Third party pressure from the Bank of England, combined with the media furore about the fixing of lending rates, appear ultimately to have led to the resignation of Bob Diamond as Barclays’ chief executive.
But such scenarios have potential implications for employers. Not only do they need to find the most effective way to manage these difficult situations, but they must also establish the means of reducing their risk of legal claims.
In many cases in which an employee genuinely resigns of their own volition, there will be no legal ramifications whatsoever for their employer. But if the resignation takes place in response to a serious breach of contract by that employer, staff members may be entitled to pursue a claim for constructive unfair dismissal.
In order to succeed, however, they would need to demonstrate that:
- The employer breached a term of their employment contract
- The breach was fundamental
- The employee resigned in response to that breach.
If, like Diamond, an employee resigns in response to third party pressure, they could argue that the criticism was unfair and their employer did not do enough to protect them. The third party in question could be a customer, a regulatory body, or even colleagues who may refuse to work with a staff member if their relationship has broken down.
In such circumstances, the employer faces a difficult balancing act in trying to best manage the situation. There are a number of options potentially available, however. They could:
- Do nothing and hope the pressure dies down
- Suspend the employee while investigating any issues that have been raised
- Support the employee and make it clear that they will not bow to the third party pressure being exercised
- Seek to negotiate and mediate between the parties concerned, with a view to reaching a mutually acceptable outcome
Up- and downsides
Clearly, all of these options have their downsides. For example, there could be commercial considerations if a key customer files a complaint as well as practical issues if colleagues refuse to work with a given individual.
In the majority of cases, a formal process will need to be initiated with a view to investigating whether the criticism and/or complaints are well founded or not. Employers should also establish if the third party is issuing an ultimatum to dismiss the employee concerned, or whether any other steps could be taken to resolve their objections.
In order to sack a staff member as a result of third party pressure, employers can use one of a number of potentially fair reasons and dismiss them on the grounds of ‘some other substantial reasons’.
In order to successfully argue SOSR, however, they will need to show that there was actual pressure applied by a third party, which amounted to more than a suggestion or request.
Before proceeding with an SOSR dismissal, employers must also carefully consider injustice to the employee by demonstrating that they have taken all sensible steps to try to alleviate the situation or find an alternative solution.
This scenario could involve considering whether to take the staff member off the complaining customer’s account or move them away from the colleagues who are exerting pressure. In cases that involve a relationship breakdown, mediation should also be considered.
Alternatives to dismissal
As with any dismissal situation, conducting procedures fairly will be vital. Employees should be made fully aware of the issues involved and have the chance to put their own case forward for consideration.
When a staff member ‘jumps before they are pushed’, this scenario can, in some cases, be a welcome relief for employers because it absolves them of having to follow a time-consuming formal process.
The employer must, however, be careful to avoid any inference that the employee was given an ultimatum to either resign or be dismissed. A tribunal is very likely to find that this type of ultimatum amounts to a forced resignation.
Furthermore, a tribunal may take the view that, by discussing resignation as an alternative to dismissal, the employer has effectively rendered it impossible for the employee to receive a fair hearing in any subsequent dismissal process.
An employer should consider the following:
- Before taking any action, establish the nature of the pressure being applied and whether it amounts to more than a suggestion or request. If it is unjustified, employers should take steps to mitigate the effect on the employee concerned in order to avoid claims that they have been exposed to an intolerable working environment
- Evaluate the effect of the situation on the business, and the potential damage to it, if pressure from the third party is ignored
- Assess the staff member’s conduct and whether they are culpable of or responsible for any of the acts complained about
- Gauge whether it is appropriate or possible for the employee concerned to work in an alternative role
- If a resignation is tendered, the employer should be careful to ensure that it is the staff member that made the suggestion and took the decision. The aim is to prevent any argument that the employer forced the resignation or breached the implied terms of trust and confidence.
Top tips
- Keep a clear paper trail: Evidence of definitive pressure from a third party as well as any potential impact on the business will be important if a constructive unfair dismissal claim does arise
- Avoid knee-jerk reactions in response to outside pressure: Evidence may come to light at a later date, which could undermine a decision made in haste
- Speak to the third party concerned: The aim is to establish if the allegations are improper and to ensure that the situation cannot be overcome in any other way
- Consider alternatives to dismissal: If an individual is vital to the business, is it possible to move them in order to satisfy third party requests? Obviously, this is something that would need to be discussed with the employee too
- Speak to the employee concerned: Where it is apparent that a given staff member will turn to litigation, employers may wish to consider without-prejudice discussions, with a view to resolving matters via a compromise agreement.
The above steps are intended to mitigate the effects of third party pressure and prevent a breach of contract, which should provide employers with good grounds to defend any subsequent unfair dismissal claim.
Michael Hardiman, employment specialist at law firm, Shoosmiths.
