Author: Fudia Smartt

Facts of the case

Mr Fotheringhame was a Managing Director at Barclays Services Limited (the “Bank”) who worked in its Electronic, Fixed Income, Currencies and Commodities Trading Business. He was a highly paid employee, having earned over £1 million in gross pay in 2014.

In 2015, the New York State Department for Financial Services (a financial regulator), commenced an investigation into the Bank’s use of certain technology known as “Last Look”, which it contended breached New York State law.  One possible outcome of the investigation was that the Bank could have lost its New York State banking licence, which would have resulted in the Bank losing its ability to trade in a key global banking location.  To avoid such an outcome, the Bank entered into a settlement with the New York Regulator by way of a consent order, which included a requirement that Mr Fotheringhame be dismissed (paragraph 20 of the Judgment).

Having entered into the consent order, the Bank then commenced disciplinary proceedings against Mr Fotheringhame based on a number of allegations of gross misconduct which included allegations of his: (i) misusing one of the Bank’s systems; (ii) having a negative attitude towards clients; and (iii) failing to implement appropriate systems and controls.  The outcome of the disciplinary hearing was that Mr Fotheringhame was dismissed on the grounds of gross misconduct. 

The employment tribunal held that Mr Fotheringhame’s dismissal was unfair. In particular, on the basis that the Bank had not followed a fair procedure and further, that the reason relied upon for Mr Fotheringhame’s dismissal was not genuine (which negated the Bank’s argument that Mr Fotheringham would have been dismissed in any event, regardless of its dismissal process). The employment tribunal also held that evidence produced by the Bank’s key witnesses was inconsistent and opaque. 

In arguing that Mr Fotheringhame would have been dismissed in any event, the Bank were seeking to reduce Mr Fotheringhame’s compensation (this is known as a “Polkey” deduction).  The employment tribunal also accepted the Bank’s argument that Mr Fortheringhame’s conduct was not completely without blame, particularly in relation to his failure to ensure that the systems and controls he had put in place regarding the use of Last Look were actually being followed.  On this basis, the employment tribunal reduced the compensation awarded to Mr Fotheringhame by 20%.

At the Remedy Hearing, the employment tribunal ordered that Mr Fotheringhame be reinstated by the Bank i.e. for the Bank to treat Mr Fotheringhame as if he had never been dismissed.  This differs from re-engagement, where an employer re-engages the employee in employment that is comparable to the job from which the employee was dismissed, or in other suitable employment, but not the same job.

Why this case is of interest

Typically in my experience, claimants focus solely on seeking compensation in the employment tribunals.  Perhaps this is in part why re-engagement and re-instatement orders are so rare, as an employment tribunal will only order re-instatement or re-engagement where an employee has expressly requested this and it considers it reasonable to make such orders.  In practice statistics suggest that re-engagement and re-instatement orders are granted in less than 1% of cases. 

For high earners like Mr Fotheringhame, the statutory cap for unfair dismissal (currently capped at £83,682) means that the compensation they receive is unlikely to cover a significant proportion of their losses.  This is compounded by the fact that securing suitable alternative employment is likely to prove problematic. Therefore, where an employee does not feel that trust and confidence has been breached (as in this case),  they may wish to request re-engagement or re-instatement.

The outcome in this case is impressive, as Mr Fotheringhame acted for himself throughout, and typically litigants in person are less successful in bringing their claims.  This is particularly so, given the favourable outcome – an unfair dismissal finding along with a new job with a base salary of £150,000.  While Mr Fotheringhame is receiving far less in total compensation from the Bank than he did previously, he at least can now look for a new job from a position of strength, having been vindicated regarding the unfairness of his previous dismissal.

The takeaway lesson for all concerned is that re-instatement and re-engagement orders should not be disregarded. With Brexit looming, one wonders if more senior employees (particularly in the finance/banking sector) will follow suit if they believe they have been unfairly dismissed.  This can be of tactical advantage to employees, particularly as it will be a bitter pill for employers to swallow to have to re-hire an ex-employee.

Fotheringhame v Barclays Services Limited