Case No 4111647/2021Venue AberdeenHearing 4-8 July 2022
Between
Mr M FraserClaimantNucore Group LtdRespondent
Before
Employment Judge HendryMr S Miller — for claimantSolicitor Advocate for claimantDate 7 September 2022
JUDGMENT
[1]That the claim for unlawful deduction succeeds and the respondent shall pay the claimant the sum of Thirty-Seven Thousand Five Hundred pounds (£37,500) being the balance of his bonus.[2]That the remaining claims not being well founded are dismissed. ETZ4(WR)
REASONS
[1]The claimant in his ET1 sought findings that he had been unfairly “constructively” dismissed by the respondent company during his period of notice. He sought compensation for that and pay for the balance of his notice. He made a claim for unlawful deductions from wages. He also sought payment of the second instalment of a bonus which he had been awarded.[2]The respondent disputed the length of the notice period to which the claimant believed he was entitled; their position was that the claimant was fairly dismissed by them during his notice period and that the bonus was not properly payable because it had been recalculated to reflect the true financial position of the company.
Issues
[3]There were a number of issues for the Tribunal. Much of the factual background of what happened in relation to the interactions between parties was not materially in dispute although there was a dispute over the true financial position of the company and where the responsibility for that state of affairs lay. The Tribunal had to decide both factually and legally when the claimant gave notice and whether an earlier resignation in April had been accepted by the respondent as withdrawn. It had to decide whether or not the claimant had been fairly or unfairly “constructively” dismissed by the respondent or dismissed by them during the notice period. Finally, it had to determine whether or not the claim under Section 13 of the Employment Rights Act (ERA) in relation to the second instalment of the bonus was well founded.
Evidence
[4]The Tribunal heard evidence from the claimant on his own behalf. He also called the former HR Manager Ms J. Donald as a witness. The claimant had asked that a Ms F G McGregor, a Manager with Beechbrook Capital Limited who were Investors in the respondent company, should give evidence but after hearing argument following the claimant’s evidence, the witness citation was rescinded by the Tribunal. Thereafter, the Tribunal heard evidence from Mr Russell Ward the Chairman of the respondent company, from Derek Mitchell the current CFO and from Michael Bryant the current CEO. The Tribunal had the benefit of documents lodged by parties in a Joint Bundle. io Withdrawal of Witness Citation for F G McGregor[5]Ms McGregor features in the claimant’s application to the Tribunal and his narrative of events (JB14). The claimant’s position as set out there was that .15 she had indicated that he would not receive preferential shares in the new company that was being formed to take over the Nucore business if he did not sign warranty documents, the terms of which documents he objected to. The respondent’s solicitor accepted that she had acted in this way and said what had been alleged. Mr Miller’s position was that the witness could give no other relevant evidence to the Tribunal in the light of his client’s acceptance that she had acted as she did. He indicated that the respondent put a different interpretation on her actions and they were not, as the claimant contended blackmail, but simply “business” or “leverage”. The important legal point was, in his view, that she was not the claimant’s employer but a third party for whom they had no responsibility or control. The claimant wanted the citation to stand. He believed that she could give relevant evidence about the background of what was happening at the time. His employers did not he said support him sufficiently.[6]After considering the matter I came to the view that Ms McGregor’s evidence was not sufficiently relevant, standing the concession that she had said what the claimant alleged and that it was in accordance with the overriding objective to cancel the citation. The claimant could give background evidence about the events surrounding the on off nature of the investment by Beechbrook and the lack of support as he saw it. Given that the focus was on a possible objectively judged breach of contract on the part of the respondent company her evidence was likely to be of little assistance. Facts
Background
[7]The respondent company, who are based in Aberdeen, are suppliers of safety critical integrated solutions for the onshore and offshore oil and gas marine, renewable energy and petrochemical industries: they design, manufacture, install and service such systems.[8]The company had been purchased by investors. The principal shareholder was Lonsdale Capital. Another investor company, Beechbrook Capital ( “Beechbrook”), was also a significant shareholder.[9]The claimant is a Chartered Accountant by profession but had undertaken a number of senior management roles in companies, principally in the oil and gas sector. He has successfully managed and ‘turned around’ companies that were facing difficulties. He was headhunted by the respondent and began his employment with them as CFO on 4 July 2018.[10]The claimant became CEO in February 2019. The company was struggling for various reasons including the debt it had built up. It was experiencing a difficult financial and trading position. One factor was that it had accrued significant debt to the I shareholders Lonsdale Capital and Beechbrook Capital and to their bank. Without the support of their bank and these investors the company would have ceased trading. They were keeping it afloat. Matters became significantly worse following the downturn in business caused by the Covid pandemic.