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Employment remedies: Compensation and recommendations

If an Employment Tribunal finds there has been a breach of the Equality Act, the main remedy it can award is compensation. A tribunal can also make recommendations. There is a separate page on Resolving disputes.

Summary

A tribunal can

This page focusses on compensation and recommendations.

On compensation, in discrimination cases the two most important categories are normally injury to feelings and loss of earnings. Unlike unfair dismissal, there is no upper limit on the amount of compensation. 'Vento bands' give guidance on level of compensation for injury to feelings.

A tribunal can also make recommendations. Since Equality Act 2010 these do not have to directly benefit the claimant. So if the claimant has left, a recommendation may be made to benefit other employees.

Compensation

Compensation can include financial and other loss (particularly loss of earnings), injury to feelings, and aggravated or exemplary damages. There is a longer summary in the Employment Code 15.40-43).

Unlike unfair dismissal, there is no legal limit on the amount of compensation that can be awarded. The 'Vento bands' developed by the courts set limits for injury to feelings, but the Michalak case below illustrates how there is no limit on other compensation, most importanly loss of earnings.

Injury to feelings: the 'Vento bands'

A Court of Appeal case called Vento v Chief Constable of West Yorkshire Police (2002) distinguished three bands of compensation for injury to feelings, often called the 'Vento bands'. These have been increased for inflation in a subsequent case but are still known as the Vento bands.

The figures above are the amounts as adjusted for inflation by Da'Bell v NSPCC (link to bailii.org), 2009, subsequent to Vento.

It is possible that those bands should be increased by a further 10%, under a case called Simmons v Castle. However, it is unclear whether this applies to Equality Act compensation for injury to feelings. A March 2014 statement of the Vento bands gives higher figures than above based on a 10% uplift - see page 20 of the Presidential Guidance on General Case Management (pdf), 2014. However, there are conflicting EAT decisions: see www.employmentcasesupdate.co.uk/site.aspx?i=ed26490.

A current issue is tax treatment of compensation for injury to feelings. It seems there is a tax case saying the recipient is liable for tax on these payments. This would normally mean the employer would be ordered to pay more, ie to 'gross up' the compensation for tax, so that the claimant receives the appropriate amount net after any tax bill. However the employment appeal tribunal is saying the payment is not taxable, so that grossing up is not appropriate. This risks leaving claimants caught between conflicting decisions of two different sets of tribunals, and out of pocket. See www.employmentcasesupdate.co.uk/site.aspx?i=ed26490

In 2011, the median injury to feelings award (including aggravated damages) in disability discrimination cases was £5,000. Of 45 awards, 3 were below £1000, and 26 were above £5,000. Source: Equal Opportunities Review, August 2012, p227ff.

A clamant can recover for injury to feelings attributable to the act complained of, a dismissal for example, without needing to attribute the injury specifically to knowledge of discrimination (Taylor v XLN Telecom (external link), EAT, 2010).

Loss of earnings

Broadly, the aim is to put the employee (or job applicant) in the financial position he would have been in had there been no discrimination. There is a great deal that could be said about how to calculate compensation for loss of earnings. I shall just pull out a couple of points:

In Michalak v The Mid Yorkshire Hospitals NHS Trust (2011) the Employment Tribunal awarded a record-breaking £4.5 million compensation in a sex and race discrimination claim by a consultant physician. There had been a concerted campaign to get rid of the claimant. Her treatment resulted in a psychiatric illness, and what was likely to be a permanent change in her personality. The tribunal concluded that she would never return to work as a doctor. The major part of the compensation was for loss of earnings and pension.

Compensation for other kinds of loss is also possible but not so common in discrimination cases. In Michalak part of the compensation was for pyschiatric illness suffered as a result of how she was treated, and medical costs.

Indirect discrimination

Tribunals are asked to consider whether or not other remedies are more appropriate in respect of unintentional indirect discrimination (s.124(4)(5) EqA, Employment Code para 15.44-45). However, this may be less relevant for disability claims, since there will often be alternative claims for the reasonable adjustment duty and 'discrimination arising from disability'.

