A recent ruling has cleared the path to uncapped financial compensation following a forced resignation. A longstanding social worker had complaints raised over her work by an interim service manager. The ensuing investigation, however, failed to inform her of the specific allegations, their source, or their scope. This covert enquiry had a profound and detrimental effect on the mental health of the individual, leading to anxiety, depression and sleep disturbances. As a result, she submitted formal grievances that were not satisfactorily resolved before her eventual dismissal.

The social worker successfully pursued a complaint of indirect disability discrimination and constructive unfair dismissal at Tribunal, although she subsequently appealed the assessment of compensation. While the original Tribunal had initially upheld her claims and awarded a total of £153,906, including past loss of earnings, injury to feelings, expenses, a basic award, and £20,000 for pension loss, it made no award for any future loss of earnings.

The Appeal Tribunal forcefully dismissed the Council’s cross-appeal, ruling that any act of workplace discrimination which inflicts an ongoing psychiatric injury that is sufficient in severity to drive an employee to lose their career is fully recoverable under discrimination law. The Appeal Tribunal confirmed that compensation, under Section 124 of the Equality Act 2010, must be assessed based on the principles of tort law, which seek to place the injured party back into the exact financial position they would have enjoyed had the wrong never occurred, ruling that any financial losses resulting from a ‘career crash’ need only stem from the unlawful act itself. Thus, from a legal standpoint, a single act of discrimination inflicted during employment can cause the ultimate loss of a job and career, albeit in this case an indivisible psychiatric injury caused by a surreptitious investigation.

The flawed grievance procedures did not break the chain of causation or remedy the deep psychological damage already inflicted by the discrimination. Moreover, the Judge ruled that the original Tribunal had erred in arbitrarily diminishing the future loss of earnings and failing to properly apply the official Principles for Compensating Pension Loss when calculating her defined benefit pension scheme.

This austere ruling is a clear warning to executives concerning clandestine workplace investigations, as employers can no longer hide behind the pretext that an internal investigation was kept quiet to protect the employee. If a workplace process isolates vulnerable employees, fuels toxic office rumour-mongering, and prevents employees from defending themselves, then it can be legally classified as a traumatising act of discrimination.