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Employment cases – correct approach to claims for future loss

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Fahy Sheila
Sheila Fahy

PSL Counsel

London

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20 June 2011

Case summary: Wardle v Credit Agricole Corporate & Investment Bank [2011] EWCA Civ 545, 11 May 2011

In Wardle v Credit Agricole Corporate & Investment Bank the Court of Appeal confirmed that in assessing a claim for future losses in employment disputes, the correct approach is to ask when the claimant would be likely to obtain an equivalent job. Loss for whole career will only be made in exceptional cases.

This was an appeal by the claimant and a cross appeal by the respondent as to the proper assessment of compensation due to the claimant.

The claimant was employed by the respondent and applied for promotion to a better paid position. His application failed and a French national was appointed to the role. The rejection of the claimant’s application for the job was held to be a discriminatory act on the grounds of the claimant’s nationality, contrary to the Race Relations Act 1976 (the Act). The  claimant was dismissed six months after the new job took effect. The Employment Tribunal (the Tribunal) held that the dismissal was unfair and an act of victimisation discrimination.

In its assessment, the Tribunal considered what would have happened to the claimant’s future employment had he not been dismissed or discriminated against, and the losses he had suffered as a result. It awarded compensation from the date of his dismissal to the date it found he would retire, the remainder of his working career, having assessed losses for that period.

On appeal to the Employment Appeals Tribunal (the EAT), the respondent’s claim that the Tribunal had been wrong to award career long loss was dismissed.

Court of Appeal

The Court of Appeal considered whether the Tribunal had been entitled to assess the claimant’s loss by reference to his entire career. The court commented that the “normal” approach, which requires assessment of losses up to the point at which a claimant would have been likely to obtain an equivalent job, is a fair manner of gauging loss. It may sometimes  overcompensate a claimant where he achieves an equivalent job sooner than assessed by the Tribunal and may equally  undercompensate where achieving employment takes longer. However, an exercise in assessing compensation which spanned the career lifetime of the claimant was the wrong approach by the Tribunal.

In undertaking that exercise, the Tribunal had gone as far as to award damages up until a point at which it could say without doubt that the claimant would have found an equivalent job. The only circumstance in which the Tribunal would be entitled to take the approach it had adopted may arise where there is no real prospect of a claimant ever obtaining an equivalent job. In that case, the assessment of compensation would necessitate measurement of the loss on the basis of it continuing for the whole of the claimant’s working life.

The court distinguished the case of Abbey National v Chagger [2009] EWCA Civ 1202 as such a case. There the claimant had suffered permanent career damage (“stigma loss”) because other employers refused to employ him as he had previously brought legal proceedings, and so should be compensated in proportion to his loss. Chagger was in stark contrast to the case at hand where the claimant had a significant chance (70%) of finding an equivalent job within two years of dismissal, and so was not entitled to compensation beyond that date.

As a result, the Tribunal’s assessment was flawed and compensation was recalculated.

Comment: This is an important case on compensation as claimants have been quick to claim career long loss, following the EAT’s decision. Whilst career loss claims can still be made in exceptional circumstances, employers will now be able to push back on these as the default position.

Further Information

This case summary is part of the Allen & Overy Litigation Review, a monthly update on interesting new cases and legisation in commerical dispute resolution.  For more information please contact Sarah Garvey sarah.garvey@allenovery.com, or tel +44 (0)20 3088 3710.