Paying over the odds?

city analyst recently received almost £1.5m in compensation after a tribunal
found her employer, Schroder Securities, paid her male colleagues higher
bonuses. Julie Bower’s award came as figures revealed a dramatic rise in
payments to victims of discrimination. Are they too large and part of an
increasing compensation culture in the UK? Compiled by Sarah Jane North

Sarah Vale
Senior employment rights officer, TUC

It is wrong to say that there is a compensation culture when it comes to
employment law cases. There is no upper limit on compensation in discrimination
law and it is only in rare cases that we see these spectacular awards. Yes, the
median award for discrimination has gone up but one has to look at
discrimination cases in a completely different light to other employment law

They make up only a very small proportion of the total number of employment
cases taken to tribunal every year. The majority of claims are for unfair
dismissal and the average award in those cases is just £3,500, which I don’t
think anyone could describe as extortionate.

Most other cases are for unlawful deductions where the employee is simply
trying to get back monies that their employer unlawfully deducted from their
pay. Settlements are mostly for very small amounts and people are simply trying
to right a wrong.

The idea that there is an army of money-grabbing employees out there is
wrong and is distorted by those high-profile cases, such as Julie Bower’s.
There is major confusion between claims for personal injury or medical
negligence and run-of-the-mill employment cases.

Personal injury and medical negligence claims are made against the insurance
companies and the public sees them as fair game for the most part.

Another factor in discrimination cases is that the discrimination is hurtful
to people’s feelings and this is often played down. But it is very, very
difficult to deal with that sort of discrimination and obnoxious if an employer
allows it to exist. If a tribunal finds a company has discriminated against an
employee then the organisation deserves to be punished and the person who
suffered to be compensated.

Julie Mellor
Chairwoman, Equal Opportunities Commission

The UK’s compensation culture is a
myth born out of unbalanced media coverage and implying that claims were not
justified. Big awards are justified for the impact on the person who suffered
the discrimination. Good employers can avoid these costs by complying with
anti-discrimination legislation.

The Government proposes that all employers should have an
internal grievance procedure. Properly implemented, it should help employers
resolve more complaints. It is essential that employees who are unable to
resolve their complaint should have the option of going to a tribunal and
receive appropriate levels of compensation if their claim is found to be

Bill Godfrey
Director of employer relations, Thistle Hotels

Julie Bower’s award was equitable, as
she was entitled to the same bonuses that her male colleagues received.
However, such big awards cannot always be justified.

Cases such as Bower’s are reported extensively in the press, as
are many sex and racial discrimination cases involving large amounts of

This heightens employees’ awareness of the size of the awards
available which, I believe, has led to an increasing compensation culture in
the UK. A have-a-go mentality has resulted in a rising number of cases going to

People’s employment rights do need to be protected, but an
effective vetting system needs to be established to weed out frivolous cases
otherwise a compensation culture is inevitable.

Jackie Wiltshire
Head of personnel, Wokingham District Council

It is not helpful to generalise from
this case. The threat of compensation payments hasn’t stopped discrimination.
The important questions are about changing objectives. Should organisations be
ordered to spend equivalent sums on HR and diversity programmes to eradicate
future discrimination in their workplaces? Are discrimination laws designed to
change organisational behaviour or to make organisations pay wronged employees?

These are very different objectives. It’s only reasonable to
assume that employees would vote for being treated fairly in the first place.
But if it is only the first objective, compensation laws alone are never going
to achieve it.

Bruce Warman
Director of personnel, Vauxhall Motors

The Julie Bower award was high, but
limiting compensation might not be the answer. There have been some unrealistic
settlements running into seven-figures and these have created a culture where
people want to go for it and so encourage lengthy tribunal cases.

Discrimination cases, where there is no upper limit on
compensation, are generally the only ones worth a long fight and it encourages
a lack of willingness to settle by both parties. This is a concern because such
lengthy cases clog up the already over-stretched tribunal system.

The issue is whether to set a cap on discrimination awards. The
answer is probably not. Perhaps what we do need is more realistic settlement
guidelines to work to.

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