands is now £900. Some earlier cases on the minimum award are
    • Doshoki v Draeger (bailii.org) (2002),
    • Elliot v The Leeds Teaching Hospitals NHS Trust (2011, ET case no. 1803268/10) where the employment tribunal awarded £750 taking into account that less than this would run the risk of diminishing respect for the discrimination legislation, and
    • Purves v Joydisk (2003) on claims against service providers which considered £750 a minimum.
    • Awards are likely to have gone up since those cases with inflation and the 10% uplift.
  • Compensation in the middle band was initially awarded in the stammering case of Wakefield v HM Land Registry, but the decision was overturned on appeal.
  • The most serious category might include for example where there has been a lengthy campaign of sexual or racial (or presumably disability) harassment. Awards in this category are relatively rare. Only in the most exceptional cases should an award for injury to feelings exceed the stated maximum.

In deciding the compensation for injury to feelings, including the band, the tribunal should focus on the impact of the discrimination on the individual concerned, rather than the gravity of the acts:

“We are all different and the impact of discrimination is an individual experience and unlawful discriminatory behaviour may affect different individuals differently, which will be for the Tribunal to assess and analyse from the evidence before it.”
Komeng v Creative Support (bailii.org), EAT, 2019

The EAT in Base Childrenswear v Otshudi (bailii.org), 2019 upheld a decision that a one-off or isolated act of discrimination could fall within the middle Vento band. Whether discrimination is a one-off act or a continuing course of conduct is a relevant factor for the tribunal to consider, but is not conclusive. The EAT said “The question for the [employment tribunal] must always be, what was the particular effect on this individual complainant?”

The Presidents say they will review and, if necessary, amend the Presidential Guidance each March. Any new Presidential Guidance will come into effect in respect of claims presented on or after 6th April in each year. That and also the Presidents’ response to their prior consultation on the new guidance is in their Response to judicial consultation: Employment Tribunal awards for injury to feelings… (judiciary.uk).

10% uplift

The bands in the Presidential guidance include a 10% uplift. This uplift applies in England and Wales, and perhaps in Scotland. In De Souza v Vinci Construction (UK), 2017, the Court of Appeal ruled that the 10% uplift in compensation provided for in Simmons v Castle should also apply to Employment Tribunal awards of compensation for injury to feelings (and also psychiatric injury) in England and Wales: see Employment Tribunal general damages uplifted by 10% (devereuxchambers.co.uk). The Court of Appeal expressly recognised that it was not for it to consider the position as regards Scotland, but the Scottish courts may well adopt the same position.

Tax treatment

It should be considered whether the compensation for injury to feelings is taxable, which would normally mean the employer is ordered to pay more, ie to ‘gross up’ the compensation so that the claimant’s net-after-tax position is preserved. An issue is likely to be whether the payment is taxable as being “in connection with” a termination of employment. The conclusion of the Court of Appeal in Moorthy v HMRC (pinsentmasons.com) (2018) that compensation for injury to feeling falls within an exemption from tax provisions on termination of employment does not apply from April 2018 when tax law was changed.

Statistics on compensation awarded

In the year 2018/19, according to official statistics, out of 56 disability discrimination claims the median award was £12,156, and the maximum £416,015. This includes loss of earnings as well as injury to feelings. However the figures are incomplete: for example if the ‘lead juridiction’ in the claim was unfair dismissal but a disability discrimination claim was made as well it is not included. Many of the larger awards are in dismissal cases, and so may be excluded. Source: IDS Employment Law Brief, Number 1119, November 2019, p30ff.

Other points

The Vento bands do not apply to compensation for personal injury, including psychiatric illness. That is outside the scope of this page. However it may overlap with injury to feelings, and one cannot claim twice for the same injury under the two different heads of loss.

A clamant can recover for injury to feelings attributable to the act complained of, a dismissal for example, without needing to attribute the injury specifically to knowledge of discrimination (Taylor v XLN Telecom (bailii.org), EAT, 2010). In that case the claimant had attributed any injured feelings not to knowledge that he had been victimised for previously making an allegation of racial discrimination, but to the employer’s failure to comply with the statutory grievance and disciplinary procedures.

