In Chagger v Abbey National Plc  ICR 397, the Court of Appeal held that when deciding what financial loss to award an employee dismissed for a discriminatory reason, it is open to the employer to show that the employee would have been dismissed in any event for a non-discriminatory reason.
This was explained by the Court of Appeal (and the EAT below) as an application of the well-established principle in tort law that a tortfeasor should be responsible for the loss actually caused by their tort. The claimant unsuccessfully argued that this approach would go against the “full compensation” principle; but of course that principle means both “no less than full” and “no more than full”.
The Court of Appeal explained that the question for the Tribunal is: what would have occurred had there been no discriminatory dismissal? In order to answer this question, the Tribunal must determine what, in fact, were the chances that dismissal would have occurred had there been no unlawful discrimination.
In other words, the Tribunal must construct the counterfactual world in which there was no unlawful discrimination, and then decide the chances that the employee would still have been dismissed (for a non-discriminatory reason).
Chagger itself is actually a straightforward application of this approach. Mr Chagger was placed in a redundancy pool with one other employee. The other employee received the maximum score in the selection process and Mr Chagger two points fewer. Mr Chagger did not claim that he was necessarily better than the other employee; he simply argued that he had not been scored fairly because of his race. The Tribunal upheld the race discrimination claim.
On these facts, the only difference in the counterfactual world is that the manager doing the scoring is not influenced by Mr Chagger’s race. Given Mr Chagger’s own view of his abilities compared to the other employee, there would plainly have been some chance that he would have been made redundant in any event.
What about a more complex case? Take two examples. Firstly, the facts of a case I was recently instructed in. The claimant was subjected to serious unlawful harassment and resigned as a result, claiming constructive discriminatory dismissal. Before he resigned, he decided to line up a new job and move to a start-up which was in competition with the respondent. The respondent argued that certain preparatory steps he took prior to resignation amounted to a repudiatory breach of contract, and that had he not resigned when he did he would have been dismissed for gross misconduct.
What is the counterfactual world here? The simple answer is that it is a world in which there had been no unlawful harassment. But digging deeper, I would suggest that it must be a world in which anything which flows from the unlawful harassment is also absent: in that world, the claimant would have had no reason to move to the competitor and so the purported gross misconduct, whether or not it is made out on the facts, would never have occurred.
Secondly, a modified version of Chagger. Take an employee who is subjected to unlawful harassment in the workplace which leads to their underperforming and taking time off work. They are not disabled. They resign and claim constructive discriminatory dismissal. Four months later the employer goes through a redundancy process and claims the employee would have been made redundant because of their performance and absence records.
What is the counterfactual world? Again, it is a world in which there is no harassment, but what flows from that? If the employee can prove that their underperformance and poor attendance flowed from the harassment, I would suggest that again it is consistent with Chagger that this is absent from the counterfactual world.
There has not been, to my knowledge, a case which has grappled with these issues. The case I was involved in almost got there, but the Tribunal disposed of the point by deciding that there was no gross misconduct.
This post was written by Andrew Watson, a member of 12KBW and a co-editor of this blog.