Understanding the hidden cost of employment claims

With employment law giving employees more rights, employers need to be more vigilant than ever when it comes to discrimination claims. A key part of any tribunal award is the potential compensation for injury to feelings - but do you know how much that could really cost your business?

At Gannons, we see many employers underestimate the financial impact of discrimination claims. Legal fees alone are daunting, but the additional burden of injury to feelings compensation can be significant - sometimes exceeding an employee’s annual salary and payable in addition to notice and any award for dismissal.

Below, we break down for employers what injury to feelings awards are, how they’re calculated, common pitfalls for employers, and the practical steps employers can take to protect their business from unnecessary financial and reputational damage.

What is an injury to feelings award?

Injury to feelings compensation is exactly what it sounds like: an award for the emotional distress caused by discriminatory behaviour. Unlike fines or penalties, these awards are compensatory, designed to reflect the hurt experienced by an employee, rather than to punish the employer.  Any form of discrimination carries the possibility of an injury to feelings award being made by an Employment Tribunal from sex discrimination, disability discrimination and the other forms of discrimination.

Vento bands

Vento bands are guidelines which divide awards into four bands based on the severity and duration of the discrimination (updated for 2025/2026):

• Lower Band (£1,200 to £12,100) - applies to one-off incidents or cases where the emotional impact is deemed less severe. Even at the lower end, costs can quickly add up - especially when factoring in legal fees and reputational risks.
• Middle Band (£12,100 to £36,400) - covers serious cases that don’t meet the upper band threshold but involve repeated incidents of discrimination. Many awards fall into this category, particularly where employees can demonstrate ongoing distress.
• Upper Band (£36,400 to £60,700) - reserved for the most serious cases, such as prolonged harassment or targeted discrimination campaigns. While claims at this level are rare, when they do arise, the financial impact on businesses can be severe.
• Exceptional cases (60,700) - in very rare and extreme situations, awards can exceed £60,700. Examples include cases involving severe, long-term harassment, or discrimination resulting in substantial psychological harm or lasting damage to an individual’s career.
• These updated bands apply to claims presented on or after 6 April 2025 and will be reviewed annually.

Real-life Tribunal awards

To put these figures into perspective, here are real cases where tribunals awarded compensation for injury to feelings:

• £40,000 Award (Upper Band): H, a sales manager at Asda for 15 years, suffered continuous harassment for 14 months before resigning. Two managers repeatedly singled her out, ridiculed her, and excluded her from workplace activities. One manager would shout at her in private and invade her personal space, making the workplace an intimidating environment. As a result, Mrs. H developed severe anxiety and depression, requiring medication, and was forced to quit her long-term job. The Tribunal confirmed there were no other external factors causing her mental health decline. Mrs. H was awarded £40,000. The length and severity of the harassment justified an upper-band award.
• £27,000 Award (Middle Band): O was repeatedly singled out, mocked, and treated aggressively by his British colleagues. His mistreatment lasted for three and a half months, and he was ultimately dismissed because his team “didn’t like him”. The Tribunal found that this racial harassment had a lasting impact and Mr. O developed anxiety and depression and now has a fear of British people due to his experience. He was awarded £15,000. The discrimination was ongoing, but not as prolonged as cases that fall into the upper band.
• £3,000 Award (Lower Band): C, was subjected to a one-off act of racial discrimination when his manager referred to him as a “slave” in front of colleagues. Although the remark was offensive and caused distress, Mr. C was able to return to work after a short absence. He was awarded £3,000. The Tribunal placed this in the lower band because it was an isolated incident, rather than sustained discrimination.

What’s the lesson for employers? Even a single inappropriate comment can lead to a financial penalty for injury to feelings. Repeated failures to take complaints seriously increase the risk of a higher pay out. In practice an award can be made without any medical evidence from the employee to support the claim. It is all a matter of whose version of events does the Employment Tribunal judge prefer.

The emotional factor: how Employment Tribunal judges measure the injury

While Employment Tribunals aim to be objective, the reality is that judges are human, and emotion can sometimes play a role in their decisions. Judges are particularly influenced by the way an employer handles a claim. If an employer appears dismissive, defensive, or lacks remorse, judges may be more inclined to favour the employee and increase the compensation award. A poorly handled grievance process can turn a lower-band case into a middle-band award.  Judges may not cut any slack for the small employer struggling to cope.

What employers can do:

1. Engage professionally in disputes, even if you believe a claim is weak;
2.  Keep records of all attempts to resolve issues amicably; and
3. Train managers to handle grievances with sensitivity.

By taking a measured and professional approach, employers can counteract potential emotional bias from judges.

Aggravated damages

Employees bringing discrimination claims may try to push for aggravated damages, arguing that their employer’s behaviour was not just unfair but malicious, oppressive, or deliberately humiliating. These damages go beyond standard compensation and are only awarded in cases where an employer’s conduct is particularly vindictive. However, proving aggravated damages is difficult. Employees must go beyond simply proving discrimination—they must convince the Employment Tribunal that the employer’s actions were deliberate, high-handed, or unnecessarily cruel. This could mean proving:

• Malicious intent - was there a clear attempt to embarrass or humiliate the employee?
• Heavy-handed handling - did the employer dismiss concerns unfairly or act unreasonably?
• Making things worse - did the employer’s actions escalate the employee’s distress instead of resolving it?

In reality, many aggravated damages claims fail. Employers who can show they acted in good faith, followed fair procedures, and had legitimate business reasons for their actions will have a strong defence.

The practicalities: what should be in your staff handbook?

Employers can’t prevent every claim, but they can put themselves in the best position to fight back by having clear policies in place. A well-drafted staff handbook should include:

• Mandatory reporting of any injury (even minor distress) - if employees don’t report it at the time, they shouldn’t be able to bring it up later in a claim.
• A clear complaints process - employees must know who to speak to and what steps to follow if they experience discrimination.
• Health and well-being monitoring - regularly updated health questionnaires can provide vital evidence if an employee later claims their mental health was impacted.
• Manager training – employers should require managers to report any concerns about an employee’s well-being, even if the employee hasn’t raised them formally. This can counteract later claims that the employer ‘should have known’.

By ensuring proper documentation and policies, businesses can push back on claims that arise months or years later - when there is no record of any reported distress.

How we can help

Discrimination claims are complex, and injury to feelings awards can be unpredictable. Our team at Gannons provides clear, practical advice to employers, helping you navigate employment law challenges with confidence.

Don’t leave your business exposed to costly claims. Contact Gannons today for expert legal support on discrimination claims, injury to feelings awards, and employment law risks.