Loss of earnings

Broadly, the aim is to put the employee (or job applicant) in the financial position he would have been in had there been no discrimination. There is a great deal that could be said about how to calculate compensation for loss of earnings. I shall just pull out a couple of points:

  • where the discrimination has resulted in loss of employment, it may be that compensation could be higher in disability cases than in others since people with disabilties can face particular problems in securing employment; and
  • compensation should reflect any difficulty in getting future employment because of a stigma from having brought proceedings against a former employer – Chagger v Abbey National, Court of Appeal (bailii.org).

In Michalak v The Mid Yorkshire Hospitals NHS Trust (2011) the Employment Tribunal awarded a record-breaking £4.5 million compensation in a sex and race discrimination claim by a consultant physician. There had been a concerted campaign to get rid of the claimant. Her treatment resulted in a psychiatric illness, and what was likely to be a permanent change in her personality. The tribunal concluded that she would never return to work as a doctor. The major part of the compensation was for loss of earnings and pension.

Compensation for other kinds of loss is also possible but not so common in discrimination cases. In Michalak part of the compensation was for pyschiatric illness suffered as a result of how she was treated, and medical costs.

Indirect discrimination

As regards unintentional indirect discrimination, tribunals are told by the Equality Act to consider whether or not remedies other than compensation are more appropriate (s.124(4)(5) EqA, Employment Code para 15.44-45). However tribunals can still decide to award compensation. The Court of Appeal held s.124(4)(5) EqA to be compatible with EU law in Wisbey v The Commissioner of the City of London Police and College of Policing (oldsquare.co.uk), 2021. In any event, indirect discrimination is not that important for disability claims, since there will often be alternative claims for reasonable adjustments and ‘discrimination arising from disability’.

Aggravated or exemplary damages

…… – aggravated damages (England and Wales only) which are awarded when the respondent has behaved in a high-handed, malicious, insulting or oppressive manner; and
– punitive or exemplary damages (England and Wales only) which are awarded for oppressive, arbitrary or unconstitutional action by servants of the government or where the respondent’s conduct has been calculated tomake a profit greater than the compensation payable to the claimant.
Employment Code para 15.40

A case discussing aggravated damages:

HM Land Registry v McGlue (danielbarnett.co.uk), Employment Appeal Tribunal (EAT), February 2013
The EAT discussed the requirements for an award of aggravated damages, and held that they were not met in this case.

Enforcement: will I actually receive the compensation?

Research published in November 2013 found that over half of claimants do not receive the compensation awarded, and more than a third receive none of it. See: Research has found over half of individuals awarded a pay out following an employment tribunal hearing do not receive their award in full (link to gov.uk),1/11/13.

The situation is made more serious by the introduction of tribunal fees from July 2013. The main fees must initially be paid by claimant. If the claim is succesful, the tribunal can order the employer to repay the fees to the claimant. However, if the employer does not pay out compensation awarded, most likely it will not repay out the tribunal fees either, leaving the claimant even more out of pocket even though he or she has won the claim.

These figures relate to awards made following a tribunal hearing (or by a default judgment). Many cases settle before a hearing. I would expect that where there is a settlement, claimants are much more likely to receive payment.

Fast-track enforcement

ln April 2010, a fast-track scheme came into force in England and Wales to help enforcement where compensation has been awarded but not paid. For how to use the fast-track scheme, including a link to Form EX747 which you need, see Taking your employer to an employment tribunal: If you win your case (link to gov.uk).

That link also has (a bit) more on enforcement generally, including what to do in Scotland.

Financial penalty for employer

Employers may have to pay a financial penalty to the government (not the claimant) if they fail to pay compensation. There is a form you can use to ask to have the employer fined (link to gov.uk).

These financial penalties have been introduced for tribunal judgments and ACAS Conciliated Settlements on or after 6th April 2016. The legislation allows an employer to be served with a warning if it fails to pay the award. If it still fails to pay, it is liable to pay a penalty to the government (s.150 Small Business, Enterprise and Employment Act 2015 (legislation.gov.uk)).

Recommendations

Recommendations: Summary

Employment tribunals have power to make recommendations in discrimination cases.

Since October 2015, the recommendation must be to counter the adverse effect on the claimant of any matter to which the proceedings relate. This reverses a change made by the Equality Act 2010, which originally permitted recommendations to benefit other employees. See below Abolition of wider power to make recommendations. In practice, the change means that a recommendation will not normally be made if the claimant has resigned or been dismissed, which is often the case.

Unreasonable failure by the employer to comply with a recommendation as regards the claimant can result in increased compensation.

