When is compensation for career-long loss appropriate
In the case of Wardle v Credit Agricole Corporate and Investment Bank, the Court of Appeal confirmed that, in the vast majority of cases, employment tribunals should assess future loss of earnings up to the point when an employee is likely to secure a new job.
Mr Wardle, after unsuccessfully applying for a promotion, brought a race discrimination claim whilst continuing to work for the Bank (the successful candidate was French). After his claim was received by the Bank, Mr Wardle was called to a meeting and summarily dismissed. He was told that he had made insufficient efforts to maintain a good working relationship with the successful candidate and that the Bank had lost trust in him. As a result, Mr Wardle brought further claims for unfair dismissal and victimisation.
The Tribunal found in favour of Mr Wardle in respect of all his claims. However, it discounted Mr Wardle’s loss to reflect the 80% chance that he would have left the Bank by April 2010 in any event. Both parties appealed to the Employment Appeal Tribunal (EAT) against the level of compensation awarded.
The EAT decided that the Tribunal should not have discounted Mr Wardle’s loss to reflect the 80% chance that he would have left the Bank by April 2010 in any event. Given its finding that Mr Wardle would have only left the Bank for a similar paid role, Mr Wardle’s loss would have continued in full, until such time as he secured such a post. The EAT did, however, decide to apply a sliding scale to the calculation of career-long loss. Both parties appealed the EAT’s decision.
The Court of Appeal decided that it was not appropriate for the Tribunal to assess Mr Wardle’s loss by reference to his whole career. It had incorrectly assumed that it had to award damages until the point when it could be sure that Mr Wardle would find another job, rather than when it was “at least possible” that he would. Given that the Tribunal thought Mr Wardle would get a similar job by the end of 2011, the Court thought that his compensation for future loss should have reflected this.
The Court confirmed that it will rarely be appropriate for a court to assess compensation over a career lifetime. Only in circumstances where there is no real prospect of an employee ever obtaining an equivalent job, would the Tribunal have to assess the loss on the basis of a lifetime.
The Court also confirmed that the Tribunal was wrong to have discounted Mr Wardle’s loss of earnings by 80% to reflect its finding that he was likely to have left the Bank by April 2010. Evidence about what an employee would have done if the discrimination had not happened is generally irrelevant to the calculation of financial loss.
The Court of Appeal ordered the parties to agree the amount of compensation, based on the principles set out by the Court.
The Court of Appeal’s decision is a welcome one for employers who are often faced with sky high schedules of loss. It confirmed that the cut off point for compensation for future loss should be when it is “at least possible” that the employee will have found an equivalent job. Only where there is no prospect of the employee ever obtaining an equivalent job, can the Tribunal assess loss on the basis of the employee’s lifetime.