Former endeavour mining boss dismissed, forfeits pay: an employment law perspective

The decision by one of the world’s largest gold mining companies to deprive its former president and chief executive of $29.1m of remuneration is one with significant employment law implications. Endeavour Mining announced that it would strip its former boss Sébastien De Montessus of the substantial sum after he was sacked for alleged “serious misconduct”. His departure, with “immediate effect”, was revealed by the company in early February.

Though De Montessus accepts failure in relation to part of the reason behind his dismissal, he disputes the misconduct charge. Should his version of events prove to be correct, Endeavour’s snap decision might prove to be extremely costly for the company too.

In a statement which provided further details, the FTSE 100 gold producer said that De Montessus will forfeit $17.6m, based on his $2m annual bonus for 2023 and unvested share awards worth $15.6m.

The firm also informed the stock market that it intends to “claw back in full” a $10m one-off award granted in 2021 and a $1.5m cash portion of the bonus received for 2022. For De Montessus, who was the highest paid FTSE 100 chief executive in 2021, this means he will receive no salary, pension, benefits, bonus or share awards for the 2023 and 2024 financial years.

Shortly after the news emerged, provoking widespread press coverage, Endeavour’s share price dropped by 12 per cent, the largest stock decline on the FTSE that day. At the centre of Endeavour’s action is an irregular payment of $5.9m said to relate to the sale of the Agbaou gold mine in Ivory Coast to Allied Gold, a Canadian rival, in 2021, which De Montessus admitted to making.

He has said that the payment was made in 2021 and related to a creditor of Endeavour to “offset” an amount owed to the company to “pay for essential security equipment to protect our partners and employees in a conflict zone”. Yet while the French executive, previously a mergers and acquisitions banker at Morgan Stanley, admits to a “lapse in judgment”, he strongly disputes that he benefited personally in any way from the deal.

Responding to Endeavour’s announcement, De Montessus said: “I am disappointed with the way this matter has been handled and that I have not been given an opportunity to makeproper representations to either the board or the remuneration committee.” This, however, is only part of the reason for the highly publicised dismissal of such a well-known figure within the gold mining industry.

The company said it was also investigating whistleblower allegations made against De Montessus “relating to his personal conduct with colleagues”. According to him though, these claims against him were completely unfounded and should not have been made public by the company.

De Montessus stated that an independent investigation carried out by Linklaters did not uphold any of the personal conduct allegations. He commented that inclusion of that information in the stock market statement was “misleading”, adding that the “legal position is now being assessed”.

In a case of this kind, in which personal conduct allegations relating to actions of dishonesty and/or significant harassment of colleagues are made, such accusations would amount to gross misconduct, if substantiated. Regardless of a person’s position within a company, gross misconduct is the most extreme and serious disciplinary policy in employee handbooks and contracts. Gross misconduct allows an employer to award the penalty of summary dismissal – meaning no notice pay and immediate termination, a significant loss to the employee financially and reputationally.

However, such a penalty cannot be given without reasonable belief on the part of the employer based on a thorough investigation into the allegations. In such investigations the employee has a right to know what the claims against them are and, crucially, must have a chance to address those claims.

What appears to be in contention in this instance is De Montessus’ claim that he was not given a proper opportunity to answer the allegations. Under UK law, if this has not happened, then the employee would be entitled to bring a claim of unfair dismissal.

As the swift termination of his employment with the company involves such a considerable sum, it would be extraordinary if the correct employment law procedures had not been followed. Viewed from the outside, however, it seems apparent that a failure to observe due process is precisely what the former Endeavour chief executive is suggesting. It will be fascinating to see how this case plays out, because the stakes are so high for both parties.

For De Montessus, any legal challenge he mounts against his dismissal will be as much about restoring reputational damage as well as his personal financial loss. He said he was given only 48 hours’ notice of the concerns and “no proper opportunity” to respond to them before he was fired. “As to the other investigation: no misconduct of any kind was discovered because none occurred,” De Montessus said.

Endeavour, which has appointed the veteran mining executive Ian Cockerill as chief executive, said its investigation into the allegedly irregular payment was continuing, but scrutiny of the personal conduct allegations has seemingly been concluded. Part of the total $29.1m will be offset against previous long-term incentive plans, but De Montessus will have to personally pay back $2.7m.

In his statement, he said he was “proud of what we have built together at Endeavour” and few in the industry dispute his enormous impact since being brought in as Endeavour’s president in 2015.He undertook an aggressive revamp of the company’s portfolio, spending billions of dollars on acquisitions. Endeavour now operates four mines in West Africa, including in Senegal, Ivory Coast and Burkina Faso.

On joining the UK stock market in 2021, Endeavour came to be seen as a replacement for Randgold Resources, the goldmining giant that delisted after its merger with Barrick Gold. That year De Montessus earned £16.85m, making him the highest paid boss in the FTSE 100. In 2022 a £9m remuneration packet also put him in the top ten list, as compiled by the High Pay Centre.

A potential challenge for unfair dismissal from someone so highly remunerated would be significant. His legal team will be looking for any indication that standard human resources and employment law procedures have not been properly followed.

---