UK: Brain food - Workplace rights - The unfair option.

UK: Brain food - Workplace rights - The unfair option. - Many people get share options these days as an incentivising part of their pay packages. But what happens to those options when you lose your job?

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Last Updated: 31 Aug 2010

Many people get share options these days as an incentivising part of their pay packages. But what happens to those options when you lose your job?

That was the burning question faced by Brian Levett, managing director of Biotrace International, when he was fired without notice just as he became eligible to cash in options on his company's shares worth more than £1.7 million.

Like most such schemes, the Biotrace option rules were clear - get the sack and lose your options.

Or so it seemed. Levett, however, was able to point to a specific provision in his own terms which meant he only lost out if his employment ended lawfully. As a victim of a wrongful sacking, said the Court of Appeal, he retained his option rights.

Companies seeking to avoid their own options being similarly curtailed should check that their schemes do not contain these kinds of loopholes.

But in one respect no amount of clever drafting will help. Employment tribunals dealing with unfair dismissals are less hidebound by stricter contract rules and are able to award what they feel 'just and equitable'.

And when the compensation ceiling for such dismissals rises to £50,000 later this year, it will present an attractive means of redress for aggrieved option-holders unfairly done out of their due.

Michael Burd and James Davies at Lewis Silkin, solicitors. Tel: 0171 227 8000; e-mail: info@lewissilkin.com.

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