Director was unfairly dismissed after being blamed for financial loss

Employer should not have hired HR consultant to conduct part of ‘lamentably deficient’ disciplinary process, tribunal finds

A web designer who was dismissed for gross misconduct after being blamed for a significant financial loss at his business – as well as misuse of a workplace email server during his suspension – was unfairly dismissed, an employment tribunal has ruled.

The employee was given insufficient time to improve his record after being given warnings, and was not the only person responsible for financial performance in the business, both of which were cited as contributing factors in the tribunal’s findings.

The judge also expressed scepticism that the company required an independent, external HR consultant to decide on a sanction, finding that she had been employed in a pre-determined attempt to dismiss the claimant, rather than as part of a genuine performance process.

YS was hired by RocketMill, a Brighton-based digital marketing agency and consultancy owned by Ben and Sam Garrity. He initially worked with the company on a project-by-project basis, but became a full-time employee in 2010, agreeing to a salary below the market average on the basis that he would gain equity in the business.

In 2013, he became a 10 per cent shareholder of RocketMill, signing a service agreement with the Garritys committing him to working for them for 10 years before he could realise the market valuation of his equity – unless his employment was terminated in circumstances such as wrongful or unfair dismissal.

YS handled the SEO arm of the business, growing it significantly from small to far larger accounts. He admitted to the tribunal that his management skills were poor and had contributed to some client losses in that department; however, he had continued to be appointed as an interim SEO manager between permanent hires.

The working relationship between YS and the Garrity brothers deteriorated from 2013, as the SEO department began sustaining significant financial losses – in part because of a new smart working platform, which, it was claimed, contributed to losses of £575,400 in client revenue.

The company brought in an independent HR consultant in early 2016 to establish whether YS should face a disciplinary process for non-performance. The consultant recommended starting the disciplinary process, but suggested a lesser offence than gross negligence – unless there was significant supporting evidence. 

YS was suspended pending investigation in February 2016 for gross negligence of his duties. The tribunal found there was no justification for this sanction as he was suspended for performance issues, having been informed his performance was under review – but had not been given the opportunity to improve.

During his suspension and investigation into his conduct, however, YS was accused of having attempted to transfer a work email account to his private email address. While suspended, he had been contacted by a company client who flagged that a company server he had been responsible for was not functioning.

In an attempt to reboot the server, YS said he asked the US-based hosting company to set up his personal email address with the account, which his employers deemed to be an attempt to take personal control of a work account. He was subsequently dismissed for gross misconduct on 7 June 2016.

Despite evidence of poor performance, the company acted unfairly in dismissing YS, the tribunal ruled, by failing to act reasonably in the stages that led up to his dismissal.

His conduct fell short of gross misconduct, or breach of a reasonable management instruction. Although there were genuine performance concerns about YS, any reasonable employer would have attempted to achieve an improvement in his performance before moving on to suspension and a disciplinary process, the judge found.

Other managers besides YS had taken the SEO role, and therefore the fault could not lie entirely with him.

The judge described the entire disciplinary process conducted by RocketMill as “lamentably deficient in the steps and the approach adopted by a reasonable employer”.

The decision to involve an independent HR consultant in the proceedings was highlighted by the judge, who said: “The explanation that [the organisation] required someone independent to undertake the investigation [was] stretching credibility.” He concluded the brothers had always intended to dismiss the claimant, which is why they hired the consultant.

YS compensation will be decided at a future remedy hearing. He could also benefit from a compensatory award for any financial losses suffered as a result of his dismissal “in so far as that loss is attributable to action taken by the employer”.

In a statement, RocketMill said: “This is a highly complex case involving performance issues with an individual who was a director, shareholder and employee.

“Because of this complexity, we opted to enlist specialist HR consultants to investigate independently and remedy as they saw fit. We are shocked by the verdict – it is littered with inaccuracies, and we are taking further advice before deciding upon an appeal.”