Veitch Penny LLP - Exeter | Crediton, Devon

Case

Chagger v Abbey National Plc
Court of Appeal - November 2009

Issues

(1) Unfair dismissal
(2) Compensatory award
(3) Stigma damages

Facts

Mr Chagger, who is of Indian origin, was made redundant by Abbey National Plc. He brought claims that he had been automatically unfairly dismissed (due to failures in procedure) and discriminated against on grounds of race.

At the Employment Tribunal he was awarded £2,700,000. The Tribunal found that his selection had been seriously tainted by race discrimination, a finding which was not challenged by Abbey National in a subsequent appeal.

The matter was subsequently appealed to the EAT and then the Court of Appeal.

There were two substantial questions for the Court of Appeal to consider.

1. Should the Tribunal reduce the compensation to reflect the chance that, even without the discrimination, Mr Chagger would have been dismissed on grounds of redundancy?

2. Should Abbey National Plc be liable for loss resulting from the stigma he faced in the job market for bringing a claim against his former employer?

Decision

In respect of the first question, the Court of Appeal felt that heed should have been given to the outcome of the redundancy, notwithstanding dismissal. In this particular case, Mr Chagger was in a pool of two and there was good evidence to suggest that he may have been made redundant in any event.

Abbey National Plc tried to argue that the job market was sufficiently strong that there was a good chance that he would have left voluntarily in due course. They referred to the numerous moves he had made prior to joining Abbey National.

The Court of Appeal disagreed. They felt Mr Chagger's package was such that he would only have left if he had had a job to go to.

With regard to the second question, the Court of Appeal found that the employer should be liable for the loss arising from the stigma attached to bringing a claim, but pointed out that compelling evidence was needed. In this case, Mr Chagger had made an exceptional number of applications within his particular field which were unsuccessful and he ultimately changed careers and trained to become a maths teacher.

Comments

These two findings are likely to be of great assistance to employees. The finding in respect of the first question will be of particular assistance in this climate when employees may have difficulties in successfully mitigating their loss promptly. With regard to the second question, then this has widened the number of cases in which stigma damages could be awarded. Originally, it was only available if arising as a direct consequence of the unlawful act, not simply as a result of bringing proceedings.

The matter was referred to the same Tribunal to reconsider the evidence in light of the Court's finding.