Discrimination compensation: Settlements and tribunal awards

If you suffer loss or harm as a result of discrimination, the law says you are entitled to financial compensation for being so badly treated.

You can get compensation for discriminatory treatment at work either by negotiating directly with your employer or by taking your discrimination claim for judgement to an employment tribunal. Those two approaches are what this guide is all about. 

For further detail about discrimination at work, see our other guides:  

• Discrimination at work – an overview
• Preparing a schedule of loss and how to calculate your financial claim
• Discrimination relating to age, disability, gender reassignment, marriage and civil partnership, mental health, pregnancy and maternity, religion and belief, sex, sexual orientation,  veganism.

Is it difficult to get compensation for discrimination at work?

Discrimination is one of the most serious claims that can be made at an employment tribunal and is taken very seriously by tribunal judges and by society at large. Despite that, the Employment Tribunal Services regularly publish statistics telling you how difficult it is to win claims for discrimination compensation. 

Lack of evidence

Discrimination claims are difficult to win primarily because they are very difficult to prove: there is usually little if any written evidence. You also cannot predict with any certainty whether or not the evidence you have will be sufficient to win a tribunal case. (See our guide on Employment tribunals.)

Discrimination settlement agreement or tribunal?

However if you can prove that you have been put at a disadvantage at work because of discrimination, then you may be able successfully to negotiate a settlement agreement directly with your employer. That way you can avoid the delays, uncertainty, stress and effort associated with making an employment tribunal claim.  

 

Will all employers negotiate discrimination settlement agreements?

Some employers are willing to negotiate, whilst others are not. Below are some of the reasons why:

Employers willing to negotiate settlements

Some employers will appreciate the considerable benefit of settling any potential claim for discrimination compensation long before it gets to the tribunal. Being accused of, or found culpable of, discrimination is worrying for an employer. It leads to a bad reputation and the possibility of further claims. 

If you can collect sufficient evidence in writing and are able to research discrimination law, (and/or ask a specialist employment lawyer to help you), you may be able to show your employer that you have a case with real prospects of success in an employment tribunal. 

If they realise that that’s the case, then they will probably want to settle. A discrimination settlement means there is no reputational damage for your employer to worry about, they have more say about compensation amounts and a settlement usually costs them less than a tribunal case.

Employers who won’t negotiate discrimination settlements

However, not all employers are willing to negotiate discrimination settlements. Some will deny the discrimination. They will even occasionally lie to avoid dealing with the uncomfortable truth that they employ managers and others who engage in unlawful and discriminatory conduct.

Other employers refuse to negotiate with individual employees as a matter of policy. 

As a result, many employees give up and don’t make any kind of discrimination claim.  They either put up with the discrimination at work or leave their job for another where (they hope) discrimination is less prevalent or preferably non-existent.

If your employer won’t negotiate but you have the energy to pursue your discrimination claim and the patience to wait a long time for your case to be heard,  the employment tribunal is there to help bring closure to your case.

Negotiating discrimination settlements – how much should you ask for?

If you want to understand a bit more about how much to ask for in your discrimination settlement agreement, it’s necessary to put it into context by considering how a discrimination claim would be dealt with in an employment tribunal. 

Why? Because most employers will ask their lawyers the question ‘if this went to a tribunal what would happen?’ They would then base any settlement agreement offer on their lawyer’s answer. See below for how much discrimination compensation can you get at a tribunal.

Note that the very large discrimination payouts in the UK that get reported in the media are often due to financial loss because the discrimination meant that the individual could not work again.

For example, if you are earning £40,000 per year, and are 65 years old, you might be able to claim 5 years’ salary totalling £200,000 if you can show that you are unlikely to find another job. 

These are rare cases and we wouldn’t want you to think that the high awards you may read about always apply to discrimination claims: they don’t!

 

What matters most when negotiating a discrimination settlement?

The first thing we would say is that it’s most important for you to have got your facts and allegations exactly right.

The second thing is that, although discrimination claims can be valuable, they are invariably also delicate and complicated. 

So whether you attempt to carry out your own out-of-court negotiations, or employ a specialist employment lawyer to negotiate on your behalf, the negotiations must be conducted very carefully in order to have any chance of success.

Sometimes, knowing what you’re claiming and how to prove it will not be readily apparent. So you will need to seek some relevant information from your employer, by such means as:

The ‘Questions procedure’

The questions procedure was previously known as the ‘discrimination questionnaire’ under the Equality Act 2010.

It is a formal procedure that you can use to ask your employer questions about discrimination relating to your case.  You can then use the answers to help establish your discrimination claim. 

Your employer must answer these questions or else ‘adverse inferences’ may be drawn about them should the case have to go to tribunal. (This means that any tribunal judge would be entitled to find that the employer was up to no good and/or had something to hide.) 

The Working Families website provides excellent guidance which you can read here on how to devise appropriate questions, together with an example of a completed questionnaire.

Commencing the questions procedure is a good negotiating tactic, as once your employer has a copy of your questions, they know that you mean business. They also know that you have reasonable technical knowledge, which means that you may well be able to win any tribunal claim.

Start ‘without prejudice’ negotiations

It is sometimes a good idea to start the questions procedure and commence without prejudice negotiations at the same time.

If you do this, your employer can deal with your without prejudice letter first and make you a settlement offer without having to devote time and resources dealing with the questions procedure.

