Addressing racist language in Financial Services

Oct 9, 2023

Case Study: Mr C Borg-Neal v Lloyds Banking Group plc

A recent decision by the Employment Tribunal has made the headlines and has drawn attention to a complex issue within the financial services (FS) sector. A 58-year-old Lloyds Bank employee, with no prior disciplinary record, found himself unfairly dismissed for using the N-word at work. The case has highlighted the importance of employers needing to consider the context of a situation before resorting to dismissal. It also suggests that the higher burdens placed on FS employers by the FCA and/or PRA will not necessarily justify a ‘zero tolerance’ approach.


Mr Carl Borg-Neal was dismissed from Lloyds Bank for using the N-word in a race education session as part of the bank’s ‘Race Action Plan’. In a question to the trainer leading the session and in front of other employees, Mr Borg-Neal queried how he should handle a situation where the N-word was used by someone else. In doing so, Mr Borg-Neal stated the full word in example. The trainer was taken aback and offended and reacted strongly in the session. The Bank was made aware of this and subsequently started disciplinary procedures against Borg-Neal for his use of this language.  Mr Borg-Neal’s defence was that he was asking an innocent question related to the session with no malice intended and that his dyslexia had played a key role in his difficulty in processing sentences and information quickly prior to speaking.

Lloyds Bank dismissed Mr Borg-Neal on the basis that the full N-word is appalling and should not be used at work. They also suggested that the dismissal was in accordance with their a zero-tolerance policy of discrimination. Additionally, Lloyds considered that even if no malice had been intended, hearing the word can be ‘intensely painful and shocking’. Notwithstanding this, Mr Borg-Neal believed his dismissal was disproportionate and therefore brought a claim for unfair dismissal and disability discrimination. This was because he considered that his dyslexia had not been considered and that summary dismissal for gross misconduct was outside of the range of reasonable responses available to Lloyds. Indeed, Mr Borg-Neal had himself suggested throughout the process that a warning and further training would have been the more appropriate sanction given the context of his case.

The Tribunal’s Decision

The Tribunal upheld Mr Borg-Neal’s claims of unfair dismissal and discrimination arising from his disability. Whilst it was accepted Mr Borg-Neal used the word and that this was in breach of Lloyds’ internal policies, the Tribunal decided that it was outside the band of reasonable responses to dismiss him.

The Tribunal took the time in their judgment to set out their reasoning as to why Mr Borg-Neal had been unfairly dismissed. The Tribunal accepted that Lloyds Bank genuinely believed Mr Borg-Neal was guilty of gross misconduct and that they held this belief on reasonable grounds. However, the Tribunal went on to consider that the word was only stated once, after which Mr Borg-Neal issued an apology and sat quietly for the remainder of the session. It was also noted that Mr Borg-Neal had not only immediately apologised, but had also repeatedly expressed remorse throughout the investigation and disciplinary processes and, critically, had never repeated the full word again.

It was also held that, on reviewing the matter as a whole, whilst a reasonable employer would find the full use of the word misconduct, this would not constitute gross misconduct in these circumstances. Further, the size of Lloyds, the number of people in attendance at the training session, the diversity of its members and the context of the conversation were also considered. It was found that there was no suggestion that Mr Borg-Neal was taking an opportunity to say an abusive term under cover of a question and had used the term (albeit ill-advisedly) in a bid to gain understanding rather than with discriminatory intent.

Another finding was that whilst a reasonable employer would take the view that the N-word is a shocking and hurtful word, by investigating the surrounding context and evaluating Mr Borg-Neal’s apology, disability, and unrepeated actions, it was ruled potentially a warning and further training on the subject would have been more proportionate. The Tribunal noted in particular that there appeared to be a conflation of two critical questions: i) whether the word ought to have been said; and ii) whether Mr Borg-Neal should have been dismissed as a result. In the Tribunal’s view, the disciplinary officer had unreasonably confused these in assuming that not dismissing Mr. Borg-Neal would imply condoning the use of the racial term.

The Tribunal also criticised Lloyds for the length of time the investigation had taken and expressed concern over the witnesses that the investigating manager had chosen to interview (and critically those the manager had not interviewed at all). Ultimately, the Tribunal found that in addition to dismissal being outside of the range of reasonable responses, the process followed during the investigation Lloyds was also unfair and the time it had taken was a breach of the Acas code.