[11]The replacement CFO left in June 2020 at which time the Board decided not to immediately reappoint a CFO but to have the financial function in the company overseen by a Finance Director. They did this partly in reliance of the fact that the claimant was a Chartered Accountant and with his previous experience as CFO could provide some oversight of the financial functions. This expectation was not communicated to the claimant.[12]The claimant had been provided with a Service Agreement when he joined the company (JB75-99). The company issued the claimant with a job description (JB71-74). The company has various policies including a disciplinary policy (JB64-70).[13]The claimant’s task was to turn round the company’s fortunes. The claimant worked closely with the Chairman Russell Ward. Mr Ward was a successful and experienced businessman with a number of active business interests. They developed a good professional relationship. The claimant was initially successful pre- Pandemic in improving the company’s trading position but despite this the amount of the accrued debt meant that it was unlikely that any significant inroads could be made in reducing the debt burden owed to two investors.[14]For these reasons there was a proposal that Lonsdale Capital would sell its interest in the company to Beechbrook. It would write off the company’s debt. Beechbrook would then inject a substantial sum of money into the company. This would involve a proposed restructuring and refinancing exercise that would mean the creation of a holding company into which the assets of the respondent and subsidiary companies would be hived up.[15]In the meantime, because of the effects of the Covid Pandemic the respondent was unable to send personnel offshore in order to carry out new work or servicing. This led to a dramatic fall in the company’s turnover. This put further pressure on the claimant to keep the business alive until the restructuring exercise could take place.[16]The restructuring and refinancing had initially been due to complete in December. It was then initially delayed until February 2021.[17]The claimant had become increasingly frustrated at delays in the refinancing and restructuring exercise. He had to carry out preparatory work for the exercise and then repeat this when it was delayed. He had to ensure that despite the uncertainty the company still functioned. At this time staff were worried about their jobs and he had to continually reassure them and persuade them to stay. The company had a very difficult cashflow position and was on the verge of insolvency. The respondent company could not progress with any major business plans until the refinancing and restructuring exercise took place. The claimant blamed Lonsdale Capital for the delays in proceeding with the exercise.[18]The claimant felt that he would not continue with his role given the delays in restructuring. He communicated his notice of resignation to Russell Ward by letter dated 1 March 2021. He gave six months’ notice. In his resignation letter the claimant told the respondent that he intended his last day of employment to be the 31 August 2021. The claimant’s resignation was verbally accepted.[19]This was a crucial time for the company. On 4 March 2021 the claimant withdrew his notice following discussions with Mr Ward and others including the investors.[20]Delays continued in arranging a date for the restructuring and refinancing. The claimant once more became frustrated at the lack of progress and on the 21 April 2021 he once more resigned by email addressed to Mr Ward (JB1SOMO). He wrote: “For the good of everyone involved, I think it’s time to draw a line under this situation and declare my position. I will be leaving Nucore no later than 31 August 2021, and feel the board must act in the best interests of the company by making the necessary provisions for this. This decision should be considered final and irrevocable. Looking at the imminent introduction of an FD, I must protect the credibility of our strategy, as well as that of myself. My direct reports, Phil and our PL leads who have given me their fullest support and dedication throughout my tenure, deserve to know of my situation, and not have this landed on them down the line. Controlling the message in this way also gives us the best chance of keeping them engaged, which is obviously the desired outcome for Nucore. 5 I have also taken the decision to personally inform our debt providers of my position and the reasons behind it. I am still of the opinion that the Company and their committed support goes way beyond my involvement, however as key stakeholders they should be made aware of our transition and succession plans now and not after the deal is signed. I have never been io comfortable with the decision taken 7 weeks ago on this, and fully understand this is against the principal investors wishes, however on a personal note I have never been in any doubt that this is the right thing to do. . . . . . Since I tendered my resignation 2 months ago, the continued nit picking and delays over finalising the debt deal have created further significant problems for the company. Although this is now reaching a crescendo, the prospect of being back round the RBS/BB covenant/debt table again in Qtr 3 is not something I can consider, and not something I think the business can go through again. Despite this I fear it is a growing inevitability ...”.[21]The claimant had been unhappy that his initial resignation had not been communicated to the respondent’s bank with which he had a close professional relationship. The company was dependent both on the bank’s support and support from HMRC, as creditors to continue trading.[22]The respondent’s HR Manager Jackie Donald wrote to the claimant on the 28 April: “Dear Mark, Resignation Acceptance. Thank you for your resignation, informing us of your intention to resign from the company and it is with regret we accept your resignation. As discussed and notified to the Board of Directors, your date of termination of employment with the company is 31st August 2021 ...”