Chagger v Abbey National Plc & Anor

Compensation for discriminatory dismissal is assessed by comparing the claimant’s actual position with the position absent discrimination. A real chance of lawful dismissal must therefore reduce compensation proportionately.

Future loss is not invariably confined to earnings from the dismissing employer. The dismissal may damage the claimant’s wider career path, including by placing the claimant on the labour market in disadvantageous circumstances. Loss caused by the stigma of bringing discrimination proceedings is recoverable in principle, although tribunals require evidence and should assess it robustly. Future contingencies are evaluated as chances, not on an all-or-nothing balance of probabilities. An exceptionally large compensatory award may justify reducing the statutory procedural uplift below its usual minimum.

The appellant was dismissed for redundancy after a selection exercise which the Employment Tribunal found was affected by race. The Tribunal upheld claims for race discrimination, unfair dismissal and breach of contract. It awarded £2,794,962.27 plus interest, principally on the basis that the discriminatory dismissal had destroyed the appellant’s career in financial services. It also applied a 2% uplift for non-compliance with statutory dismissal procedures.

The Employment Appeal Tribunal rejected the employer’s liability appeal but set aside material parts of the remedies decision. It held that compensation had to reflect the chance of dismissal without discrimination, confined future loss to earnings which would have been received from the employer, rejected recovery for labour-market stigma, and upheld the 2% uplift. It remitted compensation to the same Tribunal.

The Court of Appeal considered the counterfactual assessment of loss, career-loss compensation, stigma arising from discrimination proceedings, the statutory uplift and the constitution of the tribunal on remission.

1. The appeal was allowed in part and the employer’s cross-appeal was dismissed. Compensation for discrimination is compensatory. The tribunal must ask what would have occurred without the unlawful discrimination. If there was a real chance that the employee would have been dismissed for redundancy in any event, the otherwise recoverable compensation must be reduced in proportion to that chance. This does not permit an employer to rely on its wrongdoing; it identifies the loss actually caused by that wrongdoing.

2. The Employment Appeal Tribunal erred by confining future loss to the period during which the employee would have remained with the dismissing employer. A discriminatory dismissal may alter the claimant’s whole career path by placing the claimant on the labour market at an unchosen and disadvantageous time. Where the employee would only have left for equivalent or better employment, the relevant question is when equivalent employment could have been obtained after the discriminatory dismissal. On the Tribunal’s findings, it was permissible to assess the loss as a career loss, subject to earnings from teaching and the ordinary contingencies reflected in the multiplier.

3. Future contingencies must be assessed according to their degree of probability rather than treated as certain merely because they are more likely than not. The Tribunal’s use of balance-of-probabilities language was erroneous, but immaterial because its assessment rested on the very strong likelihood that the employee would have remained in equivalently paid employment throughout his career.

4. Loss associated with the stigma of having brought discrimination proceedings is recoverable in principle. Neither the employee’s necessary decision to sue nor the unlawful refusal of third-party employers to recruit automatically breaks the chain of causation. Ordinarily stigma is one feature bearing on the likely duration of unemployment, rather than a separate head of loss. Tribunals must take a sensible and robust approach and should not infer widespread stigma from assertion or conjecture alone.

5. The exceptional size of a compensation award can constitute an exceptional circumstance under section 31(4) of the Employment Act 2002, permitting an uplift below 10%. The challenge to the legal availability of the 2% uplift therefore failed. Since compensation would be reassessed, however, the Tribunal had to reconsider the appropriate percentage.

6. The case was remitted, to the same Employment Tribunal if possible, to determine the chance of dismissal without discrimination and reassess compensation and the uplift. The Employment Appeal Tribunal had been entitled to choose the same Tribunal for the remission.

1. Court of Appeal (Civil Division): The appeal was allowed in part. The court restored the availability of compensation for wider career loss and stigma, upheld the requirement to discount for the chance of dismissal without discrimination, and remitted compensation to the same Tribunal if possible: [2009] EWCA Civ 1202.
2. Employment Appeal Tribunal: The employer’s liability appeal was dismissed. Parts of its remedies appeal were allowed, the employee’s cross-appeal concerning the uplift was dismissed, and compensation was remitted to the original Tribunal: UKEAT/0606/07/RN, UKEAT/0037/08/RN and UKEAT/0041/08/RN.
3. Employment Tribunal: The Tribunal upheld claims for race discrimination, unfair dismissal and breach of contract. It awarded £2,794,962.27 plus interest, including career-loss compensation and a 2% statutory uplift.