Compensation in discrimination cases should put employee back in the position they would’ve been in but for the discrimination

Adrian Fryer

Once an employee has been successful in a claim of discrimination, the attention turns to the question of remedy. Compensation can include

• financial loss (particularly loss of earnings),
• injury to feelings,
• personal injury, including psychiatric illness (not dealt with on this page), and
• aggravated or exemplary damages.

The aim is to place the employee in the position they would have been in if they had not suffered discrimination. This point was considered recently in the case of Gourlay v West Dunbartonshire Council. The Claimant was dismissed for gross misconduct. He claimed to have developed a serious depressive illness as a result of his treatment by the Respondent. He brought claims of unfair dismissal, disability discrimination and victimisation. His claims were successful. The employment tribunal accepted that the Respondent’s discriminatory conduct had left the Claimant permanently unfit for work.

The tribunal, when assessing compensation, made an assessment of past and future wage loss and pension loss to the date of retirement. However, it reduced the award by 80%, considering the likelihood that the Claimant’s employment would have ended within a few years due to a relationship breakdown or a mutual agreement to leave. Alternatively, the tribunal found it likely that he would have taken ill-health retirement due to his other health conditions of MS and type 2 diabetes, regardless of his depressive episode.

The Claimant appealed the compensation decision. The Employment Appeal Tribunal upheld the appeal, finding errors in the tribunal’s approach:

• Compensation for discrimination should restore the employee to the position they would have been in if not for the employer’s unlawful actions.
• The tribunal wrongly reduced compensation based on the likelihood that the Claimant would have been fairly dismissed within a few years. Since the discriminatory dismissal left him unable to work, a reduction was only justified if a lawful dismissal would have had the same effect. There was no evidence to suggest that a later, lawful dismissal, would also have left him unable to work again.
• The tribunal also reduced compensation based on the possibility that the Claimant’s other health conditions might have led to ill health retirement in any event. However, this was based entirely upon speculation rather than upon evidence so was found to be perverse.

The issue of remedy was remitted to a differently constituted tribunal.

This case is an important reminder that, when looking at compensation for discriminatory dismissals, it is not enough to point to a potential dismissal which might have occurred in the near future and say that that should form a cap on compensation. If that dismissal would not have caused the same hardship that the discriminatory dismissal did (here, an inability to work again), then it will not break the chain of causation or justify a capping of compensation.

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