In this case, the EAT overturned a 35% Chagger reduction to an employee's compensation for sex discrimination, and confirmed that when assessing reductions to compensation for discrimination, tribunals must ask what would have happened if none of the discriminatory conduct had occurred.
Background
Compensation for discrimination that addresses future loss may be subject to a reduction where a tribunal considers that there is a real chance the claimant's employment would have ended in any event, even if the discrimination had not occurred. This is referred to as a Chagger deduction, named after the Court of Appeal case in which the deduction was introduced.
Facts
KJ worked for the British Council in Morocco. She brought a grievance regarding harassment and sexual harassment by a colleague. Following delays in the employer’s grievance process, she resigned and brought claims of constructive unfair dismissal, direct sex discrimination, harassment and sexual harassment.
The employment tribunal upheld all claims other than victimisation. It found that KJ was subjected to discriminatory acts including sexual harassment and a defective grievance process, and that she had resigned in response to this, with the grievance outcome report being the "final straw". The tribunal applied a 35% Chagger reduction to KJ's discrimination compensation, based on the possibility that KJ might have left her employment due to organisational restructuring, a reduced benefits package, and evidence that she was contemplating a move back to the UK or external roles.
KJ appealed the reduction (amongst other issues) to the EAT on the basis that the factors identified by the tribunal as evidence that KJ might have left her employment absent any discrimination were themselves potentially influenced by the discrimination and harassment that she had experienced.
The EAT upheld KJ's appeal. It found that the tribunal had failed to consider whether KJ's thoughts about her future with the British Council and a possible return to the UK were influenced by the harassment she had experienced and the discriminatory handling of her grievance. When assessing discrimination compensation, a tribunal must consider what would have happened had none of the discriminatory wrongs occurred, not merely what would have happened absent the “final straw”. The tribunal had failed to consider the effect of all of the discrimination on KJ's decision to resign.
The EAT also found that factors genuinely independent of the discrimination, such as the risk of KJ not securing a role in the British Council's proposed restructuring, could have supported a Chagger reduction. However the tribunal had not identified what proportion of its 35% reduction related solely to that risk, so its decision could not stand.
What does this mean for employers?
This decision makes clear that tribunals must take a much more disciplined approach when reducing discrimination compensation under Chagger. Employers cannot rely on a broad argument that the employee “might have left anyway” unless they can show what would probably have happened if none of the discriminatory conduct had occurred.
However, reductions are still possible where the risks relied upon are genuinely separate from the discrimination. From a litigation perspective, this means arguments on future loss should focus on clear, non‑discriminatory business circumstances and avoid reliance on employee behaviour or intentions that may have been affected by alleged discriminatory treatment.
