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In a high-stakes legal showdown, a Stoli Group subsidiary, SPI Spirits, and its billionaire owner Yuri Shefler, are fervently contesting a £1.6 million ($1.95 million) award granted to their former executive, Vlad Zabelin, who was terminated after blowing the whistle on alleged exploitation of the COVID-19 pandemic. The vodka giant vehemently claims that this substantial payout is excessive and should be reconsidered.

Stoli Group Fights Former Exec's £1.6M Whistblowing Win : A Fight for Fairness

SPI Spirits and Shefler made their case before the Employment Appeal Tribunal, demanding a fresh evaluation of the massive award bestowed upon Zabelin, who served as the group's chief investment officer at the time of his dismissal. Represented by Richard Leiper KC of 11KBW, they contend that a contractual cap of £270,000 in Zabelin's employment agreement should be taken into account when determining the award's fairness.

Leiper argued that Zabelin's prior agreement to the compensation cap raises questions about whether the £1.6 million award is "just and equitable." He emphasized that legislative constraints prohibit contractual terms from limiting tribunal awards, putting the contract cap under scrutiny.

The Whistleblower's Ordeal

This legal saga began in 2020 when Shefler abruptly dismissed Zabelin during a phone call, an act deemed "out of the blue" by the Employment Tribunal. Zabelin had raised concerns that the company was unjustly employing the pandemic as a pretext to impose a 30% salary cut when the business was thriving financially.

Zabelin's journey with SPI Spirits (UK) Ltd., a subsidiary of the Stolichnaya vodka manufacturer, started in 2017 as the director of mergers and acquisitions, eventually elevating to the position of group chief investment officer in January 2020.

According to a 2021 judgment, Zabelin received a base annual salary of £180,000 plus performance-based bonuses of up to 100% of that amount. In 2017 and 2018, he received bonuses of £150,000 and £180,000, respectively.

As the pandemic wreaked havoc, Zabelin agreed to a 30% pay reduction for three months starting in March 2020, only to discover that this reduction would continue until at least September. In protest, he voiced his concerns about the unfairness of the decision, believing that the company was exploiting the pandemic to cut salaries.

Days after reiterating his complaint and raising concerns about the impact on fellow employees, Zabelin was abruptly terminated by Shefler, setting the stage for a protracted legal battle.

Stoli Group Fights Former Exec's £1.6M Whistblowing Win : The Hefty Award

In a landmark ruling in 2021, the Employment Tribunal ordered SPI and Shefler to compensate Zabelin with a staggering £1.6 million, covering lost earnings and bonuses he would have received over three years had he not been dismissed. Additionally, smaller sums were awarded for injury to feelings and unfair dismissal.

The award also included provisions for the tax liability Zabelin would incur and an uplift of approximately £150,000 due to breaches of the ACAS code, a set of regulations that guide employers in handling grievances and disciplinary procedures.

The Legal Arguments

Leiper vigorously contested the appropriateness of the ACAS uplift, while also contending that the £270,000 contractual cap should be considered in the overall award. He argued that the ACAS Code wasn't applicable, as Zabelin's complaint was primarily about his own pay and wasn't presented as a matter of public interest disclosure.

Zabelin's legal counsel, Sean Jones KC of 11KBW, represented by Mishcon de Reya LLP, is prepared to defend the whistleblowing executive's victory.

SPI Spirits and Shefler are counting on Richard Leiper KC of 11KBW, represented by Osborne Clarke LLP, to overturn the £1.6 million decision. The legal battle rages on, with the outcome hanging in the balance.