By Andrew Yule, a solicitor in the employment team at international law firm Withers
To read the press, employees in financial services would be forgiven for worrying not just about job insecurity but also that, if fired, their prospects of enforcing their rights are doomed. This is not the case.
It’s worth reflecting on some established principles and some more recent developments that show that employment rights are, in fact, alive and well. It’s also worth de-bunking the myth that Judges will be unsympathetic towards bankers - less still that they will be swayed by a groundswell of ‘unpopularity’. For the vast majority, the facts and the merits alone will be determinative of the outcome.
Employers can only dismiss fairly for one of a select number of reasons: the most common being redundancy. But in the current climate, ‘misconduct’ (and capability) dismissals are also becoming increasingly common.
Redundancy – why me?
Redundancies usually arise where a business’ requirements for employees to carry out work of a particular kind cease or diminish. On the face of it, not a difficult test.
Even so, the basis for an individual’s selection and the process that follows must stand scrutiny and the decision to dismiss must be wholly or mainly because of the reduction in the business’ requirements. Tribunals will be quick to criticise a sham or unfair process. When they do, it can have a knock-on effect on an employer’s credibility – for example, any suggestion of discrimination becomes harder to explain and defend when the entire process has been hopelessly unfair.
Redundancies affecting 20 or more employees demand a more rigorous and lengthier process still. A failure to comply can be costly.
We have seen a rise in misconduct allegations – in particular, alleging mis-use of confidential information. Cynically, perhaps, this can turn the tables on want-away or unwanted employees.
Of course, employees must be careful to understand and comply with their obligations – but earlier this year the Court of Appeal raised the bar for employers hoping to rely on misconduct as a reason to dismiss. Where the allegations are likely to damage the employee's future career (often a reality in a regulated sector), the investigation, disciplinary process and appeal must be particularly fair and thorough, and the evidence of misconduct particularly clear and cogent. By the same token, suspension – often a knee-jerk reaction – is not automatically justified, even where there’s evidence supporting an investigation. It may even be considered a breach of the implied duty of trust and confidence.
But compensation’s capped, right ?
Compensation for unfair dismissal is assessed on your losses, generally subject to a cap (currently £72,300). But this is in addition to a ‘basic award’, notice pay and other contractual entitlements.
What’s more, compensation is uncapped in some cases – for example, if the dismissal is discriminatory or is wholly or principally because an employee raised concerns about what he believed to be a breach of a legal obligation (‘whistle-blowing’). Sure – showing that whistle-blowing caused the dismissal is rarely easy; but if the back-story is tainted, the foundations are there. The number of successful, reported cases may be low; but the majority settle – certainly the strong cases.
A dismissal claim is not the end of the story. Employees are protected from suffering detriments other than dismissal, because of whistle-blowing or discrimination – this could include suspension or a reduced bonus. The legal test to prove whistle-blowing detriment is different to that for dismissal, and has become simpler in the last couple of years. Compensation is still uncapped.
A Tribunal also has the discretion to order reinstatement or re-engagement or to punish a poor process by uplifting compensation by up to 25%.
What about my bonus ?
A bonus claim will largely depend on the language of the documents. This is usually tightly drafted, but should be read carefully; particularly older contracts are often less watertight than an employer may have you believe.
Even if the contract draws a blank and bonuses are entirely discretionary, any dismissal claim will include a claim for all future loss – including bonuses. An employer may be forced to bring evidence of bonuses paid to peers, before the Tribunal.
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