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Santander UK Risks Reputation

In a high-profile employment dispute that has made UK legal history for a number of reasons, Santander UK has been demonstrating an astonishing level of appetite for exposing its reputation and corporate image to potential damage.

Santander UK is the UK financial services provider previously known as Abbey National. It was bought out by Banco Santander in 2004. Prior to that, it was a constituent of the FTSE 100 Index. On 11 January 2010, Banco Santander changed the Abbey National name to Santander UK. The Banco Santander chief Emilio Botin and the Formula 1 racing driver Lewis Hamilton launched the Santander UK name together in London.

In 2006, while Santander UK was still known as Abbey National, it dismissed one of its employees (Balbinder Chagger) seemingly for reasons of redundancy due to cost-cutting needs. Balbinder Chagger alleged that the redundancy was a sham exercise to target and remove him, and that the real reasons behind his dismissal were unfairness and race discrimination. He was of Indian descent.

An Employment Tribunal investigated the matter and discovered that Santander UK had, in fact, used the redundancy process as a means to target and remove Mr Chagger, and had treated him unfairly and racially discriminated against him.

In order to remedy the effects of Santander UK’s unlawful conduct, the Employment Tribunal ordered it to reinstate Mr Chagger. Santander UK, however, refused to comply, giving reasons that the Employment Tribunal found as unsatisfactory.

In order to mitigate the effects of Santander UK’s unlawful conduct, Mr Chagger applied for several other jobs at Santander UK itself. It rejected all his applications. He also offered to work for Santander UK on a voluntary basis, without pay, in several of its departments in order to improve his employability elsewhere. Santander UK refused all his offers.

In 2007, the Employment Tribunal concluded that the effects of Santander UK’s conduct was that it had cost Mr Chagger both his employment at Santander UK and also his future career in the banking sector. It ordered Santander UK to compensate Mr Chagger for his loss in the record-breaking amount of £2.8 million.

Corporate values and corporate behaviours are prominent topics in society. At the very least, society expects corporations to comply with their legal obligations. In order to safeguard their reputations and images from potential damage, many corporations resolve highly risky matters in private, before they ever reach the public domain. Santander UK’s decision not to have resolved the dispute in private suggests an astonishing appetite for exposing its corporate reputation and image to risk.

Following a failed appeal in 2008 to a higher court (which upheld the original Employment Tribunal’s finding that Santander UK had treated Mr Chagger unfairly and had discriminated against him), Santander UK now seems to have conceded that it had acted unlawfully. Despite having caused Mr Chagger to lose his job and also his future career, it now appears to be risking its corporate image further in pursuing open public legal proceedings concerned merely with lowering the £2.8 million amount of damage the Employment Tribunal assessed its unlawful conduct had caused Mr Chagger.

Court of Appeal judgement: Chagger v Emilio Botin Santander UK share price and Banco Santander UK pays for Unlawful Conduct