The Financial Costs of Discrimination

Compensation
posted by KeithDaniel

The recent case of Miss N Lomana Otshudi v Base Childrenswear Ltd, serves as a reminder to employers that acts of discrimination can have significant financial consequences.

Background

In this case, the Claimant, Miss Otshudi, was dismissed after three months’ employment. The Respondent stated that the reason for her dismissal was redundancy. Miss Otshudi appealed her dismissal and raised a grievance stating that the real reason for her dismissal was due to her race as she alleged that she had suffered racial harassment and discrimination since starting her job. The Respondent did not respond to the grievance so Miss Otshudi brought a claim of discrimination on the grounds of race in regards to her dismissal.

Three weeks before the final hearing, the Respondent stated that the real reason for Miss Otshudi’s dismissal was that she had been suspected of theft. Miss Otshudi was never informed of this allegation. This late amendment to the Respondent’s defence cast doubt on its witnesses’ credibility.

The Respondent’s witnesses were questioned about the theft allegation, however none of them were able to produce any solid evidence or reasonable grounds for suspecting her of theft.

The employment tribunal held that Miss Otshudi had been subjected to direct race discrimination. It was determined that the Respondent had been dishonest about the real reason for dismissal and that it had failed to deal with Miss Otshudi’s grievance.

The remedy

In discrimination claims the bands of compensation that an employment tribunal can award for injury to feelings are known as the Vento bands. The compensation takes into account the hurt and upset that the employee has suffered.

The Vento bands act as guidelines for the amount of compensation that should be awarded, however, employment tribunals are entitled to use their discretion in assessing the award.

The three Vento bands are set out as follows:

  • Lower Band - £900 to £8,800 – appropriate for less serious cases, such as where the act of discrimination is an isolated or one-off occurrence.
  • Middle Band - £8,800 to £26,300 – serious cases which do not merit an award in the highest band.
  • Upper Band - £26,300 to £44,000 – the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment.

In this case, as the employment tribunal only dealt with the one claim of discrimination being Miss Otshudi’s dismissal, the Respondent argued that as this was only a one-off act of discrimination, the compensation awarded should fall within the lower band. However, the tribunal felt that Miss Otshudi’s claim fell within the middle band and therefore awarded a remarkable amount of £16,000.

The tribunal acknowledged that whilst the Vento bands would usually suggest that an amount within the lower band should be awarded, it felt that it would be “absurd” for the tribunal to be bound by the Vento bands when considering the seriousness of the claim and how the Respondent dealt with the dismissal. The tribunal also took note of the fact that Miss Otshudi was good at her job and had planned to work for the Respondent for the foreseeable future.

Miss Otshudi was also awarded £3,000 for personal injury as she had suffered from depression following her dismissal, and £5,000 aggravated damages. In addition, she received loss of earnings, interest and a 25% uplift as a result of the Respondent’s failure to follow the Acas Code of Practice. In total, Miss Otshudi was awarded £38,927 as well as £300 in respect of her costs.

The Respondent appealed the decision to the Employment Appeal Tribunal (“EAT”) arguing that Miss Otshudi’s compensation should have fallen within the lower band. However, the appeal was dismissed as the EAT agreed with the tribunal’s decision when considering the seriousness of the claim.

Conclusion

This case highlights to employers that discrimination claims can have significant financial consequences even where the discrimination complained of constitutes a one-off act. Employers should always ensure that they have a fair reason for dismissal which can be supported by evidence. This case also serves as a reminder of how important it is for employers to take account of the Acas Code of Practice as a claimant’s compensation could be increased by up to 25% where the employer fails to follow it.

Please contact us if you would like more information about the issues raised in this article or any other aspect of employment law on 029 2034 5511 or at employment@berrysmith.com.