Employee wins case for unfair dismissal and wrongful dismissal after allegations of gross misconduct (Sekander v Rocketmill Ltd)

In the case of Sekander v Rocketmill Ltd (ET/2301645/2016), the Employment Tribunal held that Mr Sekander, had been both wrongfully and unfairly dismissed, despite his employer claiming that his conduct amounted to gross misconduct.

The facts in Sekander v Rocketmill Ltd

On 1 June 2010, Mr Sekander (the Claimant) began working for Rocketmill Ltd, a digital advertising and marketing agency run by two brothers: Ben and Sam Garrity (the Respondent). The Claimant came highly recommended as a web designer.

The Claimant agreed to a receive salary which represented less than the market rate on the understanding that he would obtain equity in the business.
On 13 June 2013, a Joint Venture and a Service Agreement were entered into between the Claimant and the Respondent which set out the terms and conditions of his employment. The service agreement required the Claimant to commit to working for the Respondent for a period of ten years before he could realise the market valuation of his shareholding, unless his employment was terminated by circumstances such as gross misconduct.

The Claimant’s job was as Director of Technology, managing the group heads of the various divisions in the company including, SEO (Service Engine Optimisation). The SEO part of the business grew rapidly from managing small to dealing with large accounts.  In 2012, the Claimant developed and built a tool, which he called Social Crawlytics. The tool became very popular and the Service Agreement provided that the Intellectual Property in Social Crawlytics belonged to the Respondent.

In 2013, the working relationship between the Claimant and the Garritys deteriorated. This may have been due to the fact that the Service Agreement and the Joint Venture Agreement between the Claimant and the Respondent dictated that the Claimant receive 25% of the dividends based on his 10% equity in the Respondent company. However, the SEO department had lost money to the tune of £575, 484 and the Garritys attributed the entire responsibility for this failing on the Claimant.

in July 2015, the Claimant was provided with a lengthy feedback summary of issues identified by the board, in which the Garrity brothers expressed concern at the Claimant’s performance as head of SEO. The Claimant did not respond to the feedback documentation until 2 December 2015, when he sent the directors a very brief response which took on board the validity of some of the criticism.

In January 2016, Sam Garrity contacted Eve Clennell, principal consultant and director of Eden HR consulting Limited. Eden HR was engaged in the business of providing consultancy advice on HR and related matters to its clients. Eve Clennell was asked to review and investigate a potential disciplinary matter and to establish whether the Claimant, who was an employee, director/shareholder, should face disciplinary action for non-performance and failings in his department. In an email to Ben Garrity laying down the terms and conditions of her services, she highlighted that the Service Agreement between Mr Sedanker and the brothers, could be terminated for gross misconduct.

On 15 February 2016, Sam Garrity sent the Claimant a new job specification. Sam Garrity’s email to the Claimant contained no hint of any concerns about performance issues or the fact that disciplinary process had been contemplated a month beforehand. The Claimant questioned why he was being sent this new job description. Sam Garrity replied a few days later that it was because the Claimant’s job performance was under review. The Claimant then claimed in a written response that if this was the case, a formal company procedure should be followed. On 24 February 2016, the Claimant was summoned to a ‘job spec review’ meeting and there was told, with Eve Clennell attending, that he was being suspended pending an investigation into allegations of gross misconduct. He was presented with a letter that stated that that action was being taken because of: gross negligence in his duties in the form of both mismanagement of staff and of company projects, a breach of trust and confidence and the fact that a number of senior managers had expressed serious concerns about the Claimant’s performance in his job role.

On 16 March 2016, an investigatory meeting was held and at the conclusion of the meeting the Claimant requested that Chris Hutty and Krystian Szastok who had been digital marketing managers and had recently left the Respondent in February 2016 be interviewed, because the Claimant considered that their evidence would have been highly relevant to issues involving his performance. The witnesses proposed by the Claimant were not questioned on the ground later explained in a letter to the Claimant from Kevin Porter, who was appointed to chair the disciplinary hearing, that they would not be contacted as they were no longer employed by the Respondent. The employees who were then interviewed were not members of the SCO team.

On 17 March 2016, the Claimant received a message through Twitter from a regular user of the Social Crawlytic’s tool, enquiring whether Social Crawlytics was down. It was common ground that the server was hosted by Incero Limited (Incero) which was a US based company which offered computer servers and other network and data services. The Claimant had rented a server from Incero in order to host Social Crawlytics from its set up in 2012 and had used his personal email account with a password set by him. Although the Claimant was the named party with Incero, the servers were held by him for the benefit and on behalf of the Respondent, in circumstances where the intellectual property rights to Social Crawlytics had been assigned to the Respondent. The Claimant was also renting another unmanaged server from Incero to host an application called CRO Monitor which the Claimant had created in 2013. The Claimant had also assigned the intellectual property for this application to the Respondent but the Claimant himself was the named party with Incero.

