Loss of share options as a head of compensation, and how the framework differs between contractual and statutory claims. O'Laoire v Jackel International Ltd; Micklefield v SAC Technology Ltd.
Wrongful dismissal; damages; least burdensome obligation; damages for wrongful dismissal are assessed on the assumption that the employer would have performed its obligations in the manner least burdensome to itself; where the employer had a discretion as to whether to confer a benefit such as a bonus or share options, damages are assessed on the footing that the employer would not have exercised that discretion in the employee's favour; a claimant cannot recover more than the minimum the employer was contractually required to provide.
Share options; bad leaver; exemption clauses; a provision in a share option scheme that options lapse if the employee ceases to be employed 'for any reason whatsoever' (including wrongful dismissal) is valid and enforceable at common law; the court rejected the argument that such a clause was ineffective under the Unfair Contract Terms Act 1977, UCTA not applying to contracts of employment.
Share options; unfair dismissal; compensatory award; the tribunal may include in the compensatory award the value of a lost chance of share options vesting, even where the employee had no contractual entitlement to the options; the tribunal is not limited to compensating only for contractually-guaranteed rights and may assess the value of benefits, including share options, the employee would likely have received but for the dismissal.
Share options; wrongful dismissal; bad leaver; an employer who is in wrongful breach of contract cannot rely on a bad leaver provision in a share option scheme to deprive the employee of options; the characterisation as bad leaver depends on the nature of the termination and cannot apply where the employer is itself in repudiatory breach.
Share options; wrongful dismissal; notice period; trust and confidence; the implied term of mutual trust and confidence does not restrict an employer's exercise of an express contractual power of dismissal, even where the motive is to prevent share options from vesting; compensation for loss of share options in wrongful dismissal is limited to options that would have become exercisable during the notice period (Lavarack principle applied).
Share options; post-termination discretion; rationality; the employer's post-termination exercise of discretion as to the proportion of share options payable to a dismissed employee was irrational and in breach of the implied term requiring rational exercise of contractual discretion; the discretion must be exercised rationally and not in a manner that no reasonable employer would adopt.
Share options; sex discrimination; exercise of discretion; where an employer exercises a discretion under a share option scheme in a manner that is more favourable to a male comparator, that exercise constitutes less favourable treatment on grounds of sex; a share option scheme's discretionary mechanism does not insulate the employer from statutory discrimination claims.