If your employer has offered you a settlement agreement, you may be entitled to compensation for injury to feelings. In this article, you’ll learn when payment for injury to feelings may apply and how much to expect.
When can you get compensation for injury to feelings?
Signing a settlement agreement means you give up the right to bring a claim against your employer. And so it’s important to think about what the value of any claims might be. This includes assessing whether you can claim damages for injury to feelings.
In many cases, you can’t claim compensation for injury to feelings. For example, unfair dismissal compensation is limited to financial loss, such as lost earnings.
However, some types of claims do allow you to recover non-financial losses, such as an injury to feelings award. These claims include:
- discrimination (eg your employer treated you badly because of your sex, race, religion or any other protected characteristic)
- whistleblowing (eg your employer victimised you for reporting a regulatory breach)
Your solicitor will advise you on whether you should be compensated for injury to feelings.
How do you measure compensation for injury to feelings?
Courts and tribunals usually make an assessment of damages based on guidance known as the Vento Guidelines. This guidance was given by the Court of Appeal in the case of Vento v Chief Constable of West Yorkshire Police (No 2)  IRLR 102. In that case, a woman police officer suffered sex discrimination in the workplace. This led to her suffering from depression and suicidal impulses.
The guidance provides clear guidelines for the amount of compensation to be awarded and sets out three bands of potential awards. Those amounts are revised every year in line with inflation. The current figures (which apply up to the 5th April 2023) are set out below
- The lower band for less serious cases, such as where the act of discrimination is an isolated or one-off occurrence £1,100 – £11,200
- The middle band for serious cases, which do not merit an award in the highest band. £11,200 – £33,700
- The upper band for the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment. £33,700 – £56,200
When considering how much compensation you should get for injury to feelings, you need to think about which of those bands your situation falls into.
What factors affect compensation for injury to feelings?
Determining which band you come within depends on several factors, including:
- your vulnerability
- the degree of hurt, distress or upset caused,
- any medical condition you’re suffering from
- stress, loss of confidence, panic attacks, anger or depression
- whether there was a one-off incident or a course of conduct
- the seniority of the person who caused the injury to feelings
- the seriousness of the treatment
Every case is different, but here are some examples of compensation awards for injury to feelings.
Lower Band (£1,100 to £11,200)
Compensation is likely to be in the lower band for
- a small number of derogatory comments and insults
- inappropriate comments in front of colleagues
- unwanted conversations about a protected characteristic
- minor incidents
Awards are more likely to be in the lower band if there is no impact on your health.
Middle band (£11,200 to £33,700)
The middle band will apply for more significant injury to feelings. Examples include:
- a larger number of minor incidents having a cumulative impact on confidence and mental health
- a very serious one-off incident leading to post-traumatic stress disorder
- long-term discriminatory treatment
- a dismissal leading to loss of confidence and financial anxieties
Upper band (£33,700 to £56,200)
An award is more likely to be in the upper band if you can prove:
- a lengthy campaign of harassment by people in a position of authority
- a serious deterioration in mental health, such as a nervous breakdown, requiring medical treatment, such as anti-depressants
- deeply offensive mockery involving several members of staff leading to deep humiliation
What about tax?
Whenever you negotiate the terms on which your employment will end, you need to consider how much tax you may have to pay on the settlement agreement.
The amount of tax you may have to pay depends on the circumstances in which the injury to feelings happened.
If the payment relates to injury to feelings and the discrimination giving rise to the payment is not related to the termination of your employment, it can be paid tax-free.
If the injury to feelings award relates to the termination of employment, it will only be taxable to the extent that it exceeds £30,000.
Your solicitor will advise you about whether the tax treatment of the payments is correct and whether there’s any way to save tax.
Contact Us For Advice on Your Settlement Agreement
If you have received a settlement agreement, you will need to make sure you receive legal advice on it. Our solicitors can help you to assess how much you should accept, including compensation for injury to feelings.
We advise clients throughout the UK. Call us now for a free consultation. We provide clear and prompt advice on all aspects of your settlement agreement.
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