Chagger v Abbey National plc and another EWCA Civ 1202

The Court of Appeal held that in a case involving a discriminatory dismissal an employer can be liable for stigma compensation where other employers are unwilling to employ the dismissed employee because he brought discrimination proceedings.

Mr Chagger was dismissed by reason of redundancy and Abbey National was held to have discriminated against him on the grounds of race when dismissing him. He was awarded nearly £2.8m in compensation. This figure was calculated on the basis that he would never be able to obtain employment in the financial services sector again together with compensation for Abbey National’s refusal to comply with an order for reinstatement and compensation for injury to feelings as well as an uplift for the failure to follow the now repealed statutory dispute resolution procedures.

Mr Chagger cross-appealed on the 2% uplift but was unsuccessful on the basis that any other figure would have resulted in a sum which was disproportionate to the nature of the breach. The Court of Appeal upheld Abbey National’s appeal on quantum in part and remitted the issue of compensation to the Tribunal for further consideration.

It held that the Tribunal ought to have considered reducing Mr Chagger’s compensation to reflect the chance that even without discrimination he would have been dismissed for redundancy. Mr Chagger was one of only two candidates in the selection pool. Therefore there was a realistic chance that Mr Chagger would have been dismissed even if the redundancy selection had taken place and the compensation should have been reduced to reflect that chance. However compensation for future loss should not be limited to the period during which Mr Chagger would have remained in employment with Abbey National. Abbey could and was liable for stigma consequences in Mr Chagger bringing his discrimination claim.

Key point: This case is a useful clarification of the principles to be followed in assessing the level of future loss in a discriminatory dismissal case.