[23]It was common throughout the latter stages of the claimant’s tenure as CEO once the restructuring exercise had been mooted that there would be regular contact between the claimant, the Chairman Mr Ward, and Lonsdale Capital and Beechbrook’s representatives.[24]Mr Gasparro a partner in Lonsdale Capital emailed Mr Ward on the 5 May copying him an earlier email from the claimant written in March about the terms of his exit (JB142/143). The claimant had written in March “in the event that I tender my resignation at anytime in 2021, my notice period will be reduced at my request, so long as my last day does not precede 31 August.. ”[25]The claimant withdrew his resignation by email dated 24 May at 9.58. He asked for confirmation that his withdrawal had been accepted by return. (JB165) Mr Ward accepted the withdrawal. He emailed the claimant later that morning (JB164) “thanks for confirming you are withdrawing your resignation which is great news” Mr Ward had emailed Ms McGregor of Beechbrook (JB166) setting out his discussions with the claimant and writing “he will withdraw his resignation ahead of signing the warranties which is the advice of his lawyer’”[26]A new date for completion of the restructuring exercise was set for the end of May. This was then ultimately postponed to the 1 June when the respondent and its subsidiaries were hived up to a new holdings company and capital injected by Beechbrook as promised.[27]On the 24 May in the run up to the completion date the claimant was sent commercial warranties (JB167-183) to sign before a proposed completion date on the 28 May. These were required by Beechbrook. The claimant was aware that the usual process in such transactions was for warranties to be adjusted over a period and where possible to have any personal liability under the warranties given by Directors to be given subject to disclosure of the background circumstances. That disclosure process had not occurred. The claimant was taken aback at receiving onerous personal commercial warranties for him to sign so close to the completion date. Because of the claimant’s concerns and reluctance to sign these Beechbrook agreed to pay towards the claimant’s legal fees for taking urgent advice. He duly instructed a solicitor to assist him.[28]On the 28 May the claimant spoke to Ms F G McGregor of Beechbrook about his reluctance to sign the warranties as they stood. The claimant’s refusal meant that the restructuring exercise would be postponed once more. No one wanted this to happen given the critical state of the company’s finances. Ms McGregor told the claimant that if he did not sign the warranties then he would not receive the allocation of preferential shares which he had been promised by them as part of his remuneration package with the new holding company.[29]The claimant was angry at what he regarded as blackmail. He contacted Mr Ward to discuss the situation. Later he texted Mr Ward (JB202): “Russell - sorry, but they will have to complete without me. As I said earlier this morning, I am done. I already told BP to talk with Pinsents to get update so not sure why I’m still included on sale docs”.[30]Mr Ward was concerned at both the terms of the conversation with the claimant and the txt. He hoped that the claimant was simply trying to get his warranties watered down and that he would still cooperate in the completion. He responded: “Mark are you able to confirm IA. Apparently the last bit as cannot complete until that’s recd. Thanks Russell. PS try and relax this weekend and don’t think about all this. Get some rest and we can deal with outstanding issue with BB next week”.[31]The claimant spoke to Mr Ward on the morning of 1 June when he complained about the actions of Ms McGregor. He said he had lost faith and trust in the company and its stakeholders and he had no other option than to resign.[32]Attempts were made to contact the claimant to deal with outstanding matters around the restructuring such as the stock count information (JB212-213). He was contacted by the COO Philip Davie on 1 June (JBp214). He then emailed Ms McGregor and Mr Ward: I have talked with Mark - he does not want to have a call on the level of his support messaging, etc until his exit is agreed. I am rightly not in that loop and will rely on you to let me know when this has been finalised”. Mr Ward responded: “Phil No I’ve not spoken with him. Was hoping Mark would have engaged. But as not then intend to sit down with Phil B Thursday am Colin Sharkey has offered to help if need be but want to see what we have/don’t have first”.[33]On 2 June the claimant emailed Mr Davie, Mr Ward, Ms F.G.McGregor providing information in relation to the Nucore’s year end as at 31 May 2021.[34]The claimant emailed Mr Ward on the 2 June at 10.20 (JB217): “As you know I have been in discussions with my lawyer..... who advised me to contact you per the below. Following our without prejudice discussion on the phone on Monday afternoon, we will wait for the Company to confirm their position in relation to mutual agreement on the termination of my employment and exit from the Company. ~ / have cc’d my personal email address and request that this be used for all correspondence in relation to these matters ...”[35]On 3 June Mr Ward announced that the claimant was stepping down from his role as CEO (JB219-220). He confirmed that there was now a new controlling investor namely Beechbrook. Mr Mike Bryant was appointed interim CEO. The announcement stated: “Mark Fraser has been instrumental in leading the restructure and refinancing and, following completion, step down. He is leaving us earlier than anticipated but we are delighted to welcome Mike Bryant, an operating partner with Beechbrook, who will be driving this new phase of growth for our integrated business. Given Mark has been covering the role of CFO as well as CEO, we have successfully recruited a new CFO who will join the business this summer”.