Legal fees, damages, and loss of reputation mean prevention is better than cure

A recent case, involving a female banker, shows the potential cost of defending discrimination cases. The case demonstrates the grave risks and potential costs employers face if they do not deal with discriminatory behaviour in a timely and appropriate manner. The matter has been ongoing now for over four years and shows that prevention is certainly better than cure.

Last year Svetlana Lokhova was awarded eye watering damages in excess of £3 million after an employment tribunal found her employer, Sberbank CIB, had subjected her to a campaign of sex discrimination, harassment and victimisation. It has now been reported that she is pursuing a further claim - this time for libel against two of her former colleagues for damage to her reputation.

The facts in the case are extreme; Lokhova’s colleagues were reported as referring to her as “crazy Miss Cokehead” and “mad Svetlana”. The tribunal concluded it was unlikely she would ever work in the banking sector again. Of the damages awarded, £44,000 related to injury to feelings, and a further £15,000 was an award of aggravated damages relating to the tribunal’s finding that the employer’s allegation of drug use was a deliberate and unnecessary use of the tribunal process designed to put pressure on Lokhova and cause her damage.

Most employers are aware that the Equality Act 2010 prohibits discrimination, harassment and victimisation on the grounds of various protected characteristics, including sex. What isn’t so well known is that under this legislation anything done by an employee in the course of their employment is treated as having also been done by the employer, even where the actions occurred without the employer's approval or knowledge.

Breaches of the Act are serious. In addition to the risk of high compensation payments (as demonstrated by the award in this claim), there are the significant time and costs of litigation, as well as the potentially irreparable damage to reputation of both employers and its management team, and the devastating effects on employee morale, if a claim is successful.

An employer has a defence potentially against such claims where it can show it has taken reasonable steps to prevent the discriminatory behaviour happening in the first place, so it is worth ensuring this is done. But it is essential that these steps are taken before the discriminatory act occurred, and not afterwards.

The starting point is to implement a comprehensive written equal opportunities policy, covering bullying and harassment, and explaining how to raise complaints under the policy. The document should make it clear exactly what is expected of employees in the workplace. However, just having a policy in place is not enough. It is also important to demonstrate that the policy is supported and followed – this can be done by ensuring that it is well-publicised, that management show their support for it and, where possible, that employees receive equal opportunities training. Importantly employers should take steps to facilitate a working environment in which employees feel able to raise concerns without the risk of victimisation.

Unfortunately, employers may find themselves faced with incidences of discrimination in the workplace even where they do take steps to prevent this type of behaviour occurring. If this is the case, employers must take the allegation seriously and must respond to it without delay. Failing to do so can lead to increased awards of damages.

The organisation’s response should include a full investigation of the complaint in order to determine what, if any, formal action is appropriate. There should be a written disciplinary policy in place setting out the procedure for investigations and disciplinary hearings, and employers should make employees aware of the possible sanctions for discriminatory behaviour. In some cases summary dismissal for gross misconduct will be appropriate.

Keely Rushmore is an associate in the employment department at SA Law

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