The domino effect

Human error is part and parcel of working life. But can an employer dismiss a member of staff if their mistake has disastrous consequences for the company? Marian Bloodworth reports

Back in June, a trader with Fubon Securities in Taiwan suffered what the bank called a ‘fat finger’ moment. She keyed in an order for considerably more stock than her client had requested. The error only came to light when the value of several small companies shot up inexplicably.

This is just one of the latest examples of employee error having significant ramifications for a company – and this one cost the Taiwan bank an estimated £6.6m. It attributed the error to the trader’s unfamiliarity with the computer processes, but noted that, regrettably, her slip had meant that she lost her job.

Other examples of such errors often appear in the press – particularly in relation to the art world. In February this year, cleaners tidied away an art installation in a toilet in the Arches arts centre in Glasgow. A similar mistake occurred at the art gallery Tate Britain, where a cleaner had not appreciated that a black bin bag was part of a display. The fate of these employees is unknown, but in the Glasgow case at least, the management accepted that the error was accidental.

There are other cases in the workplace where a simple and genuine error can have unintended and embarrassing consequences – sending a fax with commercially sensitive information to a wrong number, or hitting ‘reply all’ by mistake on an e-mail. This happened to an NHS officer worker recently. The ensuing e-mail traffic, caused by every-one commenting on its content, nearly brought down the Cambridgeshire NHS computer system.

But what are the employment law ramifications in these types of situation? How does an employer deal with these kinds of errors, especially those which can result in financial loss or reputational damage to the employer?

The answer lies in the errors themselves. Employers need to look carefully at what went wrong and examine what kind of error it was, before deciding what, if any, action to take.

The genuine error

In some cases, the error will be genuine, as in the case of the trader and the NHS office worker. Normally, it would not be appropriate to take disciplinary or other action against employees in this situation, even where the consequences are serious and potentially damaging financially, or disruptive for the employer.

Usually, the outcome itself will act as the best possible warning not to make the same mistake again. Who hasn’t experienced the sinking feeling in the stomach as the effects of a mistake become clear? In deciding on action, you should consider whether the error could have been prevented – was the employee solely to blame or had they been let down by the internal systems?

Even so, give some thought as to the internal systems that could be put in place to prevent this kind of error recurring. For example, this could be an internal computer check that automatically queries unusually large numbers, or a system designed to allow errors to be remedied within a certain time-frame and before they are released to the external world. Where such systems are not applicable, employers need to manage the possibility of errors by training staff thoroughly and making clear the effects of errors, both in terms of financial cost and loss of reputation.

Negligence

In other cases, the error may arise through employee negligence, for example where a cleaner throws away part of an art installation because they did not pay attention to management warnings as to the nature of the exhibits. Again, the action taken by the employer in this case would depend on the precise steps it has taken to anticipate the problem.

Where the company has taken the necessary and appropriate action, that notices or warnings were clear and accessible to the employees, and that those warnings have been ignored or little attention paid to them, you are justified in taking disciplinary action for misconduct against the employee.

The level of sanction applied will depend on the facts, but unless there are exceptional circumstances, or further instances of negligent behaviour, dismissal may not be appropriate.

Deliberate disregard

Other employees may make errors by ignoring safety checks or as a result of deliberate disregard for company rules and procedures. Where employees have been utterly reckless and careless, dismissal for gross misconduct may well be justified, especially where their actions have, for example, jeopardised business relationships or the safety of fellow staff. Again, however, the employer would need to satisfy itself first that dismissal was an appropriate step in the circumstances.

Where you have alerted the employee to the need for care and attention, or where the company is entitled to expect – by virtue of the employee’s role – that the employee will exercise the appropriate levels of care and attention, then dismissal is likely to be justified.

The Einstein error

Albert Einstein said: “Anyone who has never made a mistake has never tried anything new”. Some mistakes or unintended consequences can arise for the best of reasons – for example, where employees are encouraged to innovate, or to think differently about their approach to the company’s business.

If this is the case, it is unlikely to be appropriate for you to take action, provided a course of action was authorised, adopted for genuine reasons and was properly thought through. Any errors or unforeseen consequences are probably best put down to the benefits of experience, and factored into any future attempts to bring about change.

The client demands action

Sometimes, clients or customers who have been affected by an employee error may demand that action is taken against the employee. This may range from moving the employee to another job to dismissal. Such dismissals may be fair – under the “some other substantial reason” category – but you should be careful about taking such steps.

Whether the dismissal is substantively fair, or not, will depend on the commercial arguments. Where a major and significantly valuable client demands action, the dismissal may be justified.

Demands from a smaller, less valuable client may not satisfy an employment tribunal. It will be essential in any event to follow an appropriate dismissal and disciplinary complaint procedure and to give thought as to whether there are any alternative positions available for the employee which would avoid the need for dismissal. For those employers anxious to protect valuable customer and client relationships however, there may be no choice but to dismiss, and to take your chances in the tribunal in due course.

Some employers try to pre-empt any client complaints by taking action against the employee to shore up the client relationship. In this situation, it is harder for the employer to blame client and commercial pressure for the dismissal and without good justification, the dismissal is likely to be unfair.

In dealing with employee errors, you need to be fair, firm and most importantly consistent. While businesses continue to employ people with all their qualities rather than use machines, mistakes and mishaps will remain part of life at work.

Marian Bloodworth is a senior associate at Lovells



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