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04 June 2019

172: Adverse findings on credibility in Tribunal hearing justified subsequent dismissal of Financial Conduct Authority-regulated Bank employee

In Radia v Jefferies International Ltd, the Employment Appeal Tribunal (the EAT) has ruled that an investment bank was entitled to dismiss a regulated employee for not being a fit and proper person following adverse findings about his credibility in an Employment Tribunal judgment, without further investigations into his dishonesty.

Mr Radia was employed by Jefferies International, a Financial Conduct Authority (FCA)-regulated firm, as Managing Director. He had brought a claim for disability discrimination which was dismissed after the Employment Tribunal found that much of his evidence was not credible and that he had often been evasive and untruthful. The Tribunal also noted that this was particularly concerning since he was a regulated person. Immediately after receiving this judgment, the bank suspended Mr Radia. He was subsequently dismissed because the bank concluded that his behaviour was not compatible with being a fit and proper person for the purposes of the FCA rules, which require ongoing assessment of an employee’s honesty, integrity and reputation. Since the decision to dismiss was based on the Tribunal’s findings in its written judgment, the bank did not conduct additional investigations.

Mr Radia brought several further claims which reached the EAT, including claims relating to the bank’s refusal to hold an appeal hearing against his dismissal, and a claim that the bank had not been entitled to dismiss him based only on a Tribunal’s findings as to his credibility. The EAT confirmed that, due to the FCA requirement to assess the honesty and integrity of a regulated employee, it had been reasonable for the bank not to conduct further investigations and to base its decision on the Tribunal’s written ruling. There was no requirement for a finding of deliberate dishonesty. The EAT also concluded that the procedure adopted by the bank was within the range of reasonable responses and there was no further investigation which it could have reasonably been required to conduct. Ultimately, however, Mr Radia succeeded in the EAT because of the bank’s failure to allow him an appeal hearing, contrary to its own processes and the Advisory, Conciliation and Arbitration Service (Acas) code.

This case will be particularly interesting for FCA-regulated firms. However, it also illustrates that in rare circumstances employers may be able to use evidence from another source, such as the police, a Tribunal or a regulator, rather than conducting a further separate internal disciplinary investigation. In this event, it would be essential to allow the employee every opportunity to make representations at the disciplinary hearing stage, as the bank did in this case.

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