Administrator ‘misled’ into negotiation process was unfairly dismissed, tribunal rules

11 Mar 2020 By Siobhan Palmer

Cleaning firm ordered to pay £13,000 after giving worker ultimatum to ‘resign or be dismissed’

A cleaning company has been ordered to pay a former administrator almost £13,000 in compensation for unfair dismissal. 

The Cardiff Employment Tribunal ruled the redundancy process carried out by DB Cleaners and Launderers in respect of its employee, Mrs S Sparks, was substantively and procedurally unfair, as it “intended to avoid statutory redundancy payments”.

The judge ruled Sparks had been “misled” into a negotiation process, and the actions of her employer equated to “an ultimatum to resign or be dismissed, albeit for a sum of money”. 

Sparks had worked at the cleaning firm since 2012. In 2015, the company was bought by a larger business, and the local branch manager was overseen by area managers of the owner company. 

In January 2019 a disciplinary process was opened against Sparks, because she was receiving a 100 per cent discount on cleaning services. She had been claiming this discount since 2015 with permission from the branch manager, as compensation for the new owner unilaterally reducing her salary by £3,000 per year. However, the company claimed this discount was only available to company directors, and she had been accessing this perk dishonestly. 

The branch manager did not escalate this matter, and told the tribunal this was because he wasn’t aware of the arrangements made before his appointment in 2018, and thought it better to issue new instructions going forward. However, the tribunal concluded the disciplinary investigation against Sparks was in fact abandoned because “the claimant could not be dismissed by this means without risk”.

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Following the investigation, many of Sparks’ duties were transferred to other employees, something she raised concerns about with the area manager, Mr Steed. 

Steed spoke to the company’s management, and was told there was the possibility of administration being moved from Cardiff to the central office in Worcester. He then held a meeting with Sparks on 14 February 2019 to address her worries.

However, during the meeting, Steed required Sparks to sign a form headed ‘without prejudice negotiations’, before giving her any information. Sparks claimed she was assured that signing the document would not be detrimental to her job. 

Steed then asked Sparks how much money it would require for her to leave her job, to which she responded she did not want to leave her job. The tribunal heard she was repeatedly pressed for a response. 

During the meeting it was established she would be entitled to £3,800 in redundancy payments. Steed offered her £1,500 plus her wages to the end of the month to leave, and gave her overnight to consider the offer, which she rejected the next day. 

The following week, she was offered an increased payment of £2,000. Sparks told the tribunal she was informed this offer was only on the table for the day and, if she did not take it, the company would find a way to get rid of her, leaving her with nothing. Following a conversation with the local branch manager, where she claimed the same advice was given to her, she accepted the offer. 

Six weeks later, she wrote to her former employer raising a grievance in reference to her ‘dismissal’, but this grievance was rejected. 

While the respondent claimed Sparks had freely entered into negotiations with the company, the judge said “nothing could be further from the truth”, noting she had been misled into signing the document, and was pressured into discussing figures despite making clear she did not want to leave. 

The judge ruled this amounted to both procedural and substantive unfair dismissal on the part of the employer, as the claimant was not given any input into the process, and the company used “a method... intended to avoid statutory redundancy payments [being] made”.

The tribunal awarded Sparks compensation of £12,897.95 reflecting lost wages, pensions and statutory rights.

Paul Holcroft, associate director of Croner, said the case highlighted why it was essential to plan all redundancy exercises “carefully”. 

“As seen here, attempting to circumvent the process to avoid redundancy pay an employee is entitled to can prove to be highly costly for an organisation,” he said. “Redundancies should never be used as a way of trying to cover up a dismissal of a problem employee, particularly if their role will still need to be filled following their departure.”

Sparks’ compensatory award was reduced by 10 per cent, to reflect the fact there was a small chance she would have been made redundant fairly, had her employer followed due process.

Antony Sendall, barrister and mediator at Littleton Chambers, noted the size of this reduction showed the employer “had a very flimsy business case for suggesting there was even a redundancy situation at all”. He added: “The consequence of their ‘resign or be dismissed’ approach was that the dismissal was not only procedurally, but also substantively, unfair.”

Sparks could not be contacted for comment. DB Cleaners and Launderers is yet to respond to a request for comment. 

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