Settlement agreement for investment banker
Gannons negotiated a settlement agreement for an investment banker upon her receiving a notification of 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 historically compared to full-time employees in terms of pay and opportunity. Just before bonus time she was informed that her employment was to be terminated.
Initial review of the settlement agreement
We recommended to our client that she push for a larger pay off. The initial offer was not in line with her potential claim under employment law. 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 of the settlement agreement negotiations
We achieved a good result for our client. In order to do so, first we assessed the level of compensation on offer when compared to our client’s salary, bonus and benefits package, and share option plan. Then we determined the claim, and an appropriate sum for compensation. Finally we negotiated with the employer and settled on a significantly enhanced sum for compensation.
Our client 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. But, the manager simply avoided contact.
Redundancy announced ahead of bonus announcement
Just before receiving her yearly bonus, the bank informed our client of the termination of her employment due to redundancy. The bank exercised its right to make a payment in lieu of notice. It 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.
The bank offered a settlement 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 consisted of the basic minimum contractual entitlements and a statutory redundancy payment.
The initial offer took now account of her losses.
The losses included our client’s bonus – because her contract stated that she was only eligible for a bonus if she was employed when bonuses were announced. She also lost her share options – because the option plan provided that she lost her entitlement to exercise unvested options on the termination of her employment. She also incurred on-going losses because she would be out of work for some time before she found a job. Furthermore, it was likely that any new job would be at a lower rate of pay. This added to her losses.
Our client felt it unfair and did not accept that the bank should have singled her out for redundancy. She felt capable of carrying out the duties of those to whom the bank had reallocated her work. She felt she could have carried out one of the remaining posts on her existing working pattern.
On this basis alone our client had been unfairly dismissed. The bank should have included our client’s colleagues in the selection process. It had unfairly excluded the full time staff from the redundancy process, to whom her role was reallocated.
Determining the potential redundancy related claims
In our view, without any apparent justification, the bank had treated our client less favourably than other full time staff on grounds relating to her part time status and child care arrangements. Therefore the bank had subjected her to detrimental treatment because of her flexible working arrangements. In addition, the bank victimised our client because she had raised a complaint.
Accordingly, our client had grounds to bring a claim for discrimination and injury to feelings under the both the Part Time Workers Regulations and Equality Act for sex discrimination.
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.
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 her loss of current salary and bonus entitlement. We also looked at the loss of her benefits and 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.
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 she could also recover additional costs under this.
Based on case law we were able to provide an indication of what this could amount to.
Settlement agreement approach
We drafted a grievance setting out our client’s complaints. We commenced it 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 settlement compromise agreement offer
Without prejudice negotiations continued for some weeks. Each offer made by the investment bank was an improvement on the previous offer. The bank expressed each offer as their “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 had become more 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 also has extensive experience in dealing with unfair treatment in the work place and finding appropriate solutions.
An immensely positive outcome thanks to Gannons