In Jones v JP Morgan Securities plc, an employment tribunal has recently ordered a bank to re-engage a trader it had unfairly dismissed and to pay him more than £1.5 million in lost salary and benefits for the period between dismissal and re-engagement. The decision is interesting because the bank had indicated that it would provide an adverse regulatory reference for the trader, despite the finding of unfair dismissal, which would mean that he would not be able to find a similar job in the UK. The employment tribunal therefore ordered the bank to re-engage the trader at an associated employer in Hong Kong.


Mr Jones was a financial analyst and cash equities trader employed by JP Morgan (JPM). JPM dismissed him on 31 January 2020, alleging gross misconduct following an incident of suspected "spoofing" that had occurred in 2016. Spoofing is a form of market manipulation, where a trader makes a bid or offer with the sole intention of cancelling it before execution, in order to create a misleading impression about the demand or supply of a particular commodity. It is a criminal offence and a breach of regulatory rules. Mr Jones was alleged to have engaged in spoofing on one afternoon in 2016.

JPM had investigated the alleged incident at the time but decided that it did not warrant disciplinary action. Following the introduction of a new spoofing policy and an internal Market Conduct Review in 2019, JPM decided to re-investigate the alleged incident. Following a short disciplinary procedure, where Mr Jones said he could not remember details of the relevant trades, he was dismissed for gross misconduct and brought a claim for unfair dismissal in the employment tribunal (ET).


The ET found that the true reason for dismissal was not misconduct and the dismissal was unfair. JPM did not have a genuine belief in Mr Jones' misconduct in January 2020. It had not carried out a reasonable investigation, given its size, and the dismissal would have been unfair on procedural grounds even if JPM had had a potentially fair reason to dismiss Mr Jones.

There was then a remedies hearing. Mr Jones sought reinstatement or re-engagement, in addition to compensation for lost earnings. He contended that he would not get a job elsewhere because, among other reasons, JPM had said it would provide a regulatory reference stating that it did not consider him to be a fit and proper person to perform the role.

JPM argued that Mr Jones did not want to be reinstated or re-engaged and that it was simply a way to maximise his compensation by side-stepping the cap on unfair dismissal compensation. JPM also argued that it was not practical for Mr Jones to be reinstated due to the fact there had been redundancies in his team. In addition, when he had been dismissed, JPM had not sought to replace him, with his work being absorbed by the wider team. Mr Jones identified a suitable role with an associated employer in Hong Kong, indicating that he was willing to relocate. The new role was comparable to the role from which he had been dismissed and he would be working in a new team.

The ET found that if re-engagement was not awarded, Mr Jones would not be able to work in a regulated role in the financial services sector in the UK due to the negative regulatory reference provided by JPM. Given that JPM is a global organisation with over 250,000 employees, re-engagement would work. On this basis, the ET decided that the re-engagement order was the only way that Mr Jones' unfair dismissal could be "made right" and so it ordered re-engagement to the Hong Kong role within three months. The ET also awarded Mr Jones over £1.5 million in compensation for lost earnings, including his base salary, incentive compensation and a fixed award.


This case is interesting because it deals with the implications of a bank stating that it would provide a negative regulatory reference, even though the ET had found that the dismissal was unfair and the reason given for it was untrue. There may be cases where an employee succeeds in an unfair dismissal claim because the correct procedure was not followed or the employer's decision was outside the band of reasonable responses and in which it may still be reasonable to give an adverse regulatory reference. This is likely to be the case where there is evidence that the employee has acted inappropriately. However, in this case, because JPM unsuccessfully argued contributory fault, there was a finding of fact by the ET that Mr Jones had not engaged in spoofing. Despite this finding, JPM did not change its stance on the giving of a negative regulatory reference, even though it would have assisted the bank on remedy if it had done so.

The ET judgment will have international reach so is significant for global businesses. The ET decided to make a re-engagement order that is seeking to bind a Hong Kong based JPM entity. If JPM fails to comply with the re-engagement order, there are likely to be practical difficulties in enforcing the order. The fact that the ET was willing to countenance requiring an international business to re-engage an individual in an overseas company is an interesting move and one that should be watched by businesses with an international reach.

Finally, the case highlights the dangers of re-opening a previously concluded investigation where a decision was made not to take disciplinary action, even if that might be desirable to appease a regulator.

Issues to watch

Despite Mr Jones' win at the ET, he may find he has difficulties if he leaves JPM because there is nothing to prevent JPM from issuing a negative regulatory reference in the future. In addition, there is no way of appealing against the decision that an individual lacks fitness and propriety. This may be something that regulators will need to address, given the issues this case has highlighted.

JPM may decide to appeal the ET's decision, given the significant compensation awarded, so there may be more useful commentary on this case in the future.