Whistleblowing Case Study

Whistleblowing executive, who was the centre of unlawful dismissal, awarded compensation package of £1.6 million.

Mr Zabelin (the claimant) was successful in his unlawful dismissal claims when he was detriment for whistleblowing and was dismissed by his employer (the respondent) after objecting to, amongst other things, a 30% Covid pay cut being imposed on staff. 

The tribunal has now conducted a remedies hearing to determine the level of compensation the claimant should be awarded. The size of the award is unusual, but gives an opportunity to examine what factors the tribunal may consider when making an award. This blog concentrates on the award made, rather than the substance of the claim in which the claimant succeeded.

Compensation

Unlawful dismissal

Compensation for unlawful dismissal is awarded in two sections – a basic award and a compensatory award.  

The basic award is calculated in the same way as statutory redundancy pay, on a formula based on the claimant’s salary, their length of service and their age to reach a figure for a basic award. The claimant in this case received a relatively modest sum of £1,614.

By contrast, the compensatory award can be much higher than the basis award, as it includes compensation for loss of earnings. Unfair dismissal awards are capped at a maximum of one year’s pay, or £93,878 (as at 2022/23).

Discrimination

Compensation for discrimination, by contrast, is not capped.  

We discuss below some of the items that may be included in compensation awards.

Finding a new role

The tribunal will expect a claimant to ‘mitigate’ their loss by looking for alternative employment, and will be critical of those claimants that do not make appropriate effort to do so. 

The claimant was dismissed in June 2020. He took a month-long family holiday in Italy in August, however before departing had engaged the paid services of a career coach in order to update his CV, profile and approach letters. Upon his return, he contacted and held meetings with a number of recruitment consultants and executive search agencies. In order to raise his profile within relevant industries, he attended networking and conference events whilst out of work. Between October and December 2020 the claimant applied for 8 positions; during January 2021 and September 2021 he completed 36 further applications. The tribunal considered that the claimant was equipped to undertake all the positions applied for and had been extremely active in attempting to secure a new role.

The claimant stated that his search was made more difficult by the coronavirus, as personal contact and visibility is particularly important in the high-net worth sphere. He also argued that jobs with equivalent status and remuneration were more scarce than relatively lower paid jobs. The tribunal accepted both these pieces of evidence. The respondent’s claim that the claimant should have been able to find new comparable employment within six months could not be evidenced and was rejected by the tribunal.

The claimant was awarded loss of earnings, pension loss and bonus loss for the period July 2020 to February 2022 (1 year 31 weeks). The rate of salary loss was worked out using the claimant’s annual salary of £180,000 and rate of pension loss was agreed at £5,400 a year. Bonus loss is dealt with below

The claimant’s bonus 

In his role, the claimant had been eligible to be paid a bonus of up to 100% of his salary. Whilst the level of any bonus was said to be determined by performance, the tribunal were presented with no evidence as to the actual criteria for judging this. The tribunal heard that the claimant had been given a full bonus in 2018 and was expecting to receive full bonus again in 2019 as that year had been even more productive than the previous. The tribunal accepted this evidence. Due to the effects of the pandemic, the tribunal considered that the claimant’s bonus would have been reduced by 30% in 2020 and 2021, before returning to the full amount in 2022, albeit pro-rated.

Injury to feelings

The claimant was awarded an injury to feelings award of £9,000. This is on the border between the lower and middle Vento bands for an injury to feelings award. Whilst the incident had been serious (as it was an unlawful dismissal), it was a one-off and had not involved discrimination over an extended period of time. The claimant had also not suffered any ‘deeper, personal emotional impact.’

Uplift for failure to follow the Acas Code of Practice

Acas publishes a Code of Practice on disciplinary and grievance procedures. Failure by an employer to follow the Code, where it applies, can result in an uplift to the injured party’s compensation of up to 25%. The tribunal found both that the Acas grievance procedure applied and that it was not followed: the claimant was unlawfully dismissed as a result of raising a grievance, a meeting was held without a decision-maker in attendance and decisions of formal meetings were not communicated to the claimant without unreasonable delay. The tribunal decided to apply an uplift of 20%.

The final award

All in all, the tribunal reached a figure of £1,626,425.07. This included the unlawful dismissal award, compensation for loss of earnings, pension and bonuses, the Acas uplift, interest applied to losses, and ‘grossing up’ for tax purposes. 

Ultimately, whilst it grabs headlines, this award is an anomaly. The size of award comes as a result, firstly, due to the claimant’s high level of salary. Secondly, a large amount of the award stems from the tribunal’s finding in relation to bonus losses, which in many ways were fact-specific; the tribunal effectively had no choice but to accept the claimant’s evidence in relation to bonus loss due to the lack of credible evidence put forward by the respondent. This is highly unusual as respondents will usually submit a great deal of detail regarding bonus eligibility and performance – assuming of course that they do calculate bonuses by reference to set criteria. 

Despite this, aspects such as loss of earnings, mitigation and injury to feelings are pervasive in almost all discrimination awards, even if not at quite the same magnitude. The attitude of the tribunal towards the witnesses of the respondent also illustrates the importance of providing clear and credible evidence at both liability and remedy stage. 

For claimants, whilst it is important not to get too excited about the amount of the award, the principles behind it hold good for more ‘average’ cases.  If the respondent cannot dispute a claimant’s evidence, it will be far easier for the claimant to persuade the tribunal that having succeeded in their claim, their award should match their version of events.

This blog was written by Michael Green, Trainee Solicitor at didlaw.