In more detail

Under EqA s.124 (as amended by s.2 Deregulation Act 2015) a tribunal is allowed to make a recommendation to take certain steps within a specified period “for the purpose of obviating or reducing the adverse effect on the claimant of any matter to which the proceedings relate”. Accordingly recommendations can help prevent similar types of discrimination against the claimant occurring in future.

Since the recommendation must now benefit the claimant, one is unlikely to be made if the claimant has left the employment. Subject to that, the non-exhaustive examples given in para 406 of the Equality Act Explanatory Notes (pdf, legislation.gov.uk) still seem applicable, ie recommendations that the employer:

  • introduces an equal opportunities policy;
  • ensures its harassment policy is more effectively implemented;
  • sets up a review panel to deal with equal opportunities and harassment/grievance procedures;
  • re-trains staff; or
  • makes public the selection criteria used for transfer or promotion of staff.

A tribunal might recommend awareness training in communication disabilities.

Two examples of cases under pre-Equality Act law where – as now – the recommendation had to benefit the claimant:

In Lycee Francais Charles de Gaulle v Delambre (link to bailii.org) (EAT, 2011) where the claimant remained in her post, the employer was recommended to review its employment policies and undertake a programme of equality and diversity training.

Another case recommending awareness training where the employee remained was London Borough of Southwark v Ayton (2003) (link to bailii.org).

In a 2020 case the EAT took a broad view of what type of recommendation can be made:

Hill v Lloyds Bank (bailii.org), Employment Appeal Tribunal (EAT), 2020
The claimant had depression which she said resulted from bullying at work. She said the prospect of working with her line manager filled her with absolute dread so that she felt physically sick, and that the prospect of working with her next line manager up also had severe effects. When she returned from sick leave she worked in a different office from both of these former line managers, but sought an undertaking that her employer would not require her to work with either of them and, if at a later stage there was no alternative, that she would be offered a severance package equivalent to that provided on redundancy. The employer (so the tribunal found) had a practice of not giving binding undertakings but only words of comfort to use “best endeavours” or “best effort”. The employment tribunal upheld the claimant’s argument that due to the effect the fear had on her because of her depression (a disability), it would be a reasonable adjustment for the employer to give her this undertaking. The tribunal awarded her compensation for injury to feelings. But could the tribunal also recommend that the employer give her such an undertaking?

The EAT held yes it would be lawful for the employment tribunal to recommend that the employer give this undertaking. For example there was no objection of principle to a requirement by undertaking that a particular employee should be treated as redundant in certain circumstances. The case was sent back to the tribunal to reconsider.

Enforcing a recommendation

Failure by the employer to comply with a recommendation to benefit the claimant, without reasonable excuse, can result in increased compensation (EqA s.124(7)).

Guidance in Parliament on recommendations

The Solicitor General gave some clarification on the new power in response to questions in the House of Commons Committee on the Equality Bill. She was asked among other things what length of specified period was envisaged, and what leeway should organisations have to achieve a particular outcome since they may come up with ways of achieving it which are new and different from those envisioned by the tribunal. The Solicitor General said:

“…To answer the specific point about time, it would have to be a reasonable period. There might be more creative ways of doing something that a tribunal recommends. The sensible thing would be for the parties to get together first, discuss it and suggest it to the tribunal, which could then recommend it. If parties thought there were a better way forward, that approach would give the tribunal the opportunity to avoid recommending something that was perhaps less suitable…

[And in respose to whether tribunals tend to mandate outcomes or process:] Some typical recommendations that might help include taking steps to implement a harassment policy more effectively; providing equal opportunities training for staff involved in promotion procedures; and introducing more transparent selection criteria in recruitment transfer or promotion processes. Those seem to be fairly process-based…” (col 512-513, Public Bill Cttee, 25th June 2009 (parliament.uk))

Stammering case

Recommendations made in Wakefield v HM Land Registry, a stammering case, were subsequently revoked by the tribunal because they failed to specify a period within which the employer must take the action. (The tribunal’s decision as a whole was also overturned on appeal, for other reasons.) This was under pre-Equality Act rules, but EqA s.124 also says there should be a specified period.

Abolition of wider power to make recommendations

The power to make recommendations which do not benefit the claimant was repealed from 1st October 2015 (s.2 Deregulation Act 2015, with commencement order 2015/994). See Consultation on repeal of two enforcement provisions (gov.uk).

