Law: Act now to ease the pain

Compensation payments for injury to feelings or unfair dismissal could soon rocket.

WHILE THE press unearthed pictures of the "former glamour model" who was awarded pounds 23,000 for injury to feelings in a sexual harassment claim against her employer last week, employment lawyers were down-playing the likelihood of other claimants looking for similar sums.

The award in that case included an amount that was almost double the previous highest reported award made by an industrial tribunal for injury to feelings.

But it is unlikely that there will be a repetition here of one of the highest awards given by a jury in a sexual harassment case in the US - which was against a law firm, Baker & McKenzie in 1992, of 10 per cent of the firm's gross fee, almost $7m. This was reduced by half on appeal last year.

According to Janet Gaymer, head of employment at the City law firm Simmons & Simmons, "in that case, there was a different system, with a jury awarding a tithe to the plaintiff. The UK has been playing catch-up with the US in some areas, but you certainly would not get such an award here. There are set guidelines; each case has to be decided on the basis of its facts and merits."

David Cockburn, a partner at Pattinson & Brewer, says that "the amount of the award for injury to feelings of pounds 23,000 was much higher than the usual award of pounds 5,000, with pounds 1,000 to pounds 3,000 the norm across the country". He adds that the employer may appeal and the award may be reduced.

But such cases form a tiny proportion of industrial tribunal claims - about 10 per cent of the 100,000-plus cases that are heard by the tribunals in England and Wales each year. Mr Cockburn says "the average amount on offer is not a great incentive to go through what must be a difficult time to establish harassment, especially if the press are going to trawl through your background".

In fact, the majority of industrial tribunal claims are for unfair dismissal and, with the Fairness at Work Bill (which is published today) raising the compensation limit and shortening the qualifying period to claim to one year, the number of claims is likely to rise. Already, some employment lawyers have advised employers to dismiss staff now, before the limit for compensation is raised from pounds 12,000 to pounds 50,000.

But Mr Cockburn says that "the lifting of the limit may have a significant impact for the dismissal of high earners in the City of London, particularly with the shake-out in the financial sector. Otherwise, with most cases, the average award does not come near the present cap of pounds 12,000."

His advice to any employees who think they may be likely to be dismissed is, if possible, not to leave their job before the Fairness at Work Act comes into force. He adds that it will be difficult to prove that they were dismissed to save money in an unfair dismissal claim unless, for example, they can produce an internal memo stating that that was the reason. But he considers that such cases will be rare: "Most employers are more far-sighted, and have a better grasp of industrial relations."

The Fairness at Work Bill, with its family-friendly policies, is likely to come into force at the end of July. One of the other major changes will be how employers deal with trade unions and employee representation generally as "employee representation" is going to be not just the flavour of the month, but the driving-force in industrial relations over the next five years.

"For employers, the new Act will mean that they will have to rethink their strategy," says Mr Cockburn. "Those who have diverted the human resources or personnel functions to line managers may have to put some thought into the proper management of their people. For employees, all they have to do is go to work and get their money. In theory, they will be able to spend more time with their families, and the pendulum has swung more in their favour while also trying to retain the competitiveness of British industry."