Bitter resignation

How does HR react when confronted by a case such as that thrown up by the mysterious ‘resignation’ of Department of Transport media adviser Martin Sixsmith? Philip Boucher finds there are no easy answers.

Genuine resignation or constructive dismissal

Did he jump or was he pushed? A question that often surrounds a fall from grace. But in the case of the Martin Sixsmith/Stephen Byers affair, it is now more relevant to question whether he ‘fell’ at all. Thanks to a notice by the Department of Transport, Local Government and the Regions (DTLR) on 8 May, it has become clear that Sixsmith, who supposedly resigned as director of communications at the Department of Transport over the Jo Moore e-mail affair, actually did no such thing.

This runs contrary to a statement made by Stephen Byers to the House of Commons in February, entitled Resignation of Martin Sixsmith, where Byers repeatedly claimed Sixsmith agreed to leave his job.

Regardless of the political consequences, this is a clear case of bad employment practice. Sixsmith, who had almost two years left on a £100,000 a year contract, has been awarded a £180,000 settlement by the Government. He is thought to have threatened to reveal details of the affair at an employment tribunal and the sum appears to represent double the amount he had hoped for.

Naturally, this would have put the Government in a sticky situation. Not least because Sixsmith may have had grounds for constructive dismissal. He could also have argued that his case came under the Public Interest Disclosure Act, designed to protect whistleblowers.

Confirming a resignation

What is clear, is that in HR terms, the DTLR failed to follow best practice. To begin with, it didn’t get Sixsmith to state his intentions in a letter to the department. Legally, he would have had to make an unequivocal, clear and certain statement that he was no longer willing to work with his employer. As he had been at home on full pay since 15 February, this was not the case.

The date of the apparent resignation was also never clarified. Indeed, a recent statement by the DTLR read: “The department accepts that Martin Sixsmith has remained in its employment since his contract began on 19 November 2001. He did not resign on 15 February 2002. The department regrets that, while acting in good faith, it announced he had resigned on what turned out to be an incorrect understanding of earlier discussions that day.”

Such a climbdown is far from exceptional in political circles, but in employee relations terms it represents a major breakdown in communications. Sarah Linton, counsel and head of UK employment practice at law firm Bryan Cave, explains: “To be legally binding, a resignation has to state the exact date that it takes effect. You are also supposed to give notice – this is likely to be at least the statutory minimum notice of one week. You have to make your intention to leave employment absolutely clear.”

Heat of the moment constructive dismissals

The difficulty is that situations like the Sixsmith affair are unavoidably acrimonious and often hurl HR into a crossfire of warring factions, regardless of how many egg shells it tries to walk on. In 99 per cent of resignation cases this scenario will not arise, but when it does HR has to be extremely careful to say the right thing at all times. “You need to act very carefully,” says Linton. “If an employer in any way leans on an employee to resign, the company is open to a claim of constructive or unfair
dismissal.”

It is a trap Stephen Byers may well have fallen into, exacerbating an already complex situation. Case law shows many instances where employees have resigned under dubious circumstances and frequently it is in response to a line manager’s outburst. While there is little that can be done to control a manager’s tongue in the heat-of-the-moment, HR is usually left to try and repair the damage.

In the case of Futty v D&D Brekkes Ltd, 1974 IRLR 130, a resignation took place as a result of an off-the-cuff remark by a foreman who told a man that if he didn’t like his job he could leave. The employee took this as an invitation to put in his resignation and promptly did so.

The management at D&D Brekkes was left in an indefensible position because of the actions of a line manager and subsequently had to try and repair the damage. Inevitably, this job fell in the lap of HR.

Palmanor Ltd v Cedron, EAT 1978 IRLR 303, provides another example. Mr Cedron was employed as a barman at a night-club. During the course of his duties he had a row with his employers and a manager swore at him. Mr Cedron pulled the manager up over his language and was told that if he did not like the words being used he could go. Mr Cedron took this as an invitation to leave.

An industrial tribunal took the view that Mr Cedron was entitled to treat himself as constructively dismissed, within the meaning of paragraph 5 (2) of Schedule 1 to the Trade Union and Labour Relations Act 1974, and that the dismissal was unfair. Senior solicitor at Manches, Jane Brown, says: “Employers have got to be aware that often a line manager will say something in the heat of the moment that an employee can construe as dismissal.”

Exit interviews

For HR, the difficulty lies in finding a way out of such messes. There are a number of measures that can be taken to limit the effects. “The first step is to identify what you have on your hands and the best way to clarify that is simply to get in touch with the employee to discuss what happened,” says Sarah Lamont, partner at Bevan Ashford.

