Full force of the law used against employer in a discrimination claim – Otshudi v Base Childrenswear Ltd

15th July 2019

This appeal decision in Otshudi v Base Childrenswear Ltd (UKEAT/0267/19), shows just how sharp the teeth of the law can be in cases of discrimination especially where the employer has shown a disregard for process. A worthwhile read for all employers and a cautionary tale on how not to do things.

In a discrimination claim, compensation for ‘injury to feelings’ falls into one of three ‘Vento’ bands: lower, middle or upper. Isolated, ‘one-off’ occurrences of discrimination tend to fall into the lower Vento band (which is currently between £900 to £8,800) but, as this case demonstrates, that will not always be the case.

Facts

Ms Otshudi worked as an in-house photographer for Base Childrenswear Ltd for just over 3 months before she was dismissed, supposedly for redundancy. The MD told Ms Otshudi of her redundancy which she immediately questioned, asking him whether the dismissal was actually to do with her race. The MD then called two other managers into the meeting and challenged her suggestion of discrimination.  She felt intimidated and became upset before being told to pack her things and leave.

She submitted a grievance and appealed against her dismissal, both of which were completely ignored by the company. She then commenced ACAS Early Conciliation which the company also failed to engage with.

During her subsequent Employment Tribunal (ET) claim for race discrimination, the company failed to respond to disclosure requests. It maintained that the reason for the dismissal was redundancy until, shortly before the final hearing, it altered its response to allege that the reason for dismissal was actually that Ms Otshudi was suspected of theft.  These theft allegations had not been raised at all prior to this.

At the Tribunal hearing, the theft allegations were put to Ms Otshudi in cross-examination, but the Tribunal found that the company was unable to provide a satisfactory, non-discriminatory explanation for Ms Otshudi’s dismissal. In the absence of such an explanation for the treatment, it found that the dismissal was as a result of race discrimination.  The Tribunal noted that Ms Otshudi had been good at her job, had spent a lot of time investing in her career and saw a long-term future with the company.  Her dismissal had been completely unexpected and, combined with the distressing manner of her dismissal, had led her to suffer a depressive episode for around 3 months.

The Employment Tribunal’s decision

The ET made the following awards to Ms Otshudi:

• £3,505 for loss of earnings.
• £16,000 for injury to feelings. The Tribunal considered that the extent of her injury fell in the middle of the ‘Vento’ middle band which is between £8,800 and £26,300.
• £3,000 for personal injury as Ms Otshudi had suffered depression for 3 months following the dismissal and as a direct result of it.
• £5,000 for aggravated damages in relation to the company’s failure to respond to Ms Otshudi’s grievance and appeal, the fact that it had maintained that redundancy was the reason for the dismissal when this was not the case, its late request to amend the response to make allegations of theft, its failure to respond to disclosure requests during the litigation and its failure to apologise to Ms Otshudi.
• An uplift of 25% (the maximum possible) for the company’s failure to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures, namely, its failure to respond to the grievance and the appeal.
• Interest.

The company appealed to the EAT on the grounds that:

• The ET had placed the injury to feelings award in the wrong ‘Vento’ band (it argued that a ‘one-off’ occurrence of discrimination should fall in the lower band).
• Sums awarded for injury to feelings and aggravated damages included compensation for matters that were also compensated by the 25% uplift so that there had been an element of ‘double’ or even ‘triple-counting’.
• The total award for non-financial losses was, it said, manifestly excessive.

The EAT decision

The EAT dismissed the appeal save to reduce the £5,000 aggravated damages award by £1,000 to reflect any ‘double-counting’ between that award and the 25% uplift.

It held that the Tribunal had been right to award the injury to feelings award in the middle band bearing in mind the circumstances of the case. It specifically rejected the company’s assertion that a ‘one-off’ act of discrimination should fall automatically into the lower ‘Vento’ band. It held, when looking at the case in its totality, that the awards made were not manifestly excessive and that the Tribunal had been correct to focus on the impact of the discrimination on the individual claimant.

Walker Morris comment

If ever a case highlighted how expensive and damaging discrimination claims can be for employers, this is it. One struggles to have any sympathy with the employer in this case and its blatant disregard of procedure was duly punished both by an aggravated damages award and the maximum possible 25% uplift in compensation.

The key ‘take-away’ points from the decision are:

• An isolated occurrence of discrimination can lead to an injury to feelings award in any of the ‘Vento’ bands, not just the lower band. This is because the correct approach is fact-specific with focus placed on the impact of the discrimination on the individual.
• Failing to deal with a grievance submitted after termination of employment may still lead to an uplift of up to 25% in compensation. The ACAS Code of Practice does not specifically include post-termination grievances so this point has not been entirely clear up to now. However, this case clarifies that it is not safe to assume that post-termination grievances can be ignored.
• There is no service requirement for a discrimination claim or for an uplift to compensation for failure to follow the ACAS Code of Practice. Ms Otshudi had only 3 month’s service at the point of dismissal.
• Disregard for processes following termination and during litigation can also lead to an aggravated damages award and, of course, a costs award in favour of the other party.

It also goes without saying that the negative publicity from decisions such as these can often be more damaging than the pure financial cost.

If you have any questions about this case please contact David Smedley or Andrew Rayment.