Briefings
Special Employment Briefing: Mishcon success in bullying case
We hope that many of you will have read the press coverage of the High Court judgment in the case of Steven Horkulak v. Cantor Fitzgerald International. Mishcon de Reya on behalf of Mr Horkulak, a former Senior Managing Director at Cantor Fitzgerald, brought this case for constructive dismissal as a result of bullying and harassment by the President of Cantor Fitzgerald International ("Cantor Fitzgerald"), Lee Amaitis.
The case took three years to come to Court, an unusually long time, due to some unique aspects of it. The main solicitor on the case was Daniel Naftalin who was supervised by James Libson and assisted firstly by Nicola Richardson and latterly, Helen Croft, currently a trainee but due to qualify into the Employment Department in September 2003.
Mr Horkulak was successful in showing that he was constructively dismissed and was awarded damages of almost £1million plus costs and interest.
Whilst we are proud of this success, the purpose of this bulletin is not just to tell you about it, but also to bring to your attention the interesting elements of the judgment and to mention the various important lessons that can be drawn from it.
Amid all the headlines surrounding drugs, alcohol, death threats and lap dancing bars, some very important issues were raised, considered and decided.
Are remuneration and culture relevant to the treatment an employee should expect?
Cantor Fitzgerald sought to argue in the case that where a person is employed in an organisation in which (1) he knows there is a culture of robust communications and bad language; and (2) is paid handsomely, that person should not be entitled to complain when he is abused in the sort of terms commonly adopted in the organisation.
Mr Justice Newman, the judge hearing this matter, rejected this argument and stated that
"the frequent use of foul and abusive language did not sanitise its effect. It was a hallmark of the dictatorial style of Mr Amaitis' style of management. By remaining in employment with Cantor …. the Claimant remained entitled to proper treatment in accordance with his contract"
Are senior executives subject to a company disciplinary procedure?
Cantor Fitzgerald argued that it was dissatisfied with Mr Horkulak's performance but due to his seniority, it would have been inappropriate to use the disciplinary procedure.
Mr Justice Newman accepted that in such circumstances it may not be appropriate to follow the formal procedures, but said that if a deliberate choice to avoid the formal procedures was made, a business was required to adopt an alternative method that reflected the spirit of the formal procedure.
Can an employer impose unreasonable demands on an employee?
Cantor Fitzgerald argued that Mr Horkulak was verbally sanctioned because he was not performing his duties adequately and further, that they did not consider him medically capable of doing so.
Mr Justice Newman found that Mr Horkulak's medical problems had no serious effect on his performance, but in any event went on to consider whether an employer is entitled to insist on what it believes are unachievable levels of performance.
He found that an employer is not entitled to continue to insist on levels and standards of performance where there are grounds for believing that an employee cannot achieve them.
The operation of discretionary bonuses
Mr Justice Newman also considered the operation of discretionary bonuses. The courts in recent years have increasingly restricted the way in which employers can operate 'discretionary' bonuses. The most recent development came in the case of Clark v Nomura International Plc [2000] IRLR 766. In this case it was held that an employer cannot decide a discretionary bonus in a capricious way, i.e. it would be unlawful exercise of that discretion if no reasonable employer would have exercised their discretion in that way.
The Horkulak case appears to have clarified that proposition. Mr Justice Newman stated that Cantor Fitzgerald was obliged to exercise its discretion reasonably and in good faith, and had it refused to exercise its discretion at all or done so unreasonably or in bad faith, it would have acted in breach of contract.
Lessons to learn
There is no doubt that the facts of this case made it unique, combining a number of circumstances that made it attractive to the press. However, the most important lessons of this case apply to all businesses.
The first is that problem employees exist at all levels of management, and this case provides a stark example of what can happen if such problem employees are not appropriately dealt with and proper procedures are not followed. It is also the case that the higher the employee in the hierarchy, the more expensive the problem may be to resolve.
The second lesson is that you must have the appropriate policies in place, and equally importantly, they must be followed when dealing with problem employees and difficult situations.