The woman who was called “Crazy Miss Cokehead” by her manager has been awarded nearly £3.2m by an Employment Tribunal for sexual harassment, reportedly including £44,000 for injury to feelings and a further £15,000 in aggravated damages.

We originally posted a blog on this story in November 2013 here.  Following the liability hearing, the Tribunal found in favour of Svetlana Lokhova who worked for the London branch of the Russian bank Sberbank CIB (UK) Ltd.

The Tribunal found that 19 out of her 22 allegations were not well founded.  However, on the main issues, it was found that Ms Lokhova’s former manager, David Longmuir, had bullied and harassed her on grounds of sex (even in emails), reportedly suggesting that she needed to visit a Nigerian tribesman for sex to “calm her down”.  Other such put-downs included saying that she had only been hired “because of her t***” and poking fun at her perceived privileged background.

In a stinging attack on the Bank, the Tribunal heavily criticised its conduct of the proceedings and said that there had been a “deliberate” attempt to bully her at the liability hearing in relation to an allegation that Ms Lokhova took drugs.  It said, “That allegation is completely without foundation and should never have been put to her in cross examination”.  In a Jeremy Kyle-style twist, Ms Lokhova was so “incensed and appalled” by the allegation that she took a drug test during the hearing, which was negative.

There were a number of other aggravating factors in this case.  Mr Longmuir was not disciplined at all despite the strength of the evidence and carried on working for the Bank for a further year after the bullying, receiving a £168,000 pay-off when he eventually did leave.  While I am sure that this of course had no bearing at all on the Tribunal’s ruling, you might be aware that with the benefit of the tax breaks applicable to severance payments, this is the equivalent of an Employment Judge’s salary for some 20 months.  No reason at all why thatpay-off should have irritated the Tribunal.

The Tribunal further criticised Paolo Zaniboni (who is still the CEO of the London office) who took no action against Mr Longmuir despite the evidence against him and whom the Tribunal also found to be guilty of unlawful victimisation.

The Tribunal’s attitude towards the Bank and its view of the aggravating features of this case is, perhaps, reflected in the reported awards of £44,000 and £15,000 for injury to feelings and aggravated damages respectively, which (if those reports are right) are very high awards indeed compared to previous cases.   The £44,000 figure would represent nearly a 50% uplift on the previously-understood ceiling for such awards.

The Tribunal in this case found that Ms Lokhova, who earned £750,000 a year in salary and bonuses working in Equity Sales, “will never work in financial services again, on the basis of the medical evidence”.  They found that she was suffering from a moderately severe psychiatric illness and had been suffering from such since January 2012.  The bulk of her compensation therefore represented future loss of earnings.

Lessons for employers

An interesting point for employers arising out of this case is how to deal with a case like this to limit the potential financial sanctions.  In this case there were emails containing the abuse and therefore written evidence of it (however, in most cases there will not be).  It should have been obvious to the Bank that it was going to lose in relation to those allegations.  So what can you do by way of mitigation?

1.  In circumstances where internal investigations reveal that it is likely that the allegations of harassment are true, we suggest issuing an immediate apology to the complainant in relation to those allegations (and in extreme circumstances consider paying some money as compensation to the victim).

2.  If an individual brings a claim, give serious consideration also to conceding liability when it is obvious that the allegation is true (however, take legal advice before doing this). Continuing to defend allegations that are indefensible will increase your costs and could lead to the Tribunal finding that the complainant’s injury (either medical and/or to feelings) has been aggravated.  An early apology can improve your prospects of limiting the damage and you will be able to focus on the allegations that are, perhaps, capable of a defence.  A swift apology could limit the complainant’s ability to claim that stress and/or publicity had done fatal damage to his/her career path (especially in a small world like the City of London)  and so prevent such significant loss of earnings claims also.

3.  Further, think carefully what is put to a witness in Tribunal. There was no relevance of Ms Lokhova’s alleged drug habits to the main issues in this case (which was whether or not she had been bullied and harassed).  It is difficult to see how baiting her on the witness stand to try and “prove” that she was a drug addict was going to achieve anything and, in this case, the Bank scored a comprehensive own goal when she conclusively proved that she was not.

4.  Last, give visible consideration to the handling of any employee who is clearly guilty of inappropriate behaviours. It did not take the Tribunal decision to show the Bank that Mr Longmuir’s conduct should be regarded as unacceptable.  If an employer in those circumstances takes the decision not to act against an employee (for example because he/she is a real money-spinner or related to someone in senior management or a major client) then that is a judgment it is entitled to make but only once it has weighed that option against the additional compensation the harassed individual is likely to receive as a result.  A really scorching final warning would now seem to have been a better compromise.

5.  If there is a pay-off, make it as small as possible!