Career-long discrimination compensation award reduced

The Court of Appeal has reduced a career-long discrimination compensation award, finding that an employer only has to compensate a former employee up to the point where it is likely that the individual would have found an equivalent job.

In the case of Wardle v. Credit Agricole Corporate and Investment Bank ('Calyon'), the Court of Appeal found that the Employment Tribunal had erred in awarding compensation for career-long loss (over some 15 years from 2008 until Mr Wardle’s anticipated retirement in 2024). 

After dismissal in July 2008 Mr Wardle quickly got a new job with the FSA but at lower pay.  The Tribunal found that there was an 80% chance that he would have left his job with the bank in April 2010, reducing compensation from that point on by 80%.  A further reduction was applied from the end of 2011 on the basis that there was a 70% chance that he would have returned to an equivalent job in banking at that stage.

In addition, the Tribunal had awarded a 50% uplift on the compensation, in the light of the finding that the employer had failed to follow statutory procedures (which have since been abolished).  In those circumstances the Court of Appeal found that it had been wrong of the Tribunal to assess compensation after the end of 2011.  Mr Wardle should have been awarded compensation only until the point where there was a 'better than even’s chance' that he would have obtained an equivalent job.  In fact, in the light of the Tribunal’s findings, the Court of Appeal found that this was June 2011.

Rachel Dineley, Employment Partner and Head of the Diversity and Discrimination Unit at law firm Beachcroft LLP, commented:

“Common sense has again prevailed in the long-running debate as to how to assess compensation, when contemplating a successful claimant’s future losses. The challenge is in predicting what is likely to occur, in the light of the individual’s circumstances and the degree of success that they have had in finding alternative employment, by the time that the Employment Tribunal comes to assess compensation.  Economic uncertainty and a difficult job market may add to the challenge, in the short term, but the Tribunal is obliged to take a long-term view, addressing the issue in stages.  In this case the Tribunal took account of the ‘extraordinary circumstances prevailing in the financial services sector at the relevant time’, the  career path followed by the claimant, including how often he changed jobs, and his age.

“The structured approach taken by the Court of Appeal will give some comfort to employers who face the prospect of very substantial compensation claims if they have been guilty of discrimination or victimisation. The decision, delivered yesterday, is also very helpful in confirming that, when exercising its discretion as to whether to uplift any award of compensation, the maximum 50% uplift should be ‘very exceptional indeed’ and should only apply in ‘the most serious cases’ and should not be applied to any injury to feelings award (which are not available in unfair dismissal cases).  In assessing the uplift, a Tribunal must take account of the size of the award being made, so as not to penalise an employer unduly. While the ability to pay is not relevant, the size and resources of the organisation will be, in considering the culpability of the employer.

“Due to the subsequent abolition of the statutory procedures, Tribunals must now have regard to whether the employer unreasonably failed to comply with the ACAS Code of Practice on Discipline and Grievances, when deciding whether to award an uplift.  Nonetheless, [this] decision is highly relevant, emphasising as it does the balance to be struck in undertaking this often controversial and difficult exercise."