Employer Liable for Stigma Loss

The Court of Appeal has held in Chagger v Abbey National plc (Abbey) and Anor [2009] EWCA Civ 1202 that an employer is responsible for "stigma loss" suffered by an employee if the employee can show that he would have difficulty in finding alternative employment due to having brought a discrimination claim against the employer. However, such loss will not be calculated separately and will simply be a factor to be considered when assessing how long the claimant remains out of work.

Mr Chagger was a risk analyst at Abbey and was made redundant in 2005. He brought claims at Tribunal for unfair dismissal, race discrimination and breach of contract and won on all three counts. At the subsequent remedies hearing, Mr Chagger gave evidence of his many endeavours to mitigate his loss by finding similar work and claimed that his failure in finding similar work was attributable to the stigma of having brought a claim against Abbey.

Abbey argued that it should not be held liable for the discriminatory conduct of third parties who refused to employ Mr Chagger as a result of the stigma of his claim against a previous employer. The Court of Appeal found 'considerable force' with this argument but the argument was rejected in the end. The Court of Appeal applied the same principles in Malik v BCCI, where it was held by the House of Lords that if a stigma attaches to an employee due to the unlawful way in which an employer runs its business, the employer is liable for stigma losses as a result of other employers not wanting to recruit its former employees. The Court of Appeal recognised that while Malik dealt with a different kind of stigma loss arising from unfair dismissal, it noted that it would be unsatisfactory and artificial not to apply the same principles in the context of discrimination law.