The Court of Appeal has confirmed that an employee can recover compensation for psychiatric injury resulting from an employer's act of race discrimination, even where the employee's reaction is unforeseeable and extreme. Jacqueline McCluskey, Senior Associate at Dundas & Wilson summarises the case and what this means in practice for employers.

The Court of Appeal gave its decision in the case of Essa v Laing Limited on 21 January 2004 confirming that an employee's psychiatric injury, arising as a result of his or her employer's act of race discrimination, can be considered by the courts and an award of compensation made to take account of that psychiatric injury, even where the employee's reaction is extreme.

Facts of the case
Mr Essa was subjected to a racially abusive remark by one of his fellow employees which was overheard by a number of his colleagues. The remark was found by the employment tribunal to be "grotesquely offensive". At the time of the remark Mr Essa was extremely hurt and in tears.

Mr Essa later gave evidence to the employment tribunal to the effect that the remark had so affected his health that he had been treated by his doctor for severe depression and had stopped looking for work. He said that he continued to feel distressed at the way he had been spoken to and would take the incident to his grave. It was clear that as a result of the remark, Mr Essa had suffered – and continued to suffer from – a severe psychiatric injury.

Employment tribunal
A question arose in the employment tribunal as to whether Mr Essa should receive a financial award in the form of compensation for the psychiatric injury which he had sustained.

On the one hand, the employers said that the remark was a one-off incident, that Mr Essa's ongoing reaction to the remark was extreme and that Mr Essa could not expect to receive a financial award for a psychiatric injury which was wholly unforeseeable by his employers.

On the other hand, Mr Essa said that whether or not the psychiatric injury which he had suffered was foreseeable or extreme was irrelevant and that he was entitled to receive compensation for the psychiatric injury by reason of the fact that the injury arose as a direct result of the racially abusive remark which had been made.

Court of Appeal
The case reached the Court of Appeal who preferred the argument advanced by Mr Essa. They contrasted the position between injury caused as a result of a breach of the Race Relations Act 1976 (as in Mr Essa's case) and injury caused as a result of the common law tort of negligence.

In the latter, the Court of Appeal said that injury caused as a result of negligence could be committed by accident. In the former, the Court of Appeal said that the statutory tort of breach of the Race Relations Act 1976 could not be committed by accident. This was, they said, a crucial distinction. The act of racial abuse towards the employee in this case was deliberate conduct, although the abuse was verbal and not physical. This was akin to an act such as assault. Therefore, they said that there was no need to impose a requirement that the injury was foreseeable in addition to the requirement that the injury flows naturally and directly from the wrong.

The Court of Appeal also considered whether the reference in the Race Relations Act 1976 to "injury to feelings" allowed an award of compensation to be made for personal injury such as psychiatric injury. They found that the legislation did allow for compensation for personal injury although in some circumstances there may be a considerable overlap between the two. Tribunals were, nevertheless, entitled to consider both.

What does this mean in practice?
In practice, this means that where the financial consequences suffered by the individual with a psychiatric injury are high, such as loss of earnings if the individual is unable to return to employment for some time (as in Mr Essa's case), the financial impact of this will be considerable for the employer.

The Essa v Laing case underscores yet again the potential for individuals to obtain high compensatory awards from employment tribunals as a result of the discriminatory conduct of their employers. Although Mr Essa's claim was one of race discrimination, the same principles will apply in relation to discriminatory acts under other UK discrimination legislation, such as sex, disability, religion, etc. Where a discriminatory act directly causes a psychiatric injury this is a valid head of claim for compensation. Compensation under the UK discrimination statutes is, of course, uncapped.

Employers would therefore be well advised to ensure that their staff have received training in and are well versed in their employer's anti discrimination policies to hopefully avoid the potential of costly claims.