Compromise agreement for banker in financial services

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Compromise agreement for banker in financial services

We negotiated a merchant banker’s compromise settlement agreement following her redundancy. Our client had returned to work from maternity leave on a part-time basis. A change in management led to questions concerning her commitment to work. She also suffered less favourable treatment compared to full-time employees. Just before bonus time she was informed that her employment was to be terminated.

Recommendations

We recommended to our client to push for a larger pay off.  The initial offer was not in line with her potential employment law claims. Our job was to make the employer take her case seriously and settle at a fair level of compensation.  In all likelihood our client was unlikely to work again in a merchant bank.

Result

We achieved a good result for our client.  This is how we did it:

  • Assessed the compensation on offer compared to our client’s salary, bonus and benefits package and share option plan.
  • Determined the claim and appropriate sum for compensation.
  • Negotiated with the employer and settled on a significantly enhanced sum for compensation.

Background

The employee was a senior manager in an investment bank. She had recently returned from maternity leave, and agreed part-time flexible working with her line manager to accommodate child care arrangements.

A few months later her line manager was replaced. The new manager was unhappy with her part time working arrangements. He complained when she was not in the office and openly questioned her commitment in front of junior colleagues. She raised a complaint with HR. Our client agreed to try to resolve matters with her manager. He simply avoided contact.

Redundancy announced ahead of bonus announcement

Just before bonuses were announced, our client was informed that her employment was being terminated immediately for reasons of redundancy. The bank was exercising its right to make a payment in lieu of notice. It was briefly explained that to save costs her department was being restructured. Her role was identified as one that was no longer required.  The role would be split up, with remaining colleagues carrying the different elements of her role in addition to their existing duties.

Initial offer 

The bank offered a compromise agreement comprising an enhanced redundancy package. The bank made threats.  The threat was that if she didn’t accept the offer she would receive a lower payoff.  The lower payoff was basic minimum contractual entitlements and statutory redundancy payment.

The initial offer took now account of her losses.  The losses were made up of:

  • Her bonus – because the contract provided that she was only eligible for a bonus if she was employed when bonuses were announced.
  • Her share options – because the option plan provided that she lost her entitlement to exercise unvested options on the termination of her employment.
  • Her on-going losses – because she would be out of work for some time before she found a job.  And, it was likely that any new job would be at a lower rate of pay.  This added to her losses.

Unfair dismissal

Our client did not accept that she should be singled out for redundancy. She felt that she:

  • Was capable of carrying out the duties of those to whom her work had been allocated;
  • Could have carried out one of the remaining posts on her existing working pattern.

On this basis alone our client had been unfairly dismissed. Her colleagues ought to have been included in the selection process.

Full time staff had been excluded from the redundancy process.  Her role had been allocated to full time staff.

Determining the claims

In our view, without any apparent justification, our client had been:

  • Treated less favourably than the full time staff on grounds relating to her part time status/child care arrangements.
  • Subject to detrimental treatment because of her flexible working arrangements, and,
  • Was now being victimised because she had raised a complaint.

Accordingly, our client had grounds to bring a claim for discrimination and injury to feelings under the:

  • Part Time Workers Regulations; and
  • Equality Act for sex discrimination.

Assessing compensation

A successful claim would entitle our client to recover compensation. The assessment of compensation for discrimination is based on the loss the employee has suffered and also future losses.  Unlike unfair dismissal, there is no upper limit on the compensation that can be awarded. We provided a comprehensive assessment of the likely compensation that could be awarded to our client if the claim proceed to the Employment Tribunal.

The award aims to put the employee into the position they would have been in had the discrimination not taken place.

Financial loss

To assess the financial losses we considered our client’s losses since the first act of discrimination up to a possible court hearing date.

To assess the financial losses we looked at:

  • Loss of current salary and bonus entitlement
  • Loss of benefits; and
  • Loss of pension contributions

The assessment is also forward looking and will consider future losses. Future losses take into account how long it would take our client to find alternative suitable work.

Non-financial loss

Compensation for discrimination may also include an element for injury to feelings. This is separate to an award for financial loss. We advised our client that they could also recover under this.

Based on case law we were able to provide an indication of what this could amount to.

Our negotiations

We drafted a grievance setting out our client’s complaints. We commenced in parallel without prejudice discussions.  Our client, like many of our clients, did not want to take the Bank to the Employment Tribunal.

On a without prejudice basis we requested a significant increase in compensation to reflect the losses. The employer responded by saying that the sum on offer was non-negotiable.

Final compromise agreement offer

Without prejudice negotiations continued for some weeks.  Each offer made by the Bank was an improvement on the previous offer.  Each offer was expressed as the “final offer”.  We kept on negotiating. Our assessment left no stone unturned.  By the time we reached the final stages the Bank knew the potential claim for damages was substantial. Our client received a significantly increased compensation payment.

Employers usually want to avoid court action.  A comprehensive claim and assessment of compensation often focuses their mind.  This can lead to settlement on better terms than initially offered.

Matt Gingell is a partner in the employment law team who has worked on a variety of discrimination cases. Matt has experience in analysing evidence and assessing the potential amount of compensation. He is also very experienced in dealing with unfair treatment in the work place and finding appropriate solutions.