The Claimant maintained that of the user names associated with the two Incero accounts for Social Crawlytics and CRO Monitor, one corresponded with his personal email address and the other with the Respondent’s work email address but he did not know which server was associated with which of the two email addresses.

The Claimant maintained that he had endeavoured to reset the password for the Incero account associated with his personal email address that night on the assumption that this was assigned as the user name for the Social Crawlytics account. The password reset failed and the Claimant received an error message. The Claimant contacted Incero via Skype and stated that he was having trouble resetting his password, that he had two servers with Incero and he gave his personal email address and his Rocketmill email address.

On 18 March 2016, Sam Garrity sent an email to the Claimant, saying that Incero had his private email. The Claimant defended his actions in an email on 19 March 2016 stating what had happened and that Incero had confused the situation which had been clarified during the Skype conversation.
On 20 March 2016 Sam Garrity emailed the Claimant again, stating that he was concerned because it was clear to him that the Claimant was trying to change the email address on the Rocketmill account to his personal one. The Claimant again replied on 21 March 2016, stating that he felt this Incero issue was a “cover” being seized upon by the Respondent in order to add something to already “trumped up disciplinary allegations you have personally invested so much in”. He then provided a detailed explanation as to what happened that night with Incero and the Social Crawlytic issue.

On 24 March 2016 Eve Clennell emailed the Claimant enclosing transcripts of the investigatory meeting held on 16 March, informing him that in addition to the other charges being investigated she had questions in relation to Rocketmill’s account at Incero and his alleged unauthorised access while suspended. But Eve Clennell did not ask the Claimant any questions in relation to the Incero incident as part of her investigation.

On 11 April 2016, the Claimant emailed Eve Clennell asking for a copy of the questions she had submitted to witnesses and any responses received. The Claimant’s email stated he was concerned to ensure that witnesses were not being led whether consciously or otherwise and/or put under pressure to support an agenda against him. Eve Clennell did not reply to the Claimant’s email.

Eve Clennelly concluded her investigation report and on 27 April 2016 wrote to the Claimant informing him that he was required to attend a disciplinary hearing on 6 May 2016 to consider the following allegations of first gross negligence in management responsibilities; second, a breach of trust and confidence not performing his job role; and third, an attempt to take personal control of Incero, a company hosted server whilst suspended from work.

On 25 May 2016, the Claimant wrote to Ben and Sam Garrity raising a formal grievance in respect of the manner in which he alleged he had been treated by the company, At the beginning of his letter the Claimant summarised his allegations and claimed that he was being subjected to an extended campaign of bullying and harassment by his business partners, culminating in his ongoing and unlawful exclusion from the office on trumped up disciplinary charges; and that the Respondent had manufactured allegations against him in the hope of forcing him out of the business as a bad leaver so that they could recover his shares in the business at par value.

The disciplinary hearing took place on 27 May 2016 and the Claimant attended accompanied by a colleague, Adam Craddock. The hearing was conducted by Kevin Porter, an independent HR consultant. At the outset of the hearing Kevin Porter informed the Claimant that the hearing would only consider allegation three, in relation to the Incero incident. The Claimant objected to this proposal and pointed out that in relation to the first and second allegations the Respondent had unlawfully suspended him. Kevin Porter did not ask the Claimant any questions about his motive in relation to the Incero incident, namely whether there was an intention to undermine the Respondent company or whether his involvement was to get Social Crawlytics up and running.

On 7 June 2016 Kevin Porter wrote to the Claimant confirming his dismissal for gross misconduct. The Claimant appealed against his dismissal in an email sent to Kevin Porter dated 15 June 2016.

The Claimant’s appeal against his dismissal was conducted by Claire Rutland, Senior HR Advisor who undertook work as an HR consultant for Eve Clennell’s firm, Eden HR. On 10 August 2016 Eve Clennell wrote to the Claimant informing him that his appeal to the dismissal was rejected.

The decision of the Employment Tribunal in Sekander v Rocketmill Ltd

The Employment Tribunal upheld Mr Seconder’s claims for unfair and wrongful dismissal.

