KJ v British Council: EAT allows appeal on Chagger deduction and upholds jurisdiction over sexual harassment claim

The Employment Appeal Tribunal has handed down its judgement in KJ v British Council [2026] EAT 46, allowing a claimant's appeal against a 35% Chagger deduction from her discrimination award whilst dismissing the respondent's cross-appeal on limitation. The decision clarifies the correct approach to counter-factual assessment in discrimination compensation and confirms that a continuing state of discriminatory affairs can bring otherwise out-of-time acts within the tribunal's jurisdiction.

KJ was employed by the British Council in Morocco as a Teaching Centre Cluster Lead. Between October 2020 and April 2021, a colleague, Tony Reilly, subjected her to harassment and sexual harassment. Following a grievance, a Speak Up Committee panel issued its report on 15 November 2021. KJ resigned a week later, citing the handling of the grievance as her key reason for leaving.

The Employment Tribunal upheld claims of constructive unfair dismissal, direct sex discrimination, harassment related to sex, and harassment of a sexual nature. It found multiple repudiatory breaches of the implied term of trust and confidence and discriminatory conduct for which the British Council bore vicarious liability. However, in an amended judgement, it applied a 35% Polkey reduction to the unfair dismissal award and a 35% Chagger reduction to the discrimination award, based on the possibility that KJ might have left employment in any event owing to an internal restructuring programme, a reduced benefits package, and evidence that she was considering roles outside the organisation.

The Chagger error

Mr Justice Sheldon allowed the appeal on the Chagger deduction, holding that the tribunal had failed to ask the correct question. The orthodox tortious measure requires the tribunal to identify what would have happened had none of the discriminatory wrongs occurred, restoring the claimant to the position she would have occupied but for the unlawful conduct.

The tribunal's analysis at paragraph 171 examined the restructuring exercise, KJ's interest in external roles, her communications about returning to the United Kingdom, and the proposed reduction in her mobility allowance. It did not, however, consider whether any of those matters were themselves the product of the harassment she had endured. As the EAT observed, the fact that KJ had not resigned until the SUC report was published did not mean the harassment had not already unsettled her and altered her assessment of the British Council as a long-term employer.

The restructuring was identified as one element of the assessment that was properly independent of the wrongs and could therefore ground some Chagger deduction. However, because the tribunal conflated resignation-based and redundancy-based scenarios without disentangling the influence of the harassment on KJ's own conduct and state of mind, the 35% figure could not stand. The matter is to be remitted, with disposal deferred pending the outcome of a separate remedies appeal.

Jurisdiction and the continuing state of affairs

The British Council's cross-appeal argued that the sexual harassment claims were out of time, the last pleaded act having occurred in April 2021 and the ET1 being presented on 17 February 2022. The EAT dismissed the cross-appeal, finding that the tribunal was entitled to conclude that there was a continuing discriminatory state of affairs extending from October 2020 through to the SUC report of 15 November 2021.

The thread running through the connected acts was clear: Mr Reilly's harassment prompted the grievance, the grievance process was conducted in a discriminatory manner, and the SUC report itself contained unreasonable and perverse findings. Although different individuals were involved at different stages, the acts were neither unconnected nor isolated. The proximity in time between the harassment and the grievance outcome, even allowing for unreasonable delay on the British Council's part, was sufficient to sustain the finding.

A passing reference in the tribunal's judgement to harassment by Mr Reilly continuing until 4 August 2021 — beyond the pleaded cut-off — was addressed by the EAT as context for illustrating the continuing state of affairs rather than an attempt to extend liability beyond the issues as pleaded.

The alternative finding that it would have been just and equitable to extend time was, however, found to be legally flawed, as the tribunal had not addressed the respondent's submissions on the reason for delay, the forensic prejudice arising from the passage of time, or the availability of the constructive dismissal route as an alternative vehicle for the same facts. That conclusion was immaterial given the primary finding on the continuing state of affairs.

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