Right reasons for dismissal

One of the key elements of a fair dismissal is making sure the employee is dismissed for a potentially fair reason. That reason must also be the true reason for the dismissal – choosing the ‘wrong’ reason for dismissal can lead to problems down the line, as demonstrated in Sekander v Rocketmill, a case in which the employer dismissed for gross misconduct, when the real reason was the employee’s performance.

The Facts of Sekander v Rocketmill

Yousaf Sekander worked at Rocketmill Ltd, a digital marketing agency and consultancy. Brothers Sam and Ben Garrity established the company, and hired Mr Sekander as Director of Technology, to provide the company with software services. One of his responsibilities was to provide Search Engine Optimisation (SEO). He was paid less than the market rate for his work on the understanding that he would receive some equity in the company. The Garrity Brothers reached an agreement with Mr Sekander that he would receive 10% of the shares in Rocketmill Ltd. Mr Sekander developed a software tool called Social Crawlytics. Under his Service Agreement he signed when hired, would become Intellectual Property of Rocketmill Ltd. Mr Sekander would only be able to claim the full market value of his 10% stake in Rocketmill Ltd if he was a “good leaver”, i.e. if he remained employed for ten years (or was wrongfully or unfairly dismissed). Otherwise, his shares would be worth very little.

Mr Sekander’s Dismissal

When another employee was dismissed, Mr Sekander was asked to take on the role of Head of SEO on a temporary basis even though he lacked management experience. When SEO began to lose money, the Garrity brothers attributed all the failings to Mr Sekander. Rocketmill Ltd sent Mr Sekander a report highlighting areas where he could improve his performance, and he responded with a list of the areas he acknowledged he should improve. Rocketmill Ltd subsequently contacted an external HR consultant, Eve Clennell, to advise on how they should approach Mr Sekander’s performance issues. She pointed out that the Service Contract permitted dismissal for gross misconduct and recommended that Sam Garrity should instigate the disciplinary process. Mr Sekander was informed via email that his performance was under review. At a subsequent meeting, Eve Clennell informed Mr Sekander that he was suspended pending an investigation. During his suspension, Mr Sekander received a message from a service user asking if Social Crawlytics was ‘down’. As the only employee of Rocketmill Ltd with the ability to perform the upkeep of the Social Crawlytics server, Mr Sekander tried to log into the server account using his private email. When asked why he did this, Mr Sekander explained that he was trying to fix the problem for the service user. Rocketmill accused Mr Sekander of trying to take ownership of the Social Crawlytics product during his suspension. His explanation for using his private email was omitted from the investigation into his conduct and Mr Sekander was dismissed for gross negligence in his role as manager of SEO, a breach of trust and confidence with his employer, and gross misconduct for accessing the server. Mr Sekander alleged that Rocketmill’s dismissal of him was unfair. . He claimed that the real motive for his dismissal for gross misconduct was to reduce the potential value of his shareholding from £500,000to £10, since he’d have to transfer the shares at face value. Mr Sekander claimed unfair dismissal and breach of contract.

Unfair Dismissal

Employment Judge Hall-Smith applied the principles of the well known case British Home Stores Limited v Burchell, namely: “The employer must show that it held a reasonable belief on reasonable grounds that the employee concerned was guilty of the conduct alleged, that it had undertaken a reasonable investigation into the allegation and that the sanction of dismissal was a reasonable one in all the circumstances.” The Tribunal found the following features of the dismissal unfair:

Eve Clennell’s investigation was not impartial
The investigation failed to take account of all available evidence;
The company had failed properly to investigate Mr Sekander’s reasons for accessing the server;

The Tribunal also found that the company had appointed Ms Clennell for the express purpose of dismissing Mr Sekander. The Tribunal found “unconvincing” Mrs Clennell’s assertion that she couldn’t remember whether anyone had brought the distinction of “good leaver” and “bad leaver” to her attention. The Tribunal further held that whilst the company had some genuine concerns with Mr Sekander’s performance, a reasonable employer would have taken steps to endeavour to help him improve his performance. Rocketmill failed to do this. It was also wrong of Rocketmill to lay the entire blame for the SEO’s profitability at Mr Sekander’s feet.

Wrongful Dismissal

Dismissing an employee without notice, can amount to a breach of contract. This is known as wrongful dismissal. It is for the employer to show on balance of probabilities that it had valid reasons for dismissal. The Tribunal’s role is to establish whether on the facts, the employee’s conduct is serious enough to justify summary dismissal. The Tribunal found that whilst the act of accessing the server was suspicious, Mr Sekander was not motivated by malice, nor had he acted in bad faith. His actions did not amount to gross misconduct, making the dismissal wrongful. The effect of this was to entitle to him to notice pay.

Conclusions

Gross misconduct is a serious allegation and the case of Sekander v Rocketmill shows that there are potential consequences when dismissing an employee for this reason without a fair, impartial investigation and hearing process. The company may have had legitimate performance concerns, but the proper steps should have been taken to give the employee an opportunity to improve his performance. When potential reasons to dismiss an employee arise, companies should adhere to fair, impartial procedures and be certain that the reasons for dismissal are reasonable and correct, before taking the decision to dismiss.