Dismissal Of High Paid Employee for Gross Misconduct Deemed Unfair, according to ET (Mr J Hegarty v Penny Post Credit Union)

In the case of Mr J Hegarty v Penny Post Credit Union, the employer was found to have concocted charges against a senior employee as a reason for dismissing him for gross misconduct after previously agreeing redundancy.

The Facts in Mr J Hegarty V Penny Post Credit Union

Mr Hegarty (“The Claimant”) commenced employment on 30 March 2015 as a Business Development Manager (BDM) for Penny Post Credit Union (“The Respondent”).  Prior to this, he had been the President of the Board for around 10 years. In August 2016, the Claimant was promoted to the role of Chief Executive Officer (CEO)

On 19 October 2017, the Claimant signed a contract of employment with the President of the Board at the time, Mr John McDonald. This contract stated a notice period of 12 months after the Claimant had worked for five years.

Mr Hegarty Reacts to the “Campaign to Get Rid of Him”

On 10 March 2021, the Claimant attended a meeting with Mr Robertson, the incoming President, and previously a member of the Board and another member of the Board, Mr Coverley. At the meeting, the Claimant was informed of the possible transfer of the business to Transave, and the proposal to make him redundant. A comment was made by Mr Robertson to the Claimant that said, “I don’t think they’d want another CEO”.

On 15 March 2021, the Claimant submitted a grievance alleging that there was a campaign to get rid of him organised by members of the Board.  He also accused two of the Board members of sending him aggressive emails. Furthermore, he alleged that Mr Coverley had made inappropriate sexual comments to a female member of staff and called for 3 of the Board members to be suspended from the Board pending investigation.

Later, the Claimant attended a redundancy consultation meeting on 31st March 2021. They discussed his redundancy package which he questioned as the final numbers were based on a three-month notice period, as opposed to 12 months. Additionally, the Claimant proposed reducing his pay instead of being made redundant.

The Claimant was subsequently called to a disciplinary meeting on 23 April 2021, where it was alleged, he had caused serious breaches of his obligations as CEO. He was accused of failing to communicate appropriately with regulatory bodies, namely the Financial Conduct Authority (FCO), the Prudential Regulation Authority (PRA) and the Financial Ombudsman, causing financial loss to the Respondent to the tune of £86,000.

On 18 May 2021, the Claimant was dismissed for gross misconduct.

Appeal Against Dismissal Due to Gross Misconduct

The Claimant appealed against his dismissal, on 24 May 2021, responding to each allegation and arguing they did not amount to gross misconduct. He raised points of procedural unfairness and his belief that the disciplinary process was an attempt to avoid paying him his contractual notice period.

The Claimant argued that during the course of his employment, he was subject to:

  • A breach of his employment contract;
  • An unfair disciplinary process and unjust sanction;
  • Unfair dismissal following an unfair process;
  • Unfair dismissal that was connected to a transfer of the business.

The Decision of the Employment Tribunal

The Employment Tribunal found that the Claimant had been unfairly dismissed under s.94 of the Employment Rights Act 1996 (ERA 1996).

The Claimant’s dismissal for gross misconduct was unfair as the case against him had been hastily complied after he had raised a grievance. This was used against him to avoid paying him statutory redundancy or his notice pay. The Claimant would have been fairly dismissed by reason of redundancy on 9 April 2021 and entitled to a statutory redundancy payment, and his notice pay or payment in lieu of notice (12 months notice pay in his case) if the Respondent had pursued this course of action. The Respondent had failed to establish that they had a fair reason for dismissing the Claimant under s.98 ERA.

The Claimant’s claim for unfair dismissal under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (Regulation 7(1)) was not upheld as no clear connection could be found between the transfer and his dismissal as none of the transfer options had crystalised at that stage.

The Claimant’s compensation would be decided at a Remedy Hearing.

Our Lawyers View

Steve Norton, lawyer at Redmans, says: “In this case, there is little doubt the Respondent had attempted to find a reason to terminate Mr Hegarty’s employment at the lowest cost rather than redundancy.

Clearly having to pay a CEO 12 months’ notice would be costly in a financially difficult time during the Covid pandemic in a harsh economic climate; combined with the ill-feeling over the grievance raised by Mr Hegarty against a number of the Respondent’s Board members. A gross misconduct case had been manufactured to achieve this end.

The Employment Tribunal was able to see through this blatant attempt to get rid of Mr Hegarty on the cheap“.