Aggravated or exemplary damages

...... - aggravated damages (England and Wales only) which are awarded when the respondent has behaved in a high-handed, malicious, insulting or oppressive manner; and
- punitive or exemplary damages (England and Wales only) which are awarded for oppressive, arbitrary or unconstitutional action by servants of the government or where the respondent's conduct has been calculated tomake a profit greater than the compensation payable to the claimant.
Employment Code para 15.40

A case discussing aggravated damages:

HM Land Registry v McGlue (link to xperthr.co.uk), Employment Appeal Tribunal (EAT), February 2013
The EAT discussed the requirements for an award of aggravated damages, and held that they were not met in this case.

A comment about exemplary damages and a 2009 case: www.employmentlawadvocates.com/exemplary-damages/

Enforcement: will I actually receive the compensation?

Research published in November 2013 found that over half of claimants do not receive the compensation awarded, and more than a third receive none of it.The Goverment has said it is looking to measures to help this situation. See: Research has found over half of individuals awarded a pay out following an employment tribunal hearing do not receive their award in full (link to gov.uk),1/11/13.

The situation is made more serious by the introduction of tribunal fees from July 2013. The main fees must initially be paid by claimant. If the claim is succesful, the tribunal can order the employer to repay the fees to the claimant. However, if the employer does not pay out compensation awarded, most likely it will not repay out the tribunal fees either, leaving the claimant even more out of pocket even though he or she has won the claim.

These figures relate to awards made following a tribunal hearing (or by a default judgment). Many cases settle before a hearing. I would expect that where there is a settlement, claimants are much more likely to receive payment.

ln April 2010, a fast-track scheme came into force in England and Wales to help enforcement where compensation has been awarded but not paid: Fast-track employment tribunal scheme (link to Personnel Today article, 19/5/10). For how to use the fast-track scheme, as well as (a bit) more on enforcement generally, see Taking your employer to an employment tribunal: If you win your case (link to gov.uk). However, even before the November 2013 research above, there had been that been reports that the fast track process is often ineffective, and can be a waste of the fee. See Fast Track to nowhere (link to http://blogs.citizensadvice.org.uk), February 2013.

2015 Act

New legislation will (when in force) allow an employer to be served with a warning if it fails to pay compensation awarded. If the employer still fails to pay, it would be liable to a penalty, but payable to the government rather than the claimant.

The rules are in s.150 Small Business, Enterprise and Employment Act 2015 (link to legislation.gov.uk).

Recommendations

Recommendations: Summary

Employment tribunals have power to make recommendations in discrimination cases.

Before Equality Act 2010, a tribunal could only make a recommendation which directly benefited the claimant. In practice the claimant had often resigned or been dismissed. This meant no recommendation could be made, because future improvements by the employer would not benefit the claimant. Under Equality Act 2010 a tribunal can now make a recommendation even if it only benefits other employees.

Unreasonable failure by the employer to comply with a recommendation as regards the claimant can result in increased compensation. A recommendation is not enforceable so far as it relates to other employees.

The power to make a recommendation which does not benefit the claimant is being repealed from October 2015. See below Abolition of wider power to make recommendations.

In more detail

Under EqA s.124 a tribunal is allowed to make a recommendation to take certain steps within a specified period "for the purpose of obviating or reducing the adverse effect of any matter to which the proceedings relate". So recommendations can help prevent similar types of discrimination occurring in future.

The Equality Act Explanatory Notes (link to legislation.gov.uk) para 406 says a tribunal could, for example, recommend the employer:

A survey of the most common recommendations in 2012 is included in Substantial increase in "wider action recommendations" by ETs in 2012 (link to blog.rubensteinpublishing.com).

A tribunal might recommend awareness training in communication disabilities. The present rules in Equality Act 2010 allow a tribunal to recommend this even it the claimant has left the company and so will not benefit.

Crisp v Iceland Frozen Foods Ltd [2012] EqLR 618, Employment Tribunal.
A claimant with depression succeeded in a claim for discrimination and harassment. She had now left the firm. Her claim related partly to a refusal to allow her husband to accompany her at a disciplinary hearing regarding sickness absence, and partly to a conversation which had been overheard between a manager and HR manager making fun of her disability. As well as awarding compensation, the employment tribunal recommended that (1) those in HR providing advice for managers on disciplinary and grievance processes undergo training in disability discrimination specifically relating to mental health, and (2) all managers at the level of the manager involved in this case should undergo training in issues surrounding disability discrimination generally.
Tribunal issues a recommendation against Iceland Frozen Foods (link to didlaw.com), 14/6/12.

