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Redundancy Process Lessons from Chagger v Abbey National Santander share

By: Simon King Click author's name for more of his/her articles

Selecting an employee for redundancy using an unfair and/or discriminatory redundancy process can leave the employer exposed to indefensible accusations of unfairness and discrimination, as demonstrated by the high-profile Chagger v Abbey National plc & Hopkins (2006) legal case in the UK, where the Employment Tribunal made a ruling of race discrimination and subsequently ordered Abbey National Santander share to pay the record-breaking compensation award of £2.8 million. Santander Abbey National Group (the Spanish-owned UK high street bank being re-branded as Santander share price, and being part of the enormous Banco Santander Group) terminated Balbinder Chagger's employment in 2006, asserting redundancy as the reason. Mr Chagger, on the other hand, believed that the real reason for his dismissal was race discrimination. Abbey Santander price employed Mr Chagger, who was of Indian origin, as a Trading Risk Controller. He earned around £100,000 a year and reported into Nigel Hopkins. The redundancy pool of selection was Mr Chagger and the other Trading Risk Controller, a female of European origin.

Under the Employment Rights Act 1996, the selection of any employee for dismissal via redundancy must be fair; meaning that the redundancy selection criteria must be both fair and measurable, and must be applied fairly to each employee in the redundancy pool of selection. The Employment Tribunal in the Santander Abbey Santander case found that the redundancy selection criteria used by Abbey National Santander were highly subjective and un-measureable. The Employment Tribunal highly criticised Mr Hopkins for the discriminatory way in which he had applied the redundancy selection criteria to Mr Chagger; he was personally content for Mr Chagger's employment to be ended, had pre-planned that Mr Chagger would be the employee that would be scored lower in the redundancy scoring exercise and, so, selected to be dismissed, and had used the redundancy process as a vehicle to remove Mr Chagger from his position. Mr Hopkins had picked upon Mr Chagger unfairly.

In order to safeguard the fairness of the redundancy process and to minimise the risk of allegations of unfairness and discrimination, it would appear to be good practice to ensure that more than one person is involved in the scoring of employees during a redundancy scoring exercise. The Employment Tribunal found that Santander Abbey National did not exercise this particular good practice. Amongst other things, Mr Hopkins alone was able to volunteer to Santander Abbey's management to lose one of the two Trading Risk Controllers that he managed (of which Mr Chagger was one), Mr Hopkins alone was able to approach Mr Chagger with an offer to take up voluntary redundancy, which Mr Chagger refused (Mr Hopkins did not approach the other Trading Risk Controller with any such offer), Mr Hopkins was able to carry out the compulsory redundancy scoring exercise entirely alone (Mr Chagger was the only employee whose redundancy scores he had marked down).

Organisations that do not exercise fairness in selecting employees to be dismissed in a redundancy situation can find themselves exposed to claims of unfair dismissal and/or discrimination; an unfair and discriminatory redundancy process contributed to the Employment Tribunal's ruling that both Abbey Santander Abbey and Mr Hopkins had discriminated against Mr Chagger on the grounds of race in his dismissal.

The Chagger v Santander Abbey case did not end at the Employment Tribunal stage. In 2008, Santander Abbey and Mr Hopkins appealed to the Employment Appeal Tribunal (EAT) against the original Employment Tribunal's ruling of race discrimination and against the order of £2.8 million award. The EAT upheld the Employment Tribunal's ruling that both Abbey Santander and Mr Hopkins had racially discriminated against Mr Chagger in respect of his dismissal. However, the EAT did accept Abbey Santander's appeal on the £2.8 million compensation award and sent it back to the original Employment Tribunal for reconsideration. The case was appealed to the Court of Appeal (the second highest court in the UK) this year. According to the Court of Appeal's List of Hearings, the appeal was heard on 7 and 8 July 2009. The Court's records were not available at the time of writing this article. The 11KBW set of barristers' chambers, who represented Santander Abbey and Mr Hopkins, had reported that the Court of Appeal hearing was only regarding compensation (not racial discrimination also). That would imply that the wrong of race discrimination committed by Abbey Santander and Mr Hopkins has been finalised by the EAT (which upheld the original Employment Tribunal's ruling that Mr Hopkins and Santander Abbey Group had racially discriminated against Mr Chagger), and that Mr Chagger has appealed against the EAT's decision to send the £2.8 million compensation award back to the Employment Tribunal stage for reconsideration.

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About The Author: Santander Abbey & Hopkins v Chagger (2008) and Abbey Santander Share Provides Compliance and Risk Lessons