From the Government’s response to the consultation:

107. Wider recommendations are discretionary on employers. In our view, the types of recommendations made in the tribunal cases so far show that in practice, wider recommendations have tended to be obvious and non-technical – in particular that an employer’s human resource practices should be improved or that staff be given equality training.

108. The Government considers that whilst the types of recommendations made highlight wider issues around lack of awareness and knowledge by employers of equality and employment law, the wider recommendations provision is not the right way to address this issue. We think a better approach is through the practical non-legislative measures proposed by the Government in May 2012 as part of the Red Tape Challenge equalities package announcement. We intend to work with businesses, particularly small businesses and their representative organisations to increase understanding of compliance and best-practice in avoiding risk of adverse tribunal decisions; and through very short, straightforward web-based guidance for small businesses on equality law areas known to be particularly difficult for them.

In July 2019 the House of Commons Women and Equalities Committee recommended that the Government empower employment tribunals (and County Courts) to make remedial orders that require organisational change and to make wider recommendations where this can support change within the wider sector. Also in 2016 a House of Lords Select Committee recommended that the Government restore the power of tribunals to make wider recommendations with a view to preventing discrimination experienced by the claimant from happening to others. See Enforcement of Equality Act: proposals>Wider power of employment tribunals to make recommendations.

Some examples of wider recommendations made under the Equality Act prior to October 2015, which would presumably not now be allowed:

Crisp v Iceland Frozen Foods Ltd [2012] EqLR 618, Employment Tribunal.
A claimant with depression succeeded in a claim for discrimination and harassment. She had now left the firm. Her claim related partly to a refusal to allow her husband to accompany her at a disciplinary hearing regarding sickness absence, and partly to a conversation which had been overheard between a manager and HR manager making fun of her disability. As well as awarding compensation, the employment tribunal recommended that (1) those in HR providing advice for managers on disciplinary and grievance processes undergo training in disability discrimination specifically relating to mental health, and (2) all managers at the level of the manager involved in this case should undergo training in issues surrounding disability discrimination generally.

Talbot v The Whitbread Group plc, 2011, Employment Tribunal case no.2503169/11
There was held to be a failure to make reasonable adjustments, which was also harassment. The claimant was no longer employed there. However, the the tribunal made recommendations under Equality Act 2010, including that equality awareness training be arranged for managers.

Interim relief

In some types of unfair dismissal claim, like whistleblowing, the employee can seek ‘interim relief’ if s/he applies very quickly after the dismissal. This means that if the employment tribunal thinks the claim is likely to succeed, it can order that the employment should continue until the tribunal claim is finally decided, so the claimant continues to be paid. More: Interim relief in the Employment Tribunal (outertemple.com), May 2020.

Interim relief is a particularly live topic in 2020/2021 because of increased delays in employment tribunal hearings due to Covid-19.

The Equality Act does not give a right to interim relief on dismissal. However the Employment Appeal Tribunal has said it should do, and the matter is going to Court of Appeal:

Steer v Stormsure Ltd (bailii.org), Employment Appeal Tribunal (EAT), 2020
The claimant alleged that she was dismissed by the employer and that the dismissal amounted to sex discrimination and/or victimisation. She claimed interim relief. She accepted that the Equality Act does not provide for interim relief, but argued that it should be available under EU law or under the European Convention on Human Rights.

The EAT dismissed the argument that lack of interim relief for discrimination was a breach of European Union law. However it accepted that the lack of interim relief is a breach of Article 14 (with Article 6) of the European Convention on Human Rights. No justification had been given why interim relief was available for whistleblowing but not for discrimination. The Government did not respond to an invitation to intervene in the appeal, and the employer (a private company) was not in a position to say why the difference exists.

The EAT did not have power to make a declaration of incompatibility under s.3 Human Rights Act 1998. Also the EAT considered it wrong to read into the legislation a right to apply for interim relief in discrimination/victimisation claims arising from dismissals. However the EAT granted the claimant leave to appeal to the Court of Appeal on the human rights issue, so that the Court of Appeal could consider whether to grant a declaration of incompatibility for breach of Article 14.

If the Court of Appeal (or Supreme Court if the case goes further) makes such a declaration of incompatibility, the Government will hopefully comply by amending the Equality Act to provide for interim relief in respect of dismissals which breach that Act. The argument is not based on EU law and so it not affected by Brexit.

Links:

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