Talbot v The Whitbread Group plc, 2011, Employment Tribunal case no.2503169/11
There was held to be a failure to make reasonable adjustments, which was also harassment. The claimant was no longer employed there. However, the the tribunal made recommendations under Equality Act 2010, including that equality awareness training be arranged for managers.

Enforcing a recommendation

Failure by the employer to comply with a recommendation, without reasonable excuse, can result in increased compensation in so far as the recommendation relates to the claimant (EqA s.124(7)).

A recommendation is not enforceable so far as it relates only to staff other than the claimant. However, the Government has said that if the employer does not comply with a recommendation and a further claim is made, the tribunal will be able to take the earlier recommendation into account, which may result in a tougher ruling. Tribunal judgments, including recommendations, should in due course be available on the Tribunal Service's website so one can search for previous recommendations made to an employer.

Guidance in Parliament on recommendations

The Solicitor General gave some clarification on the new power in response to questions in the House of Commons Committee on the Equality Bill. She was asked among other things what length of specified period was envisaged, and what leeway should organisations have to achieve a particular outcome since they may come up with ways of achieving it which are new and different from those envisioned by the tribunal. The Solicitor General said:

"The key is that any recommendations made to benefit the broader work force and indeed the business would have to be proportionate to the case that is brought, otherwise it would be unlawful. That is a general principle that has found greater emphasis since we brought the European convention into our law. To answer the specific point about time, it would have to be a reasonable period. There might be more creative ways of doing something that a tribunal recommends. The sensible thing would be for the parties to get together first, discuss it and suggest it to the tribunal, which could then recommend it. If parties thought there were a better way forward, that approach would give the tribunal the opportunity to avoid recommending something that was perhaps less suitable...

[And in respose to whether tribunals tend to mandate outcomes or process:] Some typical recommendations that might help include taking steps to implement a harassment policy more effectively; providing equal opportunities training for staff involved in promotion procedures; and introducing more transparent selection criteria in recruitment transfer or promotion processes. Those seem to be fairly process-based..." (col 512-513, Public Bill Cttee, 25th June 2009 (link to UK Parliament website))

Stammering case

Recommendations made in Wakefield v HM Land Registry, a stammering case, were subsequently revoked by the tribunal because they failed to specify a period within which the employer must take the action. (The tribunal's decision as a whole was also overturned on appeal, for other reasons.) This was under pre-Equality Act rules, but EqA s.124 also says there should be a specified period.

Abolition of wider power to make recommendations

The power to make recommendations which do not benefit the claimant is being repealed from 1st October 2015 (s.2 Deregulation Act 2015, with commencement order 2015/994). However, the power currently remains in force. See Consultation on repeal of two enforcement provisions (link to homeoffice.gov.uk), which includes the Government's response to the consultation. The repeal is part of the Red Tape Challenge. See Red Tape Challenge: employment repeals.

From the Government's response to the consultation:

107. Wider recommendations are discretionary on employers. In our view, the types of recommendations made in the tribunal cases so far show that in practice, wider recommendations have tended to be obvious and non-technical - in particular that an employer's human resource practices should be improved or that staff be given equality training.

108. The Government considers that whilst the types of recommendations made highlight wider issues around lack of awareness and knowledge by employers of equality and employment law, the wider recommendations provision is not the right way to address this issue. We think a better approach is through the practical non-legislative measures proposed by the Government in May 2012 as part of the Red Tape Challenge equalities package announcement. We intend to work with businesses, particularly small businesses and their representative organisations to increase understanding of compliance and best-practice in avoiding risk of adverse tribunal decisions; and through very short, straightforward web-based guidance for small businesses on equality law areas known to be particularly difficult for them.

Before Equality Act 2010

Under previous law, which is likely to apply again when the repeal discussed above takes effect, the tribunal could only make a recommendation which directly benefited the claimant. This could allow considerable scope provided the claimant was still employed:

In Lycee Francais Charles de Gaulle v Delambre (link to bailii.org) (EAT, 2011) where the claimant remained in her post, the employer was recommended to review its employment policies and undertake a programme of equality and diversity training.

Another case recommending awareness training where the employee remained was London Borough of Southwark v Ayton (2003) (link to Word doc on EAT website).

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Last updated: 26th April 2015