No return on investment as Villalba pays the price

Litigants invest heavily in the outcome of employment tribunal claims, both in terms of financial costs and hope.

Stephanie Villalba, a Merrill Lynch banker who brought a case for sex discrimination, equal pay violation and unfair dismissal against the bank, learned from the tribunal days before Christmas last year that “the value of [her] investment may go down as well as up”. Indeed, after 52 days of proceedings, fees estimated at more than £1m per side, and widespread coverage of the sex discrimination allegations, the tribunal eventually found against her on the ‘big money’ claims.

The findings on her unfair dismissal and victimisation claims (after she suggested that her sex was the reason for difficulties she experienced, including suspension from her job after a promotion) will be slim consolation. She is likely to be awarded about  £80,000 – a poor return on her financial and emotional investment, and no substitution for her prior annual earnings of more than  £500,000.

The judgment  – the majority of which concerned a period in 2002/2003, during which the talented Villalba struggled with and ultimately failed at a new post, is full of human and business interest.

The tribunal agreed with the bank’s assessment that “past performance was no guarantee of future performance”, that Villalba had been over-promoted and was over-defensive when criticised, and that she was dismissed on performance grounds. And earnest analysis on questions such as whether there is any such thing as “the worst seat” on a private jet, and about whether an offer of a job in “less prestigious Croydon” (where the tribunal members work) was less favourable treatment than a job in central London, added unintentional humour.

From a legal perspective, however, there is also much here for personnel managers to consider in dealing with any senior manager and in their own communications with and about difficult staff.

Villalba won her unfair dismissal claim because, despite the bank having a potentially fair reason for dismissal in her performance, “she was shabbily and unreasonably treated”. Having been given an exceptionally challenging task, she received insufficient support during a difficult period, and the bank was not open and transparent in appraising her or warning her of the consequences of failing to improve or accept the two alternative posts offered to her.

The tribunal quoted from the Acas Code of Practice on Disciplinary and Grievance Procedures, as a reminder that it is a “one size fits all” code which applies throughout an organisation, including to the most senior managers, whose decisions may cost or earn the employer millions.

Perhaps mindful of the fact that a wealthy employer such as Merrill Lynch may view the loss of an unfair dismissal claim as insignificant, due to the cap on compensation (56,800 for dismissals with an effective date of termination after 1 February 2005), the tribunal suggested that its lack of procedural rigour put it at risk of unlawful discrimination, and, by extension, of costly and embarrassing discrimination claims. It said that had she been told the truth about how damaging her detailed rebuttals of criticism were to her career, and had she been able to objectively understand she was not qualified for the job she hoped to gain after the ‘blip’ of the failed position, the claim might not have been made.

If the lack of straightforward communication lost the bank the unfair dismissal claim, the victimisation claim was lost due to the tone of communications about (not to) her after she raised a complaint of sex discrimination, all preserved in the e-mail record.

The tribunal found that she had been “isolated and sidelined” and suspended earlier than necessary, based on “a snide edge and a sneering tone” in e-mails about her at the time. It noted that it was “particularly disappointing to see some of these emanating from a human resources department”.
E-mails once again emerge as a dangerous convenience – the informal and hastily penned contents of which the bank and its HR department can now lament at leisure.

By Alison Wetherfield, chair, Legislative and Policy Subcommittee, Employment Lawyers Association

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