With compensation levels for discrimination cases reaching a record high,
alarm bells should be ringing for employers. Ben Willmott reports
The risk of discrimination in the workplace was spelt out in real terms to
employers last week, after research revealed a dramatic increase in payments to
victims of discrimination.
UK companies were ordered to pay out a record £3.53m compensation in unlawful
discrimination cases in 2000, according to a study by IRS Equal Opportunities
Review. This marks a rise of 38 per cent on the previous year.
Of that £3.53m, almost 50 per cent was for sex discrimination, 34 per cent
was for race discrimination and 18 per cent for disability bias.
Compensation awarded for injury to feelings (£1.53m) made up 43 per cent of
EOR editor Sue Johnstone believes the statistics show many employers are
still not placing enough emphasis on good HR practice.
"These latest figures are a wake-up call for employers. Not paying
proper attention to equal opportunities in the workplace is costing
organisations a massive amount of money.
"Yet such losses are avoidable," she added. "Forward-thinking
employers have proved that implementing good equal opportunities policies and
practices is a cost-effective way of getting the best out of every employee.
"This makes sound commercial sense for its own sake and has to be of
benefit to every business." She urged employers to act now to reap the
financial rewards of good business practice and to avoid damaging and costly
discrimination claims in the future.
Employers will have to be even more vigilant over workplace discrimination
following new European legislation on race, sexual orientation and religion, to
be implemented in 2003.
Additional anti-discriminatory laws on disability and age will follow in
2004 and 2006 respectively.
Johnstone said: "The potential for further loss is set to rise with the
outlawing of discrimination on grounds of religion or belief, age and sexual
orientation in the next few years."
The Commission for Racial Equality believes the real cost to business of
workplace discrimination is even higher than the figures suggest.
The CRE’s analysis of the decisions in 2000, shows that 36 per cent of cases
were settled "out of court", without allowing the tribunal to
consider the case and decide whether unlawful discrimination had occurred.
Gurbux Singh, the commission’s chairman, commented: "While the exact amount
of compensation in settled cases often remains confidential, employers still
have to spend time and money on resolution. Although these costs remain hidden
from public scrutiny, they can be sizeable.
"We welcome the fact that Equal Opportunities Review is giving
publicity to the compensation awarded for race as well as sex and disability
discrimination. The statistics and case summaries they present allow both
employers and individuals to get a picture of the consequences of race
discrimination at work."
The CRE also welcomes the growing sensitivity with which tribunals are
approaching this issue.
"It is clear that tribunals are beginning to recognise the full impact
race discrimination has on individuals. To experience discrimination is undermining
and debilitating and often leaves people unable to work for a long time,"
"The business case for employers should now be overwhelming. Many more
cases involve long-serving employees, and tribunals need to weigh up not only
loss of wages but pension benefits, promotion opportunities and other factors
in determining the level of compensation for loss of income," he said.
Russell Brimelow, partner at employment law firm Boodle Hatfield, believes
the figures show that tribunals are becoming more confident in making awards.
He suspects the actual cost to business of workplace discrimination is
significantly more than that awarded to employees in compensation by employment
tribunals because the hidden costs of settlements has also increased.
"No win, no fee employment litigation may also have contributed to the
increase in compensation awards," he said.
Plans to encourage employers and employees to use internal grievance
procedures to prevent complaints reaching employment tribunals will help settle
disputes over discrimination at an earlier stage, claims the Equal
A spokesman for the commission said: "The Government has proposed that
all employers should be obliged to have an internal grievance procedure. Properly
implemented grievance procedures should help employers resolve more complaints
in the workplace. It should mean fewer cases are taken to tribunal, which can
be a lengthy and difficult process for everyone concerned.
"However, it is essential that workers who are unable to resolve their
complaint at work or are unable to use the grievance procedure continue to have
the option of going to a tribunal, and receiving appropriate levels of
compensation if their claim is found to be justified."
Employers have to create work cultures where discrimination cannot exist, he
"The figures show the costs to employers of not treating staff fairly.
Good employers ensure they avoid such costs by complying with
Discrimination cases: top payouts in 2000
Ninsiima v London Borough of Waltham Forest
Injury to Feelings £30,000 (including aggravated damages)
Haddock v Sema Group
Virdi v Commissioner of Metropolitan Police
Injury to Feelings £100,000 (including aggravated
Virdi v Commissioner of Metropolitan Police
Bower v Schroder Securities
Injury to Feelings £30,000
Southwick v Smith & Jarvis & Castleton & Mali-Uddin & Hull Race