Pay-outs and prejudice

Employees who are racially abused at work can claim
psychiatric injury compensation, even when the incident and its effect on the
individual could not have been anticipated by their employer. By Jacqueline

The Court of Appeal has confirmed that an employee can
recover compensation for psychiatric injury resulting from an employer’s act of
race discrimination, even where the employee’s reaction is unforeseeable and

This decision was made in the case between Essa v Laing
Ltd on 21 January 2004. Yashin Essa was subjected to a racially abusive remark
by one of his fellow employees which was overheard by a number of his
colleagues. The remark was found by the employment tribunal to be “grotesquely
offensive”. At the time of the remark Essa was extremely hurt and in tears and
he later told the employment tribunal that the remark had so affected his
health that he had been treated by his doctor for severe depression and had
stopped looking for work. He also said that he continued to feel distressed at
the way he had been spoken to and would take the incident to his grave. It was
clear that, as a result of the remark, Essa had suffered and continued to
suffer from a severe psychiatric injury.

The question arose in the employment tribunal as to whether
Essa should receive a financial award in the form of compensation for the
psychiatric injury which he had sustained. On the one hand, his employer said
that the remark was a one-off incident, that Essa’s ongoing reaction to the
remark was extreme and that he could not expect to receive a financial award
for a psychiatric injury which was wholly unforeseeable by his employers. On
the other hand, Essa said that whether or not the psychiatric injury which he
had suffered was foreseeable or extreme was irrelevant and that he was entitled
to receive compensation by reason of the fact that the injury arose as a direct
result of the racially abusive remark which had been made.

The case reached the Court of Appeal who supported the
argument advanced by Essa. They made a distinction between an injury caused as
a result of a breach of the Race Relations Act 1976 (as in Essa’s case) and an
injury caused as a result of the common law tort of negligence.

In the latter, the Court of Appeal said that injury caused
as a result of negligence could be committed by accident. In the former, it was
stated that the statutory tort of breach of the Race Relations Act 1976 could
not be committed by accident. This was, they said, a crucial difference. The
act of racial abuse towards the employee in this case was deliberate conduct,
and although the abuse was verbal and not physical, it was akin to an act such
as assault. Therefore, they said that there was no need to impose a requirement
that the injury was foreseeable in addition to the requirement that the injury
flows naturally and directly from the wrong.

The Court of Appeal also considered whether the reference
in the Race Relations Act 1976 to “injury to feelings” allowed an award of
compensation to be made for personal injury such as psychiatric injury. They
found that the legislation did allow for compensation for personal injury
although in some circumstances there may be a considerable overlap between the
two. Tribunals were, nevertheless, entitled to consider both. In practice, this
means that where the financial consequences suffered by the individual with a
psychiatric injury are high, such as loss of earnings if the individual is
unable to return to employment for some time (as in Essa’s case), the financial
impact of this will be considerable for the employer.

The Essa v Laing case underscores yet again the potential
for individuals to obtain high compensatory awards from employment tribunals as
a result of the discriminatory conduct of their employers. Although Essa’s
claim was one of race discrimination, the same principles apply in relation to
discriminatory acts under other UK discrimination legislation, such as sex,
disability, religion etc. Where a discriminatory act directly causes a
psychiatric injury, this forms the basis for a valid claim and compensation
under the UK discrimination statutes is, of course, uncapped.

Employers would therefore be well-advised to ensure that
their staff have received training in their employer’s anti-discrimination
policies to hopefully avoid the potential of costly claims.

Jacqueline McCluskey is senior associate in employment,
pensions and incentives at Dundas & Wilson. Tel: 0131 200 7488

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