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Discrimination compensation: Increase of 10% for non-financial loss

This landmark case is relevant to HR professionals, litigants in the Employment Tribunal and their advisers.

In the case of de Souza v Vinci Construction (UK) Ltd the Court of Appeal has confirmed that the 10% uplift to personal injury compensation established in the civil case of Simmons v Castle must also apply to the non-financial loss element of compensation for discrimination claims in the Employment Tribunal.  

What is the “Simmons v Castle” uplift?

Until 2013 successful claimants in civil claims operating under a Conditional Fee Agreement (CFA) could recover not only their legal costs from the losing party but also (1) a “success fee” of up to 100% of the claimant’s costs and (2) the premium for any After The Event (ATE) insurance purchased. One of the effects of this system was that respondents to claims (insurers, particularly) had little incentive to fight claims – even ones with little or no merit – because of the costs risks of losing were so great.

As a result of extensive changes to civil litigation practice and procedure in 2013 (known as the Jackson Reforms) success fees were abolished and claimants ceased to be entitled to recover ATE premiums from the losing party. However, to counter-balance the loss to claimants of their ability to recover success fees and ATE premiums, Lord Justice Jackson recommended that general damages for ordinary non-pecuniary (non-financial) loss should be uplifted by 10%.  This recommendation of a 10% uplift was implemented by Court of Appeal guidance in the personal injury case of Simmons v Castle.

What has this got to do with discrimination cases?

Just like those civil claims targeted by the Jackson Reforms, discrimination claims also contain an element of non-pecuniary loss (mainly injury to feelings) and certain discrimination claims can be brought in the County Court.   Crucially, the Equality Act, under which discrimination claims are brought, contains a provision which states that there must be parity of compensation between the Employment Tribunal and the County Court.

It has been on these grounds that the argument has been run through the Courts and Tribunals that the non-pecuniary element of compensation in discrimination claims should similarly be uplifted by 10%. Those who have disagreed have generally run the counter argument that the Jackson Reforms were only ever intended to address litigation in the Civil Courts – not in the Employment Tribunal – and so Simmons v Castle is irrelevant to claims in the latter.  However, with no formal guidance on the issue, Employment Tribunals and Employment Appeal Tribunals (EATs) have given conflicting rulings creating much uncertainty.  Only the Court of Appeal could put the issue to bed and fortunately it has done just that in this case.

Background to this case

Mrs de Souza (DS), a cleaner, was dismissed by her employer, Vinci Construction UK Limited (Vinci). DS brought various proceedings including claims for disability discrimination.  Vinci admitted liability and the Tribunal awarded DS compensation for injury to feelings (£9,000) and psychiatric injury (£3,300) applying the 10% Simmons v Castle uplift to the latter only.

DS appealed on the grounds that the £9,000 injury to feelings award should also have been uplifted by 10%. Vinci, in turn, cross-appealed and argued the opposite – that the uplift to the psychiatric injury element of the compensation should never have been applied.  The EAT found in favour of Vinci and overruled the Tribunal’s decision, concluding that the Simmons v Castle uplift was never intended to apply to employment cases.  As explained above, this directly contradicted other EAT judgments.  In view of this, DS appealed to the Court of Appeal.

The Court of Appeal

The Court Appeal agreed with DS and ruled the uplift should apply to both elements, thereby overturning the EAT decision. Its reasoning was twofold:

  1. It was difficult as a matter of principle to justify a 10% difference between awards in the County Court and those in the Employment Tribunal; and
  2. The Simmons v Castle uplift was not confined to only those claimants whose right to recover success fees and the like had been affected by the Jackson reforms, and so the rationale of the Jackson Reforms does not provide a good reason for not applying the uplift to Tribunal claimants. 

Comment

This decision by the Court Appeal, which is binding on all Employment Tribunals and overrules the conflicting EAT decisions, has resolved this issue – for now at least. It is not known yet whether an appeal will be made to the Supreme Court but, even if it is, it will be some years before it will be heard.

A judicial consultation has been issued by the Presidents of the Employment Tribunal on the revised bands for damages for injury to feelings and psychiatric injury with the provisional view that the bands should be uplifted in line with the Retail Prices Index (RPI).  Responses must be sent by 25 August 2017.

We will keep you updated.

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further