UK: Tribunal Orders Re-engagement Overseas Of Unfairly Dismissed Trader In Light Of Negative Regulatory Reference

The recent tribunal ruling in  Jones v JP Morgan Securities plc illustrates how a financial services employer's position on providing a regulatory reference could influence the likelihood and nature of a tribunal order to re-engage an employee who has been unfairly dismissed.  It is also flags the possibility of an order being made to procure re-engagement at an associated employer overseas.

The tribunal held that the claimant had been unfairly dismissed for alleged gross misconduct: it found that the employer did not have a genuine belief in misconduct having occurred and that the procedure adopted was also unfair.  This finding did not change the employer's position that it would provide a regulatory reference stating that it did not consider the claimant to be a fit and proper person.  The claimant sought a reinstatement or re-engagement order (see box below).

Reinstatement was found to be impracticable as the relevant team had reduced in size and there was no longer a role available.  The claimant therefore sought re-engagement in an available comparable role at an associated employer in Hong Kong, arguing that he was unable to get a regulated financial services job elsewhere in the UK because of the employer's negative regulatory reference.

In deciding whether to make such an order a tribunal must consider the wishes of the claimant, whether it is reasonably practicable for the employer to comply with the order, and whether the claimant contributed to the dismissal. In this case the tribunal rejected the employer's contention that the claimant did not actually want to be re-engaged and was seeking it only as a tactic to circumvent the compensatory caps.  Its conclusion that the claimant's request was genuine was supported by findings that his entire career had been structured around working for the employer's group, that he bore the employer no ill-will, and that his stop-gap work had been chosen to enable him to leave on short notice.  The tribunal found that the employer could easily procure the Hong Kong role in the associated company and had not presented any evidence that certification requirements would be a problem there. It concluded that, if re-engagement was not awarded, the claimant would never work in a regulated role in the financial services sector again and therefore the order sought was the only way that the unfair dismissal could be "made right".  An order was made requiring re-engagement within 3 months and a day, by 10 March 2022, along with payment of £1.5 million in compensation for lost earnings.

Together with Fotheringhame v Barclays Services Ltd in 2019 covered in our blog post  here, this case highlights the risk for financial services employers of claimants obtaining reinstatement or re-engagement orders and/or substantial levels of compensation for unfair dismissal, notwithstanding – or because of – regulatory concerns.  It may be appropriate for an employer to consider carefully whether facts established at a tribunal hearing could and should justify revisiting their assessment of the individual.

The facts also flag the need for an individual to be able to appeal a firm's determination that the individual lacks fitness and propriety, a mechanism that is not currently available from regulators, given the impact that reference will have on their future career prospects.

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