Unfair Dismissal – Section 98 of Employment Rights Act 1996

In his reasoning, the Employment Tribunal judge explained that the Claimant was dismissed for reason of gross misconduct, and that conduct can be a potentially fair reason for dismissal.

He stated that the Tribunal had to remind itself that it was not its role to substitute its own view for that of the Respondent employer and decide what it would have done or may have done had it been the employer of the employee concerned.

The role of the Tribunal in cases of unfair dismissal was to review the entire process undertaken by the Respondent employer and to determine whether at each stage of the process, the employer acted reasonably, or in other words whether each stage of the process fell within the range of reasonable responses available to a reasonable employer. In relation to the sanction of dismissal, the Tribunal had again to consider whether such a sanction amounted to a reasonable sanction in all the circumstances.

As law, he cited the guidelines of the EAT in British Home Stores Limited v Burchell 1980 ICR 303 and referred to the statutory framework set out in Section 98(4) of the Employment Rights Act 1996.

The Judge then concluded the following:

  • That he found that there were genuine performance concerns involving the Claimant, but that a reasonable employer would have taken steps to endeavour to achieve an improvement in the Claimant’s performance.
  • That there were serious issues about the loss of revenue but that with the lack of investigation, these could not reasonably be attributed to the Claimant’s performance alone and that on the basis of the information available to the Garritys, there was no justification in attributing the entire blame or responsibility to the Claimant.
  • He raised the issue of why it was necessary for the Garritys to involve an outside party, namely Eden HR in the person of Eve Clennell, to undertake an investigation into alleged performance issues. He felt that the explanation that the Garritys required someone independent to undertake the investigation was stretching credibility; that the real reason for the involvement of Eve Clennell was to place some distance between the Garrittys and the disciplinary process which was intended to achieve the dismissal of the Claimant.
  • That the investigation was flawed in that the questions put to the individuals selected by the Respondent to be interviewed were clearly, in his judgment loaded questions, namely asking them to share concerns they had surrounding the Claimant’s performance as Head of SCO.
  • That there was no justifiable reason for Eve Clennell’s failure, to include the Claimant’s account of his involvement in the Incero incident in her investigation report especially having regard to the seriousness in the way in which the Respondent treated the incident. A reasonable employer, undertaking a reasonable investigatory process, would have interviewed the Claimant or asked for an explanation before levelling a charge of gross misconduct.
  • – That the entire investigatory process did not reflect a genuine or reasonable approach on the part of the Respondent and that the intention was to secure the Claimant’s dismissal.
  • That there was no justification for either the Claimant’s suspension or for the terms on which he was suspended. In fact, the Respondent’s own disciplinary procedure stated that a period of suspension would only be necessary “in certain circumstances but this should not be regarded as a disciplinary sanction. Less serious misconduct should not normally require paid suspension”.
  • That there were a number of steps that the Respondent, as a reasonable employer, might have considered taking such as removing from the Claimant the responsibility of the Head of SCO role and monitoring his performance.
  • That there was no justification for the Claimant’s suspension and that the Claimant’s suspension for reason of gross misconduct, amounted to a breach of breach of the term of trust and confidence implied into the Claimant’s contract of employment and that accordingly the Claimant was unfairly dismissed by the Respondent.

Wrongful Dismissal – Common law claim

The Judge explained that in cases of wrongful dismissal:

  • it is for the Respondent to show on the balance of probabilities that there were grounds for summarily dismissing the employee concerned, and that issues of fairness or reasonableness play in a consideration of the issues involved in a case of wrongful dismissal;
  • that the Tribunal is required to make a finding of fact as to the conduct of the employee concerned and whether it was such conduct that was so serious as to justify the employer in dismissing the employee summarily in breach of the terms of his contractual notice entitlement;
  • that while the Claimant had the ability to act in bad faith, if so motivated, on the evidence, the Claimant’s motive was not malicious and did not amount to gross misconduct justifying the Claimant’s summary dismissal.

Our solicitors’ view on Sedanker v Rocketmill Ltd

Caroline Lewis, a specialist employment specialist at Redmans commented that “This case indicates that employers must always ensure that they follow a fair procedure when contemplating the dismissal of an employee; one that involves a genuine and impartial investigation which can then justify the outcome. Any abuse of this process may result in a Tribunal concluding that the employer has not acted reasonably, that the dismissal was a foregone conclusion (whether on the grounds of gross misconduct or other), and lead to an employee winning on a claim of unfair and possibly, wrongful dismissal”.

The judgement of the Employment tribunal can be found here.