A chief risk officer was automatically unfairly dismissed after he made repeated protected disclosures about regulatory and compliance issues at his organisation, a tribunal has ruled.
The London Central Tribunal heard that Mr M Daniels’ “escalating protected disclosures” were the “true cause” of the decision to dismiss him, instead of not being “fit for the role”.
However, while Daniels was considered “a good employee”, the judge concluded that “it was 40 per cent likely that the [employer] would have dismissed [him] lawfully in any event” as “there were significant and ongoing concerns about [his] judgement and communication”.
Daniels claim for automatic unfair dismissal because of protected disclosures succeeded, but the tribunal ruled that the company did not subject him to other separate detriments.
Daniels was employed as a chief risk officer (CRO) at United National Bank from 28 July 2019 until his dismissal on 1 April 2021.
His responsibilities included assessing and mitigating regulatory, competitive and technological threats to an enterprise’s capital and earnings. The tribunal heard that his role was a regulated position with individual accountability and that his appointment required the Prudential Regulation Authority’s (PRA) approval.
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In February 2019, the PRA issued a section 166 to the bank – which means it can ask the firm to appoint a skilled person to produce a report on specified matters – setting up a three-phase review. A three-phase remediation plan was also implemented in May 2019, and the first phase identified 116 concerns that needed to be addressed.
On 14 January 2021, Daniels made a protected disclosure in his attestation and appraisal form, stating that there were insufficient resources to allow him to complete his role and made a remark regarding the existing operations’ lack of sustainability.
He said: “Working hours have been exceptional this year with repeated late night finishes and several early morning completion times, this is not sustainable.”
The tribunal was informed that Daniels believed the working time limitations, particularly those relating to working hours and annual leave rights, had been “violated”, and that a breach “had both occurred and was likely to occur unless recruitment was progressed”.
The tribunal determined that Daniels believed he was disclosing information that inferred United National Bank would breach its legal duty to provide yearly leave to its workers and that his health and safety would be jeopardised if he continued to work as he had the previous year. He made it clear that his annual leave had to be postponed.
In the duration of his employment, Daniels also raised concerns about deliberate concealment of a key control form and the bank’s failure to monitor working hours.
On 24 February 2021, Daniels met with Ms T Eplett, head of HR, and raised concerns about the bank's risk management structure. He told the tribunal that he had "explicitly needed to hold individuals to account" and that he needed assistance with how to do so in a fair and transparent manner consistent with HR policy.
He claimed that Eplett instructed him to do a "fact find”, which could then be followed by individual actions. He further told the tribunal that Eplett had cautioned the bank's review process that people might be held accountable for recurrent risk procedure and policy violations.
On 11 March 2021, he also told Eplett that a health helpline was not working.
Daniels told the tribunal that on 11 March 2021, during a routine weekly catch-up meeting with his CEO and line manager Mr B Firth, he raised 30 breaches of internal processes stemming from the bank’s launch of a new product.
"I've done the following to make it safe, but hang on, we've created a situation that should never have existed," Daniels said in the meeting. “I would have mentioned regulatory responsibilities,' he told the tribunal.
On 19 March 2021, Daniels was “inadvertently informed” by the bank that they wished to terminate his employment.
On March 23, Firth informed Daniels that he would be fired and placed on gardening leave the next day. "Your role is critical to the bank, but we have concerns that you are not best suited for this role here," he said, adding that Daniels should prioritise tasks that are completed in accordance with board expectations, and that he would like to see more long-term planning and clarity on priorities. This was despite Daniels receiving an ‘A grade’ in his appraisal a month earlier.
On 1 April 2023, Firth updated the board in a meeting about Daniels’ termination. He indicated that he was concerned about Daniels’ lack of focus and overengineering of tasks, as well as potential remedies to current and often non-existent difficulties.
Daniels departed the organisation the same day and his termination letter stated: “As discussed at our meeting last week, we do not believe that you are the best fit for your role at UBL UK.
“Your background is in financial services for a much larger company, and we are concerned that your focus and priorities do not appear to be related to the size and resources of UBL UK."
The tribunal heard that Daniels was not given the option to contest his dismissal and that he was fired without any disciplinary process before the conclusion of the compliance evaluation. He also did not receive a response to his concerns expressed in his alleged protected disclosures.
Employment judge Brown said that Daniels' “escalating protected disclosures were the true cause of the decision to dismiss him” as the tribunal “decided that [the employer] considered [Daniels] was not the ‘right person’ for the CRO job going forward because of his continued protected disclosures”.
The judge also noted that the s166 process was coming to an end, and at that point, the bank was considering what, and who, was required in its “business as usual” operations, “it was 40 per cent likely that the company would have dismissed [Daniels] lawfully in any event” since “there were significant and ongoing concerns about [his] judgement and communication”.
Daniels was awarded a grand total of £137,894.37 in compensation for his claims, including injury to feelings, past loss, an ACAS uplift and grossing up.
The injury to feelings award was reduced by 40 per cent for Polkey Deduction.
Employment lawyer’s take
Anthony O’Loughlin, head of litigation at Setford's, explained that Daniels had been working at the bank for less than two years, and hence did not have the right to bring an ordinary unfair dismissal claim.
“However, the same would not apply in the case of protection for whistleblowing and the automatic unfair dismissal and detriment which can be associated with such,” he said.
“This decision will serve as a warning to employers to take careful advice before taking action against employees who have made or possibly made protected disclosures or taken steps which may be covered by whistleblowing protections,” O’Loughlin added.
United National Bank has been approached for comment. Daniels could not be reached.