Legal Q&A: sex discrimination compensation payments

The case of top City lawyer Gill Switalski, who won a record £13.4m in compensation for sex discrimination and harassment, is symptomatic of the increasing sums being claimed in discrimination cases. An employment tribunal found that Switalski suffered less favourable treatment than a male colleague on account of her flexible working hours, which were necessary to take care of her disabled children but ultimately led to her resignation.

This is a warning to employers that unfair treatment of employees on the grounds of sex can result in heavy financial penalties. How are these figures calculated? And what can employers do to avoid paying large sums in compensation?

Q What options do employers have if an employee brings a sex discrimination claim?

A Once an employee has issued a claim to the employment tribunal the matter can be resolved in one of three ways:

  • the matter will go before the tribunal to determine,
  • the employer can settle the claim
  • the employee may decide not to pursue the case and withdraw the claim.

If there is a huge disagreement between the employer and the employee as to the value of the claim the employer may have no option but to allow the claim to go before the tribunal.

Q How are compensation payments structured?

A Compensation payments under all discrimination legislation are calculated on the basis of what is just and equitable for the employee to receive. The first element to be considered is ‘injury to feelings’ which compensates the employee for the actual discrimination. This will vary depending on how many acts of discrimination have taken place and how serious the discrimination was.

The employee is also allowed to claim for the loss flowing from the discrimination, for example, if the employee resigns and suffers a loss of earnings as a result of the discrimination, that loss is recoverable. The loss is assessed as damages so the employee will be put back into the position she would have been in had the discrimination not occurred. There is no upper limit for discrimination cases and interest is also awarded on the compensation element but not the ‘injury to feelings’ element.

Q How do tribunals assess injury to feelings?

A Compensation for injury to feelings is awarded on a “just and equitable basis”. The employment tribunal will consider the injury suffered by the employee and award accordingly. Case law has provided guidance on the level of damages to be awarded in claims of discrimination.

  • £500-£5,000 for one-off or less serious incidents
  • £5,000-£15,000 for acts over an extended period or more serious acts
  • £15,000-£25,000 for sustained and deliberate campaign of discrimination.

Generally, awards will not exceed £25,000 unless there are exceptional circumstances. It is also possible for the tribunal to award aggravated damages within the injury to feelings award if the employer’s conduct had aggravated the injury. The tribunal can consider if the employee has suffered a personal injury and if so, this can be taken into account when the injury to feelings award is assessed.

Q How are loss of earnings calculated?

A Calculating the amount of lost earnings and pension is not a straightforward exercise and is usually speculative, particularly where an employee’s pay might be discretionary and based on performance. Factors such as age/retirement issues, prospects of finding another job, the length of time taken to find another job and the state of the job market all play a part in assessing the loss of earnings. Additionally, an employee’s entitlement or otherwise to bonus/performance payments must be established.

Ultimately, the aim of the payout is to put the individual back into the position they would have been in if the discrimination had not occurred.

Q What preventative measures should employers take?

A Employers must ensure that they have a good equal opportunities policy in place, ensure that all staff are made aware of the policy and carry out adequate equal opportunities training regularly. Should an employer become aware that an employee has breached this policy, they must take early action against offenders.

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