An employment tribunal has upheld a ruling that ex-City lawyer Gill Switalski was the victim of sexual discrimination and harassment. Switalski is claiming £12m in compensation from her former employer F&C Assets Management for forcing her to quit her £140,000-a-year job as head of the legal team. This is further example of the rise in the value of claims involving alleged discrimination that are being taken to employment tribunals.

Last November a former trading risk controller Balbinder Chagger won a case alleging racial discrimination when he was laid off by his former employer, high-street bank Abbey. This award tops the previous record of £1.4m paid to investment bank worker Julie Bower in 2002 for sex discrimination.

How did the Chagger tribunal panel arrive at an amount that one solicitor described as "simply extraordinary"?

Judging by evidence in the tribunal's written ruling, they hit on a formula that could be described as reasonable and objective. Tribunal panel members based the calculation on loss of future earnings, which they estimated at about £80,000 a year. This may be a little generous as Chagger earned £100,000 a year at Abbey and can look forward to earning about £40,000 once he gets a maths teacher's job - a post he is now training for.

Given that Chagger is 40, the notional loss of earnings over 25 years at £80,000 per annum (assuming retirement at 65) is £2m. Add on assumed pension losses, and the formula seems to add up. Nevertheless, Abbey is appealing against the use of the formula and hopes the damages will be cut.

It all begs the question: how high can damages in discrimination cases go, and should there really be a cap on them? As it is they look set to go higher still, with ex-City lawyer Gill Switalski's claim for £12m damages for alleged workplace bullying.

No matter how careful employers are cases will inevitably emerge, but if damages continue to rise, the public will soon think such cases are as ridiculous as celebrity divorce settlements.