In a recent employment tribunal decision, Stacey Macken, a female banker at BNP Paribas, received a compensation award of over £2 million from the bank. The amount of the award and the other facts of the case understandably generated headlines when the decision was issued.
The facts of the case present an interesting example of what can happen if an employer fails to address inherently sexist behaviour and gender pay issues. However, it is the level of compensation awarded by the tribunal that will have set off HR alarm bells and perhaps emboldened employees facing similar workplace issues.
In this article we analyse the case and the key takeaways for both employers and employees, and consider whether this decision reflects a growing trend towards high compensation awards in the employment tribunal.
Ms Macken joined BNP Paribas (the “Bank”) in 2013 on a salary of £120,000 in the prime brokerage division, whereas her male colleague comparator performing the same role received £160,000. Similarly, over the following four years, her male colleague received more than £167,000 in bonuses, in comparison to the £33,000 that Ms Macken received over that period. Despite repeatedly raising concerns about the pay differential, the Bank failed to address Ms Macken’s complaints and downgraded her in performance appraisals, which in turn resulted in lower bonus awards.
Ms Macken was also faced with various sexist incidents during her role at the bank. On one occasion a witch’s hat was left on her desk by drunk male colleagues, and her boss frequently responded to her questions with the expression “not now Stacey”, which was a habit that colleagues picked up on and repeated. Further, a different senior colleague persistently answered the phone in an inappropriate way and referred to the roleplay his friend had engaged in with his wife.
The employment tribunal upheld Ms Macken’s claims for direct sex discrimination, victimisation and equal pay in a judgment handed down in 2019. The incident involving the witch’s hat was held to be an inherently sexist act in a predominantly male working environment and the senior colleague’s persistent use of the phrase “not now Stacey” was held to be a demeaning comment which was used to belittle the claimant. While both of those issues were out of time as standalone claims, the Bank was unable to demonstrate that the persistent difference in Ms Macken’s pay and bonus awards in comparison to her male colleague did not involve less favourable treatment because of her sex.
The decision last month followed a remedy hearing at which a total compensatory award of £2.08 million was made by the tribunal. This included £402,000 as an equal pay award; £213,000 for personal injury; £860,000 for future earnings; and £123,000 in additional compensation (including awards for injury to feelings and aggravated damages). The uplift for the Bank’s unreasonable failure to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures (the “ACAS Code”) meant a further £317,000 was added to the total.
Importantly, the tribunal also considered itself obligated to order the Bank to complete an equal pay audit and report on gender pay by 30 June 2022. This relates to all remuneration, including base pay, pension contributions, allowances and discretionary bonus payments made by the Bank. Although the Bank is now carrying out voluntary annual equal pay reviews and argued that historical anomalies have now been corrected, the tribunal noted that the Bank still operates an opaque pay system and that “such significant cultural shifts take many years”.
Key takeaways for employers
The case is a clear reminder to employers of the importance of fostering an inclusive culture, in which discriminatory behaviour of any kind is given short shrift and any unequal pay practices are identified and alleviated at the earliest opportunity. Key takeaways from this case for employers include:
Review equal opportunities and anti-harassment policies to ensure that these are still fit for purpose and accurately identify and address key risk areas within the business. This applies not only in relation to sex discrimination, but other protected characteristics under the Equality Act 2010 (such as race, age and disability). Diversity and inclusion remains a hot topic for employers in 2022, especially given the increased focus on the topic by regulators such as the SRA and the FCA.
Implement regular, thorough and effective training. This should be incorporated into onboarding processes and repeated throughout employment, ideally with tailored training for managers. Not only is it good employment practice, it is also a key component of the “reasonable steps defence” which exists for employers under the Equality Act 2010. An employer can argue that it should not be held liable for an employee’s discriminatory behaviour in the course of their employment if the employer has taken all reasonable steps to prevent it from occurring.
Encourage a speak-up culture so that employees know where to turn if they encounter inappropriate behaviour (whether this is to HR, a senior manager, or an anonymous hotline). Importantly, employees should feel confident that reporting issues and following the employer’s grievance process will not expose them to retaliation or have a detrimental impact on their future career.
Keep a paper trail throughout the employment relationship, from recruitment onwards and particularly in relation to significant HR processes, such as performance appraisals, pay review and bonus awards. This can help demonstrate that decision making has been fair and objective (rather than tainted by discrimination on the grounds of sex or other protected characteristics). The tribunal in this case held that the very limited and entirely unsatisfactory records of the Bank’s recruitment process for the claimant and her comparator was significant evidence that could lead to the drawing of inferences of discrimination. Throughout the process, Ms Macken was continuously referred to as “junior” and lacking “gravitas”, which was not supported by her CV which showed considerable previous experience. When it came to bonus awards, the Bank was unable to give any explanation in relation to the methodology which was used to grade employees and determine bonus awards.
Respond promptly and thoroughly to grievances. Allegations of unequal pay and discrimination should be taken seriously and fully investigated as part of a thorough grievance process which reflects both the employer’s internal grievance process and the requirements of the ACAS Code. As the Macken case demonstrates, a failure to properly address an employee grievance with a view to resolving issues at an early stage, can have serious financial consequences for the employer and a negative impact on their reputation.
Key takeaways for employees
Compensation awards are rarely this high: While it may be tempting for employees facing similar issues to see this decision as a golden ticket to a large tribunal award, it is worth noting that discrimination compensation awards are rarely this high. The Tribunal’s annual statistics for 2019/20 (the most recent available) show an average discrimination award of under £30,000 for all protected characteristics. That said, where employees have suffered a lengthy pattern of discriminatory behaviour they will often suffer from long-term mental and physical health difficulties, which may give rise to an additional claim for personal injury, as was the case for Ms Macken. However, it should be borne in mind that only the most severe conditions are likely to have a career-shortening impact, and a substantial tribunal award is far from a given outcome.
Mitigation remains important: No matter how badly the employer has behaved, a tribunal will expect a claimant to take reasonable steps to mitigate their loss and this will usually involve them looking for a new job if the discrimination has resulted in them being out of work. The surrounding circumstances, such as whether the claimant is medically able to work, or still employed but in receipt of permanent health insurance payments for example, will all be relevant to the question of what is “reasonable” in the context of a particular claim.
Follow internal grievance processes and the ACAS Code: Employees should remember that the ability of the tribunal to adjust a compensation award to reflect an unreasonable failure to follow the ACAS Code works both ways. The potential for a reduction in compensation of up to 25% should incentivise employees to try and address their concerns internally through existing grievance processes in the first instance. However minimal the chance of achieving a positive result, a tribunal will still expect the employee to give their employer an early opportunity to resolve the issues inhouse.
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