[36]The claimant was sent a letter on 4 June accepting his resignation (JB221- 222). The letter stated: “Acceptance of resignation Further to email of 21 April 2021, I am writing to acknowledge receipt of your resignation with Nucore Group Limited (the company). I note that your proposed last date of employment is 31 August 2021. As you will be aware, your notice under your Contract of Employment is 6 months notice however the Company agrees to your proposal to shorten the notice period. Therefore, your last day of employment with us will be 31 August 2021”. The claimant was asked to take garden leave for the remainder of his notice period.[37]The claimant wrote to Ms Donald (JBp232) on 17 June. He rejected the basis on which he understood the company to be bringing his employment to an end. He indicated that his resignation on the 27 April was withdrawn along with the proposed termination date of 31 August and that accordingly the notice period should be 6 months. He said he was angry at the lack of consultation before his leaving was announced to staff. He commented on the actions of Ms McGregor over the warranty issues : “ I believe this would constitute attempted blackmail and whilst this left me feeling hurt and angry, it also destroyed any trust between myself as CEO and the principal investor. At this stage, it was clear that my position as Nucore CEO was untenable.• Despite me having the option to shorten my notice period, I had been operating for a considerable amount of time (since my resignation on 27th April) on trust, based on what the Board and incoming controlling investor had led me to believe. Because of this, I made no attempt to seek alternative employment as I never thought it was required (based on what I was being told regarding staying on as Nucore CEO). As a reminder, my contractual notice period is 6 months.” New Management Team[38]Mr Mike Bryant the new COE appointed Mr Derek Mitchell interim CFO. Mr Mitchell was highly experienced in business and a qualified accountant. He found the business and the accounts in a confused state. He could not reconcile the accounts despite many attempts to do so. It was time consuming and difficult for him to try and work out why the accounts would not balance. He understood that the claimant was not attending work and not engaged with the business. He prepared a list of questions for the claimant to respond to which he passed to Russell Ward (JB237). This was not an exhaustive list. Mr Ward at this time was still maintaining some communication with the claimant. Mr Fraser was not attending work and generally not dealing with any work related matters.[39]Mr Mitchell discovered invoices on the claimant’s desk including a substantial Invoice from a firm “Leyton” who provided services to the company which had not been posted or paid. At this point the company’s cash position was perilous and any unexpected creditors were a threat to its survival. Mr Bryant the new CEO had become dismayed that there had been no professional handover by the claimant to him and his new team. They had to try and understand the workings of the company without Mr Fraser’s input. They were uncovering numerous problems. He believed that the claimant could have potentially answered a number of queries and cut down their work in trying to reconstruct what had occurred. They were unable to find a robust set of accounts or to reconcile the accounts from the various spreadsheets generated by the accounts system.[40]In particular Mr Mitchell found it odd that there had apparently been a large increase in stock recorded in the accounts over the early months of the year. One of the remaining Managers Phil Griffiths had indicated that he had disagreed with the claimant about the suggested stock level recorded. He had argued that it was probably considerably lower than the stock level recorded in the accounts. Mr Bryant once he became familiar with the company was of the view that stock needed to build new units and service existing customers appeared historically to be around £300,000 in value and that there was no obvious reason why the company should be holding stock of up to £500,000 given the current poor trading position. He tasked Mr Mitchell to urgently get to the bottom of the matter.[41]Mr Ward wrote to Mr Fraser on the 4 June 2021 accepting his resignation. He was put on garden leave with effect from the 4 June 2021. The letter stated: As you will appreciate, the company may require your assistance with specific duties, projects or tasks during your garden leave period and we expect you to be available during this time to complete any work as requested by the company. You will be given access to such systems which are required from time to time during your garden leave to carry out any such duties, projects or tasks. You will be paid your basic salary and contractual benefits during your garden leave up to 31st August 2021 ...”[42]The claimant did not attend work. He did not assist the new management team or propose any sort of handover. He dealt with some minor matters and took some calls from customers but did not engage with the new management team.