“To claim constructive dismissal an employee has to resign in clear response to a breach. If it is not mentioned in the resignation letter or stated at the time of resignation, the EAT will ask why.”

This is not to say you can stop unfair dismissal claims through a cunning manipulation of the law. But, it does provide a breathing space to tidy the situation up and maybe even ask the individual to return. Lead adviser on public policy at the CIPD, Diane Sinclair, says: “In circumstances where someone leaves suddenly, it would be wise for HR to conduct an exit interview if possible. If there is a dispute, HR has to work with both parties to resolve the issue.”

An exit interview also allows HR to find out the facts as the employee sees them. This may prove invaluable if legal action follows. Sinclair says: “In circumstances where the situation had gone too far for HR to step in and bring about a quick and sensible solution, the HR department needs to start investigating the matter as soon as possible – if there is a claim of constructive dismissal, the organisation will have the information it needs to defend itself.”

The key is to act quickly. However, if a resignation is formally accepted the situation becomes much more definite, and subsequently, any claims of constructive dismissal become more difficult to avert. While a “reasonable” period is permitted for a retraction, there is no set time. If it is not done promptly, there may be disruption to the employee’s continuity of employment.

The role of HR

Another course of action is to pre-empt potential difficulties by training managers in the basic principles of employment law. Even though many of the issues surrounding employment law and integrity appeal to basic common sense, this can help managers to avoid comments that later create difficulty.

From a grievance point of view, HR also has to understand the employee’s work situation as thoroughly as possible. Head of HR at Axa Sunlife Insurance Andrea Cartwright, says: “In situations like this, there is nearly always some kind of history or something else in the background.”

Analysing this helps HR to arrive at a sensible conclusion about what has happened from a personal point of view. It may also take into account organisational issues that may have exacerbated the situation. As HR has to answer for the organisation as soon as a manager says something out of place, it needs to find out if the internal grievance structure is in any way to blame.

Speaking of the Sixsmith case, Cartwright says: “The flaws in the system and the obvious lack of communication would have to be identified and made clear to others in the team and the organisation. In cases like this where the issue has to be dealt with in a very public manner, there is also a certain amount of external public relations to consider.”

The important thing is that the lessons are transmitted to other managers around the company so the same mistakes aren’t made again. Situations like this can very quickly tumble into dispute. The exception is in cases where a senior employee is under-performing or has been negligent. Here, it is often the case that both sides choose resignation as a face-saving exercise where the normal rules are usually ignored in favour of preserving a reputation. And it is likely that Stephen Byers hoped Sixsmith would fall on his sword in this very manner.

“In situations like this, a disciplinary process reflects badly on both parties,” says Caroline Knoblet, partner at Hammond Suddards Edge. “One way of dealing with it is reaching an agreement where the individual goes voluntarily, as resignation sounds far better than being sacked.”

In return, the high-ranking employees receive a financial incentive coupled with a blot-free CV. This enables both sides to part company without tarnishing their business image and settles the whole affair without recourse to the courts. The alternative, as Mr Byers has suddenly realised, is a far more damaging route entirely.

Working out a compromise

Compromise agreements where employee’s agree to refrain from going to tribunal in return for a tax-free payment, are becoming more commonplace. Unfair dismissal, discrimination and numerous other types of claim can be settled by way of a CA with the aim of achieving a clean break. Here are some of the issues that can arise.

– How early before the effective termination date will the CA be agreed, bearing in mind the severance payment will not be paid until after that date? Inland Revenue rules allow a CA to be agreed in advance, but it cannot be conditional on future events. There should not be a long period between the two dates – firstly because the IR may take this to indicate that the agreed payment is to induce the employee to stay, therefore negating its tax effectiveness. Second, there are dangers in agreeing a payment when the employee is still working out notice, such as the risk of subsequent gross misconduct. (See Are payments made under a settlement agreement taxable?)

– References can be problematic. It is often good practice to agree favourable wording, plus a clause that there will be no communication inconsistent with such wording. However, beware of being pushed into a favourable reference at odds with the manner of departure – it could put you at risk of a negligence claim if it is inaccurate and a new employer relies on it and suffers damages as a result. (See How to deal with reference requests.)

– Most severance payments anticipate a future period of unemployment, so it is worth considering a clause whereby the employee undertakes he has no job offer or immediate expectation of one, including consultancy work. (See How to manage garden leave.)

– Does the CA detail action to be taken against the employee if he breaches the agreement? If the employer fails to make payment the tribunal has jurisdiction to enforce this, but it is harder for the employer to show loss upon an employee’s breach, such as a leak to the press. Consider a confidentiality clause as well as getting the employee to agree to a specific cash penalty for any breach. (See How to use a settlement agreement to resolve an employment issue.)

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