EAT confirms uncapped compensation can flow from discrimination that leads to resignation

Background

In Griffiths v Essex County Council, the claimant, a social worker with anxiety and depression, became the subject of workplace complaints. Her employer informed her that complaints had been made but provided no details and conducted an investigation without involving her.

The investigation ultimately concluded that the complaints were unfounded, but the claimant was not properly informed of this outcome. She raised a grievance, which partially upheld her complaints but found that the initial complaints against her were not malicious and therefore no disciplinary action would be taken. The cumulative effect of these events significantly affected her mental health, and she eventually resigned and brought a claim in the employment tribunal.

The employment tribunal upheld a claim of indirect disability discrimination, finding that the employer's practice of excluding the subject of a complaint from participating in the investigation placed disabled employees with mental health conditions at a particular disadvantage. The tribunal also found that the claimant had been constructively unfairly dismissed.

At the remedy stage, the tribunal awarded more than £150,000 in uncapped compensation, including loss of earnings. The employer appealed.

EAT decision

The EAT dismissed the employer's appeal.

The employer argued that any loss of earnings arising from the claimant's resignation should be subject to the statutory cap applicable to unfair dismissal compensation because no claim of discriminatory constructive dismissal had been brought.

The EAT rejected that argument. It held that the tribunal had been entitled to find that the claimant's loss of earnings flowed directly and naturally from the successful indirect disability discrimination claim. The tribunal had identified a clear causal link between the discriminatory treatment and the claimant's eventual resignation.

The EAT emphasised that the discrimination had a continuing impact on the claimant, undermining her trust and confidence in her employer and contributing to her decision to leave. In those circumstances, the resulting loss of earnings could properly be recovered as compensation for discrimination and was therefore uncapped.

The EAT allowed the claimant's appeal. The tribunal had erred in declining to award any future loss of earnings on the basis that she had already found alternate employment. The tribunal had failed to consider that the role paid considerably less than her previous salary. The EAT also considered that the tribunal had failed to properly analyse her pension loss. The EAT remitted this assessment back to the same tribunal to analyse the claimant's likely future earnings and pension position.

Learning points

This decision highlights the potentially significant financial consequences of discrimination claims. Employers should be aware that a successful discrimination complaint may give rise to substantial uncapped compensation where the discriminatory treatment can be shown to have contributed to an employee's resignation, even if the dismissal itself is not found to be discriminatory.

The practical significance of the decision may reduce once the statutory cap on unfair dismissal compensatory awards is removed for dismissals taking effect on or after 1 January 2027. However, for current claims, it remains an important reminder that discrimination-related losses may extend far beyond injury to feelings and can include substantial earnings-related losses where a clear causal connection is established.

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For more information or advice, please get in touch with Alice Mennell in our Employment team.