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Compensation in Discrimination Claims set to Increase

New “bands” for calculating compensation to Claimants for “injury to feelings” in discrimination claims have been published, which come into effect for claims brought on or after today, 11 September 2017.

For claims issued from today, compensation for “injury to feelings” will be at the following rates:

• Lower band: £800 - £8,400
• Middle band: £8,400 - £25,200
• Upper band: £25,200 - £42,000
• Exceptional cases: £42,000 +

What is injury to feelings?

Injury to feelings is compensation awarded in discrimination claims. It is compensation to a Claimant for “injured feelings” – i.e. the hurt, upset, anxiety or distress that they have suffered as a result of discriminatory acts.

A Claimant does not usually need to show medical evidence or a diagnosis of any psychiatric injury arising from the discrimination in order to claim injury to feelings. Where a Tribunal is satisfied that a Claimant has been subject to unlawful discrimination, it then assesses how much upset a Claimant has suffered, looking at all of the circumstances of the case before it, to decide how much compensation should be awarded for injured feelings. The Tribunal does that by categorising treatment into “bands”:

• The lower band. 

This band is used in less serious cases of discrimination, for example where the act of discrimination is an isolated or one off occurrence.

• The middle band. 

This band is helpfully described by the Tribunal as being for "serious cases, which do not merit an award in the highest band".

• The upper band. 

The Tribunal will find that an award in the upper band is appropriate in the most serious cases, for instance whether there has been a lengthy campaign of discriminatory treatment.  Only in the most exceptional cases will an award for injury to feelings exceed the upper band limits.

Once the Tribunal has determined which band the matter falls into, it then looks to the set compensation levels for that band in order to determine how much compensation the Claimant should receive.  So, if the Tribunal determines that the compensation awarded should be in the lower band, the Claimant will receive between £800 - £8,400 compensation for injury to feelings.  The Tribunal also has the power to award a Claimant other compensation on top of that, including for any financial loss suffered, and for being unfairly dismissed (if applicable).

Why the change?

Earlier this year, the Court of Appeal made clear that it felt that compensation for injury to feelings had fallen behind inflation and was therefore in need of adjustment. That prompted the increase.

What does this mean?

The increase in the compensation bands is dramatic. Previously, the limits were £600 - £6,000 for the lower band; £6,000 - £18,000 for the middle band; and £18,000 - £30,000 for the upper band. As a result, the potential exposure to employers in discrimination claims has markedly increased.

For discrimination claims brought on or after 11 September 2017, the position is simple; a Claimant can now recover more than they would have done had they issued the claim last week. That said, it is important to take this uplift against the backdrop that awards in the upper and exceptional bands are rare, with the current average award for discrimination claims being just under £14,000. Whilst that average may increase, it is unlikely that many will ever face the upper band awards above.

For ongoing claims, the position is less clear. The Tribunal may exercise its discretion to apply a percentage increase on the previous bands (likely a 10% increase), though it is unlikely it would apply the new bands absolutely to any existing claims. What happens in practice we will wait and see…

So, the advice to employers does not change: tread carefully and try not to unlawfully discriminate against employees…whilst it was potentially costly before, it is even more so now! If you are facing any allegations of discrimination, or are faced with the task of managing employees who you believe are likely to allege discrimination, please do not hesitate to get in touch with one of the team for advice.

If you would like more information on the content of this article please contact our Employment Team on 01603 281153.

Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance.