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Insights - 19/05/2022

Huge pay-out awarded to banker who was unfairly dismissed to appease regulators

Employment tribunal orders bank to re-instate employee and pay him £1.5m for lost salary and benefits after he was wrongly accused of manipulating the market.

The case serves as a stark reminder of how costly a re-engagement order can be in unfair dismissal claims.  In this case, the claimant, Mr Jones was employed by JP Morgan as a financial analyst and trader – a role which was certified and regulated by the Financial Conduct Authority.

He was dismissed on 31 January 2021 for events which occurred and were investigated way back in 2016 relating to “spoofing”. Spoofing occurs when traders place a bid or offer but then cancel it before execution with a view to creating a misleading impression about the demand or supply of a particular commodity.

After the initial investigation the bank decided that Mr Jones should not face disciplinary sanctions for his actions but then proceeded to changed their mind some 3 years later following pressure from the regulator to “clean up its act”. The true reason for the dismissal was therefore not misconduct – they had after all originally decided that disciplinary action was not warranted. Rather it was in response to pressure from the regulator to adopt a stricter approach. The Tribunal ruled that the dismissal was unfair, both in terms of substance and procedure.

Whilst the bank’s failings serve as a salutory lesson and would justify a whole article in itself  the most interesting aspect of this case is the remedy awarded by the Tribunal. In most unfair dismissal cases the remedy comprises an award of compensation for any financial loss suffered as a result of the dismissal. This is currently capped at £93,878 or 52 weeks gross salary.

In this case Mr Jones was especially concerned that he would find it almost impossible to find a similar role in another bank even though the tribunal had found in his favour. This was partly because JP Morgan had made clear that any regulatory reference they would be obliged to provide would state that they did not consider him to be a fit and proper person to perform the role, effectively blacklisting him from any comparable employment elsewhere.

Mr Jones had spent his entire career at JP Morgan and in spite of the treatment he had been subjected to maintained that he had no hard feelings against the Bank and very much wanted to be able to resume his employment there. He gave compelling evidence to this effect which was ultimately accepted by the tribunal.

In addition to the power to award compensation tribunals can also order that the Employer re-instate or re-engage an employee. In practice employees rarely pursue an order that they be reinstated but on occasions where they do so and the Tribunal is satisfied that it would be fair and practicable to order this then in addition to making such an order it can also award compensation for any loss of salary and benefits sustained  from the date of dismissal to the date of reinstatement or re-engagement. The actual amount awarded would have to take  appropriate account of sums already received including pay in lieu of notice, ex gratia payments and earnings from any other employment.

Whilst re-employment orders are rare this case demonstrates that both from a tactical and practical perspective employees should not be too quick to discount this remedy.

Employers might take an unfair dismissal claim more seriously if the financial stakes are much higher. As in this case that is likely to be the case with a high earning employee who is also seeking a re-employment order.

Had Mr Jones simply sought compensation rather than re instatement or re-engagement with accompanying compensation for losses arising in the interim the outcome would have been one in which the Tribunal would have had to cap his compensation at a fraction of the sum actually recovered.

Jones v JP Morgan Securities plc [2021] 12 WLUK 538

Should you have questions regarding any of the points mentioned in this article, please do not hesitate to get in touch with Mel McCrum, Head of Employment Law at Morr & Co, or any of our Employment team.


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