Redundancy Selection Procedure Lessons from the Santander Banking Group

Published: 21st July 2009
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A stark reminder that selecting an employee for redundancy with an unfair and/or discriminatory redundancy selection procedure can leave the employer exposed to allegations of unfairness and discrimination from the employee is provided by the high-profile Chagger v Abbey National plc & Hopkins (2006) UK legal case. Abbey Santander (the high street bank soon to be re-branded as Santander, and being part of the Banco Santander Group) ended Balbinder Chagger's employment in 2006, giving redundancy as the reason. Mr Chagger (of Indian origin) was employed as one of the two Trading Risk Controllers reporting into Nigel Hopkins. He earned around £100,000 per year. The redundancy pool of selection was Mr Chagger and the other Trading Risk Controller, a female of European origin. However, Mr Chagger believed the actual reason behind his dismissal from Santander Abbey National was not redundancy but race discrimination. The Employment Tribunal that heard the case agreed; it found race discrimination and subsequently awarded the record breaking £2.8 million compensation.

Selection of any employee for dismissal through redundancy must be fair under the Employment Rights Act 1996. That means that the redundancy selection criteria must be fair and measurable, and must be applied objectively to each employee in the redundancy pool of employees. The Employment Tribunal in the Abbey Santander case found that the redundancy selection criteria used by Santander Abbey National were un-measurable and highly subjective. The Employment Tribunal criticised Mr Hopkins highly for the discriminatory manner in which he had applied the redundancy selection criteria to Mr Chagger. The Employment Tribunal found that Mr Hopkins was personally content for Mr Chagger's employment to be terminated, had planned that Mr Chagger would be the employee that would be scored lower in the redundancy scoring exercise and, thus, selected for dismissal, and had used the redundancy process as a means to remove Mr Chagger from his employment; he had picked upon Mr Chagger unfairly.

As a safeguard control mechanism to enhance the fairness of the redundancy scoring exercise and to minimise the risk of allegations of unfairness and discrimination, it would appear to be good practice for employers to ensure that more than one person is involved in the scoring of employees during a redundancy scoring exercise. Abbey Santander did not operate this control, the Employment Tribunal found. Amongst other things, Mr Hopkins single-handedly was able to volunteer to Abbey's management to lose one of the two Trading Risk Controllers that he managed (Mr Chagger being one), Mr Hopkins single-handedly was able to approach Mr Chagger with an offer to take up voluntary redundancy, which Mr Chagger declined (Mr Hopkins never approached the other employee in the redundancy pool with any such offer), Mr Hopkins was able to carry out the compulsory redundancy scoring exercise entirely single-handedly (and Mr Chagger was the only one whose scores he had marked down).

Employers who do not exercise fairness in the selection of the employees to dismiss in redundancy situations can find themselves exposed to claims of unfair dismissal and/or discrimination; an unfair and discriminatory redundancy selection procedure contributed to the Employment Tribunal's conclusion that both Santander Abbey National and Mr Hopkins had discriminated against Mr Chagger on the grounds of race in his dismissal.

The Chagger v Abbey National plc & Hopkins case did not end at the Employment Tribunal stage though. In 2008, it escalated to the Employment Appeal Tribunal (EAT), and this year it escalated to the Court of Appeal, being the second highest court in UK, where it was heard on 7 and 8 July 2009 (according to the court's website). At the time of writing this article, the Court of Appeal's records of the case were not available. The King's Bench Walk set of barristers' chambers had reported (on its website) that the hearing was only about the matter of compensation (i.e., not race discrimination also). That seems to suggests that the wrong of race discrimination committed by Santander Abbey National and Mr Hopkins seems to have been finalised by the EAT (the EAT had upheld the original Employment Tribunal's judgement that Mr Hopkins and Abbey Santander had discriminated against Mr Chagger on the grounds of race in his dismissal).


Abbey National plc & Hopkins v Chagger (2008) and Santander Abbey National Illustrates Unfair Dismissal Remedy (Reinstatement)

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