[43]Mr Ward emailed the claimant on the 25 June (JBp239): “You suggest that we proposed terms to you, but all we have done is respond to your actions. As you know you resigned on 21st April date and made it very clear in your email that you would not work past 31 August. As you set out on 28th of May in a text to me “you were done”. You have not done any work since then and did not carry out your duties as a Director in getting the deal over the line in the best interests of the company. Indeed we had to arrange for me to sign documents in place of yourself. You left the company in a very difficult position by resigning and absenting yourself from the role of Director, CEO and CFO. Your resignation has forced the company to look around urgently for replacements for the roles you undertook and given that you then absented yourself without warning to staff on 28th of May we have had to communicate something or risk other employees leaving. As you have resigned and indicated you will not be undertaking any further work then we have to deal with the situation we find ourselves in. On one view of your actions you resigned with immediate effect. Given the long relationship, we have agreed to allow you to work out the remainder of your notice and garden leave provided that you helped us with certain transition tasks and would be prepared to agree to that as long as you complete the handover. You chose to resign and left the company and its employees in an extraordinarily difficult position incurring significant extra legal fees to sort the mess out and risking the entire refinancing deal. I would remind you of your ongoing duties under your contract and your fiduciary duties under the Companies Act here. I attach a list of questions we require information on. I will be in touch to arrange a time over the next few days to discuss these”.[44]The questions put were various and related to issues such as disputed invoices they included : Leyton £52k for VAT R&D Claim Stock write offs-reason for unnecessary delay in processing the P&L SAGE implementation -still many actions unresolved-what was the agreed in terms of scope with TMS? 2019 Audit adjustments not processed why?[45]Mr Ward emailed the claimant on the 28 June 2021 (JB241): “Mark Further to my email to you last Friday, could you let me know when will be convenient Tuesday or Wednesday this week for Derek Mitchell and Mike Bryant to have a call with you regarding questions they would like to discuss with you in more detail. If you can let me know I’ll put them directly in touch with you to arrange”.[46]The claimant advised that the initial email went into his junk folder. He responded by email on the 28 June (JB242): “Many of the points raised in my email dated 1 7June appear to have been glossed over in the Company’s response. You also continue to make reference to my resignation on 21st April and the terms thereof which was subsequently retracted at the Company’s request on the 24th of May. This was formally accepted same day. I have taken several legal opinions on this situation, and they all return the same verdict. Whilst I am sincerely disappointed at the way my involvement with Nucore has come to an end, and I am fully aware of the inconvenience and costs this will have caused Nucore (which you have set out in your email), we cannot simply ignore the root cause of all of this when trying to resolve the terms of a fair exit. The situation both parties find themselves in now is not my fault. Had that event not occurred, I would still have been in position today ... ... lam happy to talk with you or FJ directly on this but if the board are going to mess me around, then I will leave it with the lawyers to progress in the manner they are proposing.”[47]The claimant wrote to Mr Ward following a discussion he had with him on or about the 29 June 2021 setting out his outline termination proposals.[48]The new management team had also arranged for an accountant from the company’s auditors who were familiar with the respondent’s financial systems to assist Mr Mitchell. He decided that there was no option other than to physically check the stock level. After an inspection of the premises and company vans, they concluded that the stock had been considerably overestimated and that the company was looking at a stock write off of approximately £227,000. This was communicated to Mr Ward who was shocked at the level of write off needed. He in turn asked Mr Bryant to hold off taking any action against the claimant in the hope that agreement could be reached with him on his exit and his cooperation obtained. However, by the end of July as agreement had not been reached Mr Bryant had to consult the investors who were frustrated at the claimant’s lack of assistance and the fact that the stock and hence the value of the company was not what they understood it to be. They held the claimant personally responsible for that state of affairs. Mr Ward agreed to disciplinary proceedings being taken against the claimant. It was hoped that this would galvanise the claimant into active cooperation.[49]Mr Bryant who had been in daily contact with Mr Mitchell about the accountancy difficulties emailed him at his request on the 3 August setting out a series of issues that required explanation including “stock write off - £200k at 31 May. The stock materially overvalued”.[50]Mr Bryant emailed the claimant on 6 August (JB p316-318) asking him to attend a disciplinary hearing on 10 August. He attached various documents to the email as background including the balance sheet with the £227k stock write off shown. At this time the claimant was still in contact with Mr Ward who in turn was in contact with David Gasparro of Lonsdale Capital as he was attempting to arrange a satisfactory termination deal with the Investors approval. Mr Gasparro and other investors had now lost patience with the claimant. In addition, the claimant’s cooperation was becoming less necessary to resolve the accounts difficulties as the new CFO and CEO had through their own investigations identified the issues for the company to resolve.[51]Attempts were then made to reach a settlement between parties’ solicitors. Consent for any proposal had to be obtained from the investors.