Court Of Appeal's Discrimination Compensation Rulings In Chagger V Emilio Botin's Abbey Santander

The Court of Appeal has issued rulings (effective from 13 November 2009) on how employment

discrimination compensation awards should be calculated, after hearing the employment race discrimination case Chagger v Abbey National & Hopkins (2009).

Previously, in Chagger v Abbey National & Hopkins (2006), an Employment Tribunal had made findings of race discrimination, unfair dismissal and breach of contract against Emilio Botin's Abbey Santander price and Nigel Hopkins. The Tribunal then had ordered Abbey Santander share to re-employ Balbinder Chagger, to put him in the position that he would have been in had there been no discrimination, thus, preventing him from suffering any sizeable losses from the wrongs that had been committed. Emilio Botin's Abbey Santander share, however, refused to comply with the Employment Tribunal's re-employment order, advancing reasons that the Tribunal concluded as being unsatisfactory. Subsequently, the Employment Tribunal ordered Santander Abbey to pay Mr Chagger the record breaking 2.8 million compensation to cover his loss.

In Abbey National & Hopkins v Chagger (2008), the Employment Appeal Tribunal (EAT) upheld the original Employment Tribunal's finding of race discrimination, unfair dismissal and breach of contract against Grupo Santander shares and Mr Hopkins. Banco Santander Abbey and Mr Hopkins did not appeal further against the EAT's rulings on the wrongs they had committed; they appear to have conceded that they discriminated against Mr Chagger on the grounds of race, dismissed him unfairly and breached his contract.

The Court of Appeal upheld the EAT's ruling in Abbey National & Hopkins v Chagger (2008) that discrimination compensation must be reduced to reflect the chance that an employee who had suffered discrimination could have been dismissed lawfully in any event. If there was such a chance, then Employment Tribunals must factor it into the compensation award.

When determining compensation, the Employment Tribunal must put the employee in the position that he or she would have been in had the discrimination not occurred. The Court of Appeal ruled that, to achieve this, Employment Tribunal's must consider when the employee might expect to obtain another employment on equivalent remuneration, because a discriminatory dismissal affects the career path that the employee might otherwise have pursued. The employee's future loss is fixed by that time period.

Mr Chagger presented the Tribunal with compelling evidence that he had tried exhaustively to obtain further work but that despite his best efforts he had been unable to obtain equivalent work. Eventually, he decided to retrain as a mathematics teacher. He believed that being shunned by prospective employers for having brought legal proceedings against Abbey Santander was one of the difficulties he was facing in securing employment elsewhere (so-called stigma).

The Court of Appeal ruled that the original employer (in this case Abbey Santander) could be liable for future losses that arise from the so-called stigma suffered by an employee who has brought discrimination proceedings against his former employer. It did not believe stigma loss would normally lead to unrealistically high compensation awards, because if an employee is unable to make good his suspicions that he is the victim of such a stigma from prospective employers by taking a claim against those employers, he cannot expect an Employment Tribunal to take seriously his 'conjecture' that he has suffered by way of stigma loss. The Court ruled that if an Employment Tribunal were to find that an employee who had been discriminated against could have been lawfully dismissed in any event, then any damage to his employment prospects from the stigma of suing his former employer would be his only recoverable future loss.

by: Simon King

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