Understanding the hidden cost of employment claims

With employment law giving employees more rights, employers need to be more vigilant than ever when managing the risk of discrimination claims. A key part of a tribunal award can be 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 injury to feelings compensation can be significant and is payable to other compensation that may be awarded.

Below, we break down for employers what injury to feelings awards are, how they’re calculated, and the practical steps employers can take to reduce the risk of claims.

What is an injury to feelings award?

Injury to feelings compensation is 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 can give risk to an injury to feelings award, including sex, disability and race discrimination.

Vento bands

Vento bands are guidelines which divide awards into multiple bands based on the severity and duration of the discrimination (updated for 2026/2027):

• Lower Band (£1,200 to £12,600) - generally applies to less serious cases, such as one-off incidents. Even at the lower end, costs can quickly add up.
• Middle Band (£12,600 to £37,700) - generally covers more serious cases that do not justify an upper-band award, including cases involving repeated incidents.
• Upper Band (£37,700 to £62,900) - reserved for the most serious cases, such as prolonged or particularly serious harassment or discrimination
• Exceptional cases (exceeding 62,900) - in very rare and extreme situations, awards can exceed the upper-band figure. 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 2026 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.
• £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 act can result in compensation for injury to feelings, while repeated failures to address complaints can increase the potential award.

Medical evidence is not necessarily required for an injury to feelings award.

The emotional factor: how Employment Tribunal judges measure the injury

While Employment Tribunals aim to assess compensation objectively, the way an employer responds to a complaint can be relevant to the overall case.

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.

Aggravated damages

Employees bringing discrimination claims may also seek aggravated damages where the employer's conduct is high-handed, malicious, insulting or oppressive. These damages are separate from injury to feelings compensation and are only awarded in appropriate cases.

Employers who can demonstrate that they acted reasonably, followed appropriate procedures and responded properly to complaints may be in a stronger position to defend such allegations.

Proving aggravated damages is difficult and many aggravated damages claims fail.

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 reduce the risk of claims and be better prepared to respond if a dispute arises.