A £1.45 million lesson: the cost of penalising parenthood

A recent Employment Tribunal remedy (i.e. compensation) hearing has served a stark reminder of the risks associated with ordinary unfair dismissal claims and a look at what the future may hold for employers who unfairly dismiss higher earners. The removal of the cap on ordinary unfair dismissal claims on 1 January 2027 could see the compensation awarded in this case become much more commonplace.

Case overview 

The Claimant was a Senior Vice President for Goldman Sachs, with an established record of strong performance. He took a period of contractual parental leave following the birth of his second child, which seemingly was the trigger for a sea change in the Respondent's treatment of him. After taking his leave, he was classified as an underperformer, excluded from various opportunities, had his remuneration reduced, and was ultimately selected for redundancy.  

The figures 

The Tribunal found that he had been unfairly dismissed and experienced direct (sex) discrimination. 

The notable elements of the £1.45 million compensation award are below, which from 1 January 2027 could well be awarded to successful Claimants in ordinary unfair dismissal awards as the compensation cap is removed:

• Past loss of earnings: £261,710.41 (which factored in a 50% reduction to account for the Tribunal finding that a fair process would have resulted in a redundancy dismissal i.e. a “Polkey” deduction);
• Future loss of earnings: £334,017.79 (which factored in a 50% “Polkey” deduction);
• Acas uplift of 25%: £155,753.3 (this was awarded for failure to follow the Acas Code of Practice)
• Grossing up for tax: £619,149.24 (grossing up is done to ensure a Claimant is adequately compensated. The Claimant was in the 45% tax bracket.)

The takeaways 

There are several useful reminders in this case: 

1. A genuine redundancy situation does not guarantee a fair dismissal, a fair process is an absolute must.
2. Tread carefully with those who are on or have taken a period of parental leave (both male and female).  
3. Getting things wrong with high earners from 1 January 2027 onwards is likely to be very expensive. 

For support on dealing with the upcoming changes to ordinary unfair dismissal, or with a particular case, please visit our website or speak to your usual Stone King contact. We also have an Employment Rights Hub, which has lots of useful information and resources related to recent past and upcoming changes to employment law.