Compensation and causation in discrimination claims

Background

In the case of K J v British Council, the claimant was employed overseas and subjected to harassment and sexual harassment by a colleague. She raised a grievance, but the employer’s handling of that process was found to be seriously flawed, including conclusions that inappropriately attributed blame to her and downplayed the seriousness of the conduct.

The Employment Tribunal upheld claims for constructive unfair dismissal, direct sex discrimination and harassment. It found multiple repudiatory breaches of trust and confidence, including failures to protect the claimant and serious deficiencies in the grievance process.

However, the Tribunal applied a 35% reduction to both unfair dismissal and discrimination compensation, on the basis that there was a chance the claimant would have left in any event due to restructuring, reduced benefits and her apparent interest in other roles.

The claimant appealed that reduction. The employer cross-appealed on limitation.

EAT decision

The EAT allowed the claimant’s appeal in relation to compensation for discrimination.

It confirmed that, when assessing financial loss in discrimination claims, tribunals must consider what would have happened if the unlawful treatment had not occurred. This involves constructing a “what if” scenario in which the discrimination is removed entirely.
The Tribunal had failed to do this properly. It relied on evidence that the claimant had been considering other opportunities and a possible return to the UK, but did not consider whether those thoughts may themselves have been influenced by the harassment she experienced.

The EAT made clear that this matters. If an employee’s thinking about leaving has been shaped by discriminatory treatment, it cannot be treated as an independent reason for reducing compensation. The correct approach is to ask what the employee would have done in a world where none of the discrimination had taken place.

Although the Tribunal was entitled to take account of factors genuinely unrelated to the discrimination, such as a restructuring exercise, it had not separated those factors from matters potentially influenced by the claimant’s experience. The reduction could not therefore stand.

On limitation, the EAT dismissed the employer’s cross-appeal. It agreed that the harassment, the employer’s failure to deal with it properly, and the flawed grievance outcome formed part of a continuing course of conduct. The claim was therefore in time.

Learning points for employers

When defending discrimination claims, employers should be cautious about arguing that an employee would have left in any event. Any such argument must be based on factors that are genuinely independent of the alleged discrimination. If the employee’s loss of confidence or interest in other roles may have been influenced by their treatment, a reduction in compensation is unlikely to be justified.

The case also highlights that how an employer responds to a complaint is not a separate issue. A poor or biased grievance process can form part of an ongoing course of discriminatory conduct, potentially extending time limits and increasing overall liability.

---

For more information or advice, please get in touch with Khadija Khatun in our Employment team.