[52]In the event there were a number of delays and a settlement was not ultimately achieved. Matters broke down in relation to fees being requested by the claimant for his legal advisers to advise on and complete a Compromise Agreement. Disciplinary Process[53]Mr Bryant decided that there was material to allow the company to take disciplinary action. He hoped that the claimant would urgently address the issues they had found and that agreement could be reached to get his cooperation. He wrote to the claimant on 4 August (JB316-318) inviting the claimant to a disciplinary hearing on 10 August. The disciplinary issues were noted as follows: “1. That on or around 28 May 2021, immediately prior to the Company completing a major refinance and restructure, you indicated to the Company that you were unwilling to assist the Company to complete said transaction. You subsequently left work and have been absent without leave since that date. You have largely been unwilling to engage with the Company in relation to business matters during this absence and you have failed to respond to specific requests made by the Company. These actions resulted in the Company having to delay the proposed refinance and restructure, requiring additional time and cost to conclude the matter. These actions are in breach of your fiduciary duties as a director of the Company as well as the terms of your service agreement with the Company, and have further left the Company in a dangerous financial position. The Company also considers that these actions may be considered a failure to carry out a reasonable and lawful direct instruction and/or the carrying out of an activity which adversely affects the Company’s interests; That you have failed to complete a handover to ensure continuity of your various roles following your resignation and during your absence. This is again in breach of your fiduciary duties as a director of the Company and the terms of your service agreement with the Company. The Company also considers that these actions may be considered a failure to carry out a reasonable and lawful direct instruction and/or the carrying out of an activity which adversely affects the Company’s interests; and 3. That you have been responsible for various financial irregularities in respect of the Company’s financial records, which the Company considers may amount to falsification of Company records, deliberately making a false entry in the written records of the Company, a failure to carry out a reasonable and lawful direct instruction and/or the carrying out of an activity which adversely affects the Company’s interests, including:a. an ongoing pension issue between the Company and Royal London in which employees’ pensions contributions have been noted incorrectly and for which you have refused to deal with Royal London to resolve. This has caused difficulties for the Company including reports by employees to the Pensions Regulator;b. failing to reconcile debtors, creditors and stock in evidence for the Company’s accounts. This has required the Company to make material adjustments to its accounts, resulting in prior months’ results not being accurate;c. materially over-valuing Company stock which resulted in the Company having to write off around £200,000 of stock in the May 2021 accounting period;d. failing to properly oversee the implementation of the SAGE accounting system which has meant accounts cannot be closed within the Company’s accounting periods. This also resulted in the Company failing to make payments in its supply chain, which has in turn put operational pressure on the business; ande. failing to deal with historic balances in time. This has included failing to deal with historic balances for companies that have gone bankrupt and failing to return double receipts to customers in time (resulting in additional cash outgoings for the Company). This has caused financial liability for the Company as it has had to write off around £88,000 in balances for historic creditors which have not been dealt with in time.”[54]The disciplinary policy used was one prepared for the respondent’s subsidiary Oteac which the claimant was aware of.[55]The claimant asked for more time to prepare for the hearing. This was not granted.[56]The claimant did not attend the hearing on 10 August. In the claimant’s absence Mr Bryant considered that the claimant, absent any explanations, had committed acts of gross misconduct. He later wrote to the claimant on 1 2 August (JB337-339). He wrote: “In consideration of the evidence presented, I consider that the allegations against you as set out in the letter of 6th August 2021 are all proved. I consider each of these allegations to constitute a separate act of gross misconduct when taken individually and I consider that each one is sufficiently proved. I therefore consider your actions to constitute 3 separate acts of gross misconduct.” The claimant’s employment was terminated with immediate effect. He was advised he had a right to appeal. Mr Ward was nominated to deal with the appeal.[57]The claimant exercised his right to appeal by email dated 12 August (JB340- 341). Mr Ward wrote to the claimant on 18 August (JB342) arranging an appeal hearing on 24 August. The meeting was to be conducted by video conferencing.[58]On 19 August the claimant objected to Mr Ward dealing with the appeal on the grounds that he had been intimately involved in all aspects of the claimant's relationship with Nucore and intimately in events surrounding the disciplinary allegations.[59]He was advised that his grievance would be dealt with at the appeal.[60]There was correspondence between the claimant and Mr Ward in relation to the hearing. Mr Ward emailed the claimant on 20 August with further documentation.[61]The claimant was disappointed that he was not getting access what he regarded as first-hand data or information and he emailed Mr Ward on 20 August setting out these concerns (JB345-355).[62]The appeal hearing was minuted. (Parties agreed that the Minutes are accurate apart from an error at page 359 where there was reference to 54 hours and 48 hours. This should read 46 hours on both occasions. At page 361 last line “FJ” reference is incorrect. It should have been a reference to Mr Bermingham who worked with Ms McGregor).