Learning Points – from an FS Perspective

  1. Contextual Assessment: understand the full context of any potential misconduct, particularly where sensitive issues like racist language are involved. Critically, reliance on zero-tolerance policies in respect of discrimination, will not absolve FS employers of the duty to undertake a full and thorough investigation in order to justify any sanction.
  2. Fitness and Propriety: where findings of misconduct (even where only a first written warning is issued), FS employers will need to consider whether such conduct impacts an individual’s fitness and propriety and whether the behaviour has compromised the employee’s honesty, integrity, competence, reputation or financial soundness or has amounted to a breach of the FCA conduct rules.
  3. Regulatory References: when cases of misconduct arise, even where only the investigation stage is reached, FS employers will need to consider whether even the investigation alone merits inclusion in the employee’s regulatory references.
  4. Thorough and Timely Investigations: ensure that timely and comprehensive investigations into allegations of misconduct are conducted and be mindful of whether such an investigation needs to be reported to the FCA and/or PRA and at what stage such a report should be made.
  5. Proportionate Response: respond to misconduct or gross misconduct in a manner that aligns with the severity of the breach. Ensure that any disciplinary action taken, particularly when such action is dismissal is proportionate to the offence. Do not rely on a zero-tolerance approach to justify an extreme sanction without further justification.

How we can help

With so many factors to consider, understanding how to respond appropriately in matters of potential misconduct and how to carry out further investigation properly, could avoid a lengthy and costly Employment Tribunal process and/or further investigation from the PRA and/or FCA.

For further information, or to discuss the issues raised within this case, please contact us to speak to a member of our Employment Team.

This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

Alex Harper

Alex Harper

Senior Solicitor, Employment Law

t: 01276 854 925

Hannah King

Hannah King

Senior Solicitor, Employment Law
 01189 899 707

Bridget Bailey

Bridget Bailey

Trainee Solicitor

Latest News & Insights

All in a Day’s Work: Employment Podcast Series

Our Employment team bring you a monthly podcast covering all aspects of Employment law for businesses and individuals. You can browse our podcasts below…
All in a Day’s Work: Introduction to TUPE

All in a Day’s Work: Introduction to TUPE

In this episode, we discuss the basic principles of TUPE including when a transfer arises, the impact this has on employees and how best to prepare for a potential TUPE transfer.

Top Legal Insights


Contract Law

Material Breach of Contract

What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?

Property Law

Commercial Lease: The Financial impact on Landlord and Tenant

Coronavirus (COVID-19) and the restrictions now in place to control its spread, are having a significant effect on many business sectors.

Divorce and Family Law

Divorce in Lockdown: Can I get some discreet legal advice?

We have spoken to clients who are unfortunately experiencing some family issues, and would like to obtain expert legal advice, yet don’t know how...

Land & Property Dispute

Restrictive Covenants – The Price of Modification

Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?

Wills, Trusts and Probate

Why is having a will so important?

It is entirely up to you if and when you want to create a Will, but it is important to be aware of the consequences of not having a Will.

Award winning legal advice

Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.

+44 (0)1276 686 222


Brennan House, Farnborough Aerospace Centre Business Park, Farnborough, GU14 6XR

Reading (Appointment only)
The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA

Ascot (Appointment only)
102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY

London (Appointment only)
60 St Martins Lane, Covent Garden, London WC2N 4JS

Privacy Policy   |   Legal Notices, T&Cs, Complaints Resolution   |   Cookies  |   Client Feedback   |  Diversity Data



Our Services

Corporate Lawyers
Commercial Lawyers
Commercial Property Lawyers
Conveyancing Solicitors
Dispute Resolution Lawyers
Divorce & Family Lawyers
Employment Lawyers
Immigration Law Services
Private Wealth & Inheritance Lawyers
Startups & New Business Lawyers

Pay Online >

Please be aware that we have no plans to change our bank details. If you receive any indication that any of our bank details have changed please contact us before sending us any funds. We take no responsibility for monies you transfer into the wrong bank account.

© 2023 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.

Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.