However, if you simply want answers from the questions procedure because you think they will put you in a stronger position, then wait for them and then use the answers – or the lack of answers – as the basis for writing your without prejudice letter.

Remember, be strong, but professional in tone and do not make wild allegations that are unsupported by facts.  See also our without prejudice letter templates for examples of without prejudice letters used in real-life cases.

 

What should you do if your discrimination negotiations stall?

If negotiations become deadlocked when negotiating in a discrimination case, now is a good time to submit a grievance, a subject access request, and/or a questions procedure (as above) if you haven’t already done so. 

If all of those fail to secure the settlement outcome you wanted, or if your employer is dragging their feet in dealing with your case, now is the time to issue a claim in the employment tribunal and commence Acas pre-claim conciliation before you exceed the time limit for submitting a tribunal claim (see below).

Issuing a tribunal claim doesn’t mean that you have to stop negotiating for an out-of-court settlement. (You can carry on negotiating right the way up to the day of any tribunal hearing.) It will however show your employer that you are serious and can often lead to an improved offer.

If you previously decided not to instruct a lawyer to negotiate on your behalf, now may be the time to reconsider.

How much discrimination compensation can you get at a tribunal?

There is no upper limit for discrimination claims. However, an employment tribunal will use the following three elements to work out how much compensation you should be awarded if you win your tribunal claim:

Financial loss

Financial loss is based on the same principles as unfair dismissal, although it is theoretically unlimited rather than being capped as unfair dismissal claims are. (The unfair dismissal cap is £115,115 from April 2024 – see our Unfair dismissal guide for further detail.)

In practice, financial loss assumes you have left your employment and is limited to the amount of money you lost – or are likely to lose – whilst out of work. So if you got another job straight away on the same or more money as in your previous employment, then you would suffer no financial loss. 

Injury to feelings 

Injury to feelings is always payable to claimants in successful discrimination cases. Guidelines on the amounts of compensation were set out by the Court of Appeal in the ‘Vento vs Chief Constable of W. Yorkshire Police’ case back in 2002.  These have since been updated regularly and (from 6 April 2024) are as follows:

• Band 1: £1,200 – £11,700 [one-off or isolated incident – this is the most common award] 
• Band 2: £11,7200 – £35,200 [more serious discrimination];
• Band 3: £35,200 – £58,700 [sustained campaign of the most serious discrimination – which is rare], with only the most exceptional cases exceeding this upper limit.

Personal injury

Personal injury compensation is theoretically unlimited but in practice, it’s tightly pegged to the type of injury caused, and it’s very difficult to prove, so please don’t assume that you’ll get anything for this.

It’s based on the same principles as for, say, a car accident, although the kinds of injuries most common in discrimination employment matters are psychological injuries such as depression and similar disorders.

Medical evidence is necessary here, and you have to show somehow that your employer’s conduct was the only cause of your medical condition, and that they should have known that their actions could lead to injuring you.

If you’d like to learn more about how much you should get:

• try our calculator here
• read our guide on how much you should get in your settlement agreement
• take a look at our guide on preparing your schedule of loss where the above headings are further explained. There’s also an example of a real schedule presented to an employment tribunal for a discrimination claim on behalf of one of our clients

Do you need 2 years’ service to make a discrimination tribunal claim?

There is no minimum period of employment before you can make a claim in the employment tribunal for discrimination.  Unlike unfair dismissal, you do not have to be employed with your employer for two years before you can bring a claim.

Your rights not to be subjected to less favourable treatment began when you first applied for a job. For example, providing you could prove it, you could claim because you were denied an interview because of a protected characteristic.

How much time do you have to make a tribunal claim?

The rules on time limits for making a tribunal claim for discrimination are complicated. However, as a rule of thumb, you only have three months – less one day – to commence an employment tribunal claim for discrimination. This will start with notifying Acas through the Early Notification Form.

The clock starts ticking after the discriminatory incident or course of events in question (unless you can show it was reasonable in all the circumstances to wait). 

If you miss the time limit, the tribunal can reject your claim, unless they decide that it is “just and equitable” to accept it.  You need a really good reason for waiting more than three months (less one day).

For this reason, your employer will be less likely to offer you a decent settlement agreement if you have missed the deadline. Employers will often try to string out any grievance procedure to take you over the time limit for issuing a claim!

Can you make a discrimination tribunal claim when still working?

If you’re still employed then you can make a discrimination claim while your employment continues. This can be a good negotiating tactic too, as it puts pressure on your employer to settle: not surprisingly, they don’t like it if one of their employees is suing them and remains employed in their organisation.

Their first instinct is to get rid of you, but they can’t do that without victimising you and thus increasing their likelihood of having to pay compensation. If you decide that you want to leave, this is the perfect time for you to write a without prejudice letter with an offer to settle and end your employment in return for a good settlement package.

Next steps

This guide is intended to be read alongside our overview on Discrimination at work. See also our other discrimination guides listed below.

Monaco Solicitors have an excellent reputation for winning discrimination cases.  We are specialist employment lawyers who represent employees only so we have no loyalties to clients who are employers and no qualms about aiming for the highest possible settlements for our clients.

We can usually offer fee arrangements for discrimination settlements that are based on a percentage of the additional compensation we negotiate for you. Fees for tribunal cases are determined on a case-by-case basis but are always highly competitive.  

Contact us to find out more:

• By this website link
• By phone on  020 7717 5259
• By email: communications@monacosolicitors.co.uk