[63]In the Minutes (JB364) the claimant was asked by Mr Ward: “did you ever respond to the questions that were put to you that you mentioned?” This was a reference to the questions prepared by Mr Mitchell. The claimant responded: “no it was agreed that once the compromise agreement was agreed I would’. It was then put to him why did he want to wait. He responded: “because of the behaviour that had been demonstrated when this happened, this was my only leverage. I could prove I had already been blackmailed. I couldn’t understand why no-one was telling me my statutory rights and no-one was responding to me. I didn’t want to give up this leverage, and I don’t think that’s unreasonable”.[64]Mr Ward said that the claimant had “walked out the door..” The claimant was asked by Mr Ward about the text dated 28 May: “I am out of here.” He said that the comments were selective and that there was an important background which he spoke about. He also said: “Clearly I expressed to you I had 4 hours sleep, / was hurt and angry. I’m not denying my intention was to leave. However, my behaviours show that my intention was to leave but to work with them to find a mechanism to do that. The claim that I went AWOL cannot be considered true. I pulled the board pack on 4 June”. The claimant had prepared papers for the Board meeting and this was accepted by Mr Ward.[65]Mr Mitchell emailed Mr Bryant on 1 September in relation to the issue of stock and adjustments to the spreadsheet. He discovered an adjustment in the accounts by stock adjustments being processed against retained earnings. Mr Bryant was of the view that the adjustment between stock and P & L reserves of £222,600 was “inexplicable” and he could not think of a reason to make an entry in the accounts of this kind.[66]Following the appeal hearing Mr Ward considered the matter. He rejected the appeal. He wrote to the claimant on 9 August rejecting the appeal (JB379-380): “Dear Mark, Appeal Hearing I refer to the appeal hearing which took place on 24 August 2021 and now write to you with my decision. I reviewed the evidence provided, considered each of the points of appeal raised by you in your email of 12 August 2021, and have additionally conducted a full re-hearing of the case. I therefore find as follows: * I do not uphold any of the grounds of appeal set out by you in your email of 12 August 2021. The Company has followed a fair disciplinary process in the circumstances. This has largely been in line with the Company’s disciplinary policy, but it is acknowledged that given your seniority a degree of flexibility has been exercised. In any event, even if there have been procedural failings, I am comfortable that these have been addressed and rectified at appeal stage. I am comfortable that the Company has, at no point, acted without proper cause and I can see no evidence of any underhandedness from the Company. I therefore do not uphold any of the grounds of appeal;• Regardless of the above and in any event, having conducted a full re-hearing of the disciplinary case against you, I find you to have committed acts of gross misconduct as follows: o That on or around 28 May 2021, immediately prior to the Company completing a major refinance and restructure, you indicated to the Company that you were unwilling to assist the Company to complete the transaction. You subsequently left work and have been absent without leave since. While you have indicated that you have completed some tasks during this time, it is clear you have been unwilling to engage and cooperate with the Company in relation to business matters and you have continuously failed to respond to requests made by the Company. These actions resulted in the Company having to delay the proposed refinance and restructure, requiring additional time and significant additional legal cosfs of around £34,000 to conclude the matter. I consider these actions to be in breach of your fiduciary duties as a director of the Company as well as the terms of your service agreement with the Company. These actions have left the Company in crisis and in a dangerous financial position. It is clear these actions amount to gross misconduct and I consider there is sufficient evidence to prove that you are guilty of such gross misconduct; and o That throughout your absence from the Company, you have failed to complete any handover to ensure continuity of the various roles you carried out prior to your absence. This is again a breach of your fiduciary duties as a director of the Company and the terms of your service agreement with the Company. Your failure to provide a handover has compounded the state of crisis you have left the Company in. It is clear these actions amount to gross misconduct and I consider there is sufficient evidence to prove that you are guilty of such gross misconduct.• Regardless of the above and in ay event, having conducted a full re-hearing of the disciplinary case against you, I also find you to have committed acts of gross negligence as follows: o That you have failed to reconcile debtors, creditors and stock in evidence for the Company’s accounts. This has required the Company to make material adjustments to its accounts, resulting in prior months’ results not being accurate. I consider these failings to amount to gross negligence; and o That you have materially over-valued Company stock which has resulted in the company having to write off around £200,000 of stock in the May 2021 accounting period. I consider there may be sufficient evidence to find that you have committed an act of gross misconduct in respect of this act, but in any event, I consider this to amount to gross negligence. For the reasons set out above, I am therefore comfortable that the sanction of dismissal is appropriate in all the circumstances and will therefore stand. Further detail of my reasoning can be found in the Appendix to this letter. In terms of the Company’s Disciplinary Procedures, my decision is final and there is no further level of appeal.”