Where irresolvable differences of opinion render an employment relationship entirely unworkable, dismissal may be justified. However, as one case showed, a knee-jerk response is never wise and a failure to allow time for reflection and the observance of proper procedures is likely to have serious financial consequences (Jayadev v AM Technology Ltd).
The case concerned the chief operating officer and founder of a technology company whose relationship with his co-founders had become so strained that a psychologist specialising in dispute resolution had at one point been engaged in an attempt to break the impasse. They objected to elements of his management style and had very different visions as to how the company should progress.
Matters reached a head when he was summarily dismissed during a board meeting. He was given no prior notice of the co-founders’ intention to dismiss him, let alone their grounds for doing so. He was not advised of his right to be accompanied at the meeting and was not offered any right of appeal. After he launched Employment Tribunal (ET) proceedings, the company conceded that unauthorised deductions had been made from his wages and that his dismissal was unfair.
In assessing the amount of compensation due to him, the ET noted that he may not have been a model employee in all respects. However, there were likely to have been errors and miscommunications on both sides and the breakdown in working relationships was an unhappy fact for which more than one individual could fairly be held responsible.
The ET found that the bond between the man and the co-founders had irretrievably broken and there was no real prospect of it being repaired. Given the loss of trust and confidence between them, his dismissal was capable of being fair. That, however, would have required a formal procedure and a pause for reflection and perhaps dialogue. Such a procedure would have taken up to six months.
The man was awarded a sum equivalent to six months’ loss of earnings, benefits and statutory rights. The ET uplifted the award by 25 per cent to take account of the company’s flagrant breach of the principles of sound employment relations practice enshrined in the Acas code. Together with a payment in respect of unlawful deductions from his wages, his overall award came to £117,145.