Take steps to avoid costly sex discrimination claims

Earlier this month, a £104m sexual harassment claim was brought in New York against Toyota and its US chief executive by his former PA. She claimed he made repeated unwanted sexual advances, and that when she complained, she was involuntarily removed from her job.

This is the latest in a number of high-value sex discrimination claims. In January this year, six female staff launched a gender discrimination claim against investment bank Dresdner Kleinwort Wasserstein in which they alleged they were denied promotions and paid lower bonuses than male counterparts.

Employers are understandably concerned about a trend towards multi-million pound discrimination litigation. Many such claims have been brought in the US, where damages are awarded by jury trial and can include punitive elements of several million dollars. Where the US leads, the UK often follows, and there is evidence that mega-claims are crossing the pond.

Sex and the City

In 2004, Stephanie Villalba brought a £7.5m claim for sex discrimination, victimisation and unfair dismissal against investment bank Merrill Lynch (Villalba v Merrill Lynch [2004] EAT/0461/04).

In January, Claire Bright, a senior banking manager, issued an £11m claim for sex discrimination and unfair dismissal against a large high street and City bank. This claim is due to be heard later this year.

In April, Sue Storer, a deputy headteacher, lost her £1m sex discrimination and constructive dismissal claim against Bristol City Council in a case now infamous for her allegation that her employer discriminated against her by failing to replace a chair which made ‘farting’ noises. And earlier this month, Peter Lewis, former global head of equity trading at HSBC bank, lost his £5m compensation claim for discrimination on grounds of sexual orientation.

The trend towards high-value sex discrimination claims in this country is likely to continue.

Compensation for discrimination claims in the UK is potentially unlimited. It is a common tactic to bolt on allegations of sex discrimination to an unfair dismissal claim to increase the value of the complaint. This can pressure an employer to settle for a higher amount and avoid adverse publicity.

Employees on top

Changes made to discrimination laws in recent years, concerning the burden of proof and wider legal definitions of indirect discrimination and sexual harassment, have also made it easier for employees to assert discrimination.

Recent surveys of tribunal awards in sex discrimination cases also confirm a trend towards rising compensation levels. Publicity given to high-value claims is also likely to encourage even more claims.

But the picture is not entirely bleak for employers. Discrimination claims are not always bound to succeed (both Villalba’s and Storer’s failed). And the amounts claimed in many high-profile cases are distorted by the substantial salaries and bonuses earned by the employees concerned (Bright is reported to have earned more than £600,000 a year).

Even when sex discrimination claims do succeed, the compensation awarded is often lower than the amount claimed. In 2004-05, the highest award for sex discrimination was £179,026, although the average was only £14,158.

Court of Appeal guidelines state that compensation for injury to feelings, even in the most serious cases, should be limited to between £15,000 and £25,000 (Vento v Chief Constable of West Yorkshire Police (No.2), unlike the multi-million dollar punitive awards available in the US.

Uncommon claims

So far in the UK, mega-payouts for sex discrimination claims are rare. But employers should not be complacent, as tribunals will award substantial damages where appropriate. This includes cases of disability discrimination and (from October) age discrimination, where perceived disadvantage in the job market is more likely to lead to far higher awards.

As always, prevention is better than cure. Employers with the correct equal opportunities and anti-harassment policies and procedures, and who demonstrate proper implementation of such policies, will be well placed to defend discrimination claims. Employers that do not take these steps will be at risk.

Former City banker loses appeal against Merrill Lynch




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