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Warning to employers of the financial cost of discrimination

The Employment Appeal Tribunal has recently declared that a one-off act of discrimination can fall into the middle band of injury to feelings award, significantly increasing the potential financial exposure to employers.

Compensation for acts of discrimination

Where an employee brings a successful claim of discrimination to the Employment Tribunal can make an award for injury to feelings. Such awards are assessed using what have become known as the Vento guidelines, following the case of Vento v Chief Constable of West Yorkshire Police (No 2).

There are three bands (lower, middle and top) and a combination of guidance and case law usually determines which band a particular claim will fall into. For example, a less serious or one-off act of discrimination would normally fall within the lower Vento band which, for acts of discrimination occurring after 6 April 2019 ranges from £900 to £8,800. The middle band, for more serious acts of discrimination, now ranges from £8,800 to £26,300 with the top band being reserved for the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment, and ranges from £26,300 to £44,000.

However, the recent case of Otshudi v Base Childrenswear Limited has highlighted that even one-off acts of discrimination are capable of resulting in an injury to feelings award within the middle band.

Brief facts of the case

In this case, the claimant, Miss Otshudi, was dismissed after three months’ employment with the respondent. On 19 May 2016, Mr Granditer, managing director of the respondent, called Miss Otshudi into his office and informed her that he was dismissing her for reasons of redundancy. This came as a complete surprise to the claimant. Mr Granditer had requested the presence of two other senior managers in the meeting in order to stand witness and to affirm that it was a redundancy situation.

The claimant questioned the genuine reason for dismissing her and believed it to be an act of discrimination. At the time and following her dismissal, Miss Otshudi made it clear that she had felt that she was being treated differently because of her race. She stated it at the time she was dismissed and again in her subsequent grievance and claim form. The respondent did not respond at all to her grievance.

The claimant brought a claim of victimisation and seven claims of discrimination and harassment on the grounds of race. Of these, six claims were dismissed for being out of time. The seventh claim was a claim of direct race discrimination that was brought one day out of time. Due to the different nature of the details of this particular claim, the tribunal agreed to extend time and allowed this claim to proceed.

Three weeks before the final hearing, having submitted a response to the claim that the dismissal was for reasons of redundancy, the respondent changed its position and attempted to amend its response to state that the claimant was dismissed upon suspicion of theft. At this point, it became evident that Mr Granditer and the managers that had affirmed what he had said to the claimant had been dishonest and complicit in his lie. While the respondent’s application to amend was permitted, their lateness in amending the response and complete turnabout of facts cast doubt on their version of events and their creditability as witnesses. In addition, the witnesses were inconsistent and amended their statements at the time of the hearing (with the tribunal’s permission).

The respondent’s witnesses were questioned about the alleged theft committed by Miss Otshudi. None of the witnesses were able to provide solid evidence or reasonable grounds for suspecting her of theft nor had they kept any evidence to provide to the tribunal to support their case. The tribunal found the circumstances hard to believe particularly in consideration of the persistent assertion that the dismissal had been for the reasons of redundancy.

The tribunal upheld the claimant’s direct race discrimination claim.

The remedy

As mentioned above, the normal approach for an injury to feelings award for a one off act of discrimination would be for it to fall within the lower Vento band, which at the time of the act of discrimination in this case ranged from £660-£6,600. However, the tribunal felt that Miss Otshudi’s claim fell into the middle band and awarded an unprecedented amount of £16,000.

The tribunal took all the circumstances into account and noted that, while usually the Vento guidelines would suggest the lower band would be used, it was “absurd” that the tribunal should be bound to do so considering the seriousness of the complaint and also the way in which the dismissal had been dealt with by the respondent. In particular, the tribunal took into account the false reason for dismissal and the fact that it had been clear that the claimant was good at her job and was expecting a much longer period of employment with the respondent.

In addition to her injury to feelings award, the claimant was also awarded an uplift of aggravated damages of £5,000 along with £3,000 for personal injury in respect of the depression she had suffered following her dismissal. In addition, she received loss of earnings, interest and a 25% uplift awarded for the respondent’s failure to follow the ACAS Code of Practice. The claimant was awarded a total of £38,927.80 along with an order for the respondent to pay £300 in respect of costs.

Important lessons for employers

This case is an important reminder to employers that acts of discrimination can have significant financial consequences. The Vento guidelines are just that, a form of guidance, and employers should be aware that a tribunal is not bound to follow them and that, in appropriate circumstances, a one-off act could fall into the middle Vento band, increasing the organisations’ financial exposure much more than anticipated.

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