[67]Mr Ward also considered the grievance issue. He wrote to the claimant by letter dated 29 September 2021 rejecting his grievances. The letter was signed on his behalf by Jackie Donald the company’s HR Manager. Mr Ward rejected any suggestion of bullying or that the company had not acted reasonably in the disciplinary process. He wrote (JB389): “I do not consider there is any evidence of bullying or harassment by Your absence on 28th May 2021 and refusal to the Company. engage with the Company was linked to your dislike of the commercial terms proposed during the Company’s refinance and restructure in May 2021. You expressed that you did not like the terms proposed and that you were therefore refusing to engage. This was completely unrelated to your employment with the Company and represented your personal view on the commercial terms proposed. Your reaction to this was to leave work on 28th May 2021 and refuse to engage with the Company from that point onwards. You also admitted during the appeal hearing on 24th August 2021 that you had been deliberately withholding certain information from the Company as you considered this to be the only leverage you had over the Company, thus essentially attempting to hold the Company to ransom. Given the attempts by the Company to discuss serious issues of misconduct which had previously been ignored by you, I consider the Company had no option but to instigate formal disciplinary proceedings to discuss these issues. All correspondence has been courteous and factual. I therefore consider it was perfectly reasonable for the Company to instigate disciplinary proceedings in respect of the allegations raised against you and I do not consider this has been done in an attempt to manipulate, bully or harass you in any way. The proceedings were raised in response to legitimate concerns about your conduct. Indeed, I consider that your conduct, tone and language have at times been inappropriate and unpleasant in nature. As previously noted, continuous requests to engage with you were ignored. You admitted during the appeal hearing on 24 August 2021 that you had been deliberately withholding information from the Company as you considered it to be the only leverage you had over the Company. In doing so, I consider this was an attempt to hold the Company to ransom. I therefore consider this conduct to be completely inappropriate. Further you have repeatedly referred to Mike Bryant, CEO Designate, as a “temporary” or “agency” manager. I consider this to be inappropriate and unpleasant in nature as you are well aware that Mike Bryant is the Company’s CEO Designate. You have previously been invited to attend a meeting to meet Mike Bryant, the CEO Designate, but refused to attend.” Claimant’s Bonus[68]The respondent had a bonus scheme for the claimant. Given the company’s difficult trading position the Board wanted to give the claimant a strong incentive, by way of a performance bonus to keep him focused on the company’s affairs. He was provided with a letter dated 29 May 2018 (JB391) setting out the executive incentive bonus scheme: “Dear Mark Approved Executive Incentive Scheme I am pleased to advise that the board have now approved an executive incentive scheme to be adopted for both you and I which is based on the following parameters - CFO Incentive 25% of salary for achieving budget 50% of salary for exceeding budget by 10% Both targets subject to discretionary payments based on linear approach as discussed previously so that the 10°/o above budget is not seen as an on/off switch ie 0-10°/o would pay out between 25- 50°/o Further targets to be agreed between you and / but generally these will focus on: - cash generation - working capital days - system integration - department development . Naturally the scheme above will be subject to the standard good leaver / bad leaver terms as you would expect and of course taxable. Payment of any earned incentive would be made on the signing of annual audited accounts for that year. Please consider this to be an amendment to your previously issued employment contract. Happy to discuss further with you when we talk tomorrow. Yours Sincerely Graham Thomson Chief Executive Officer”[69]A meeting of the Remuneration Committee took place on 3 March 2021 via Teams to discuss the claimant’s bonus (JB413). The meeting was minuted as follows: “The business has accrued all bonuses within the currently stated year end results. Mark has accrued £75,000 in the accounts for his bonus on the following basis - 1) Whilst the original EBITDA budget was not going to be achieved the Board did in April 2020 agree to accept a revised budget for the year based on the impact of Covid and the Oil price crash. This was set at an expected loss of£154K. The actual result came in at positive EBITDA of £450K which was £559K above the target. 2) Marks contractual bonus position is that he is paid 25% of his base salary for hitting agreed targets and is increased pro rata up to 50% for a result 10% or higher. As the actual result was at the higher end Mark is expecting to receive a bonus of £75,000 based on his basic salary of £150,000. 3) Additional supporting circumstances for such a bonus are the fact that Mark along with others took a 20% wage cut during the height of the pandemic, gave up car allowances etc. 4) In addition, Mark has achieved his two major objectives of a) Planning and delivering on the integration plan to bring the business under one trading entity and b) to deliver a strategic plan in a level of detail acceptable to the Board and Investors. 2020 has been an exceptional year and whilst ordinarily the business would not look to pay out on such a result, consideration needs to be given to the company’s survival and the work that has been undertaken.”[70]The claimant was paid half his bonus in March 2021. The balance of £37,500 was due to be paid in August 2021. it was not paid (JB414). Witnesses[71]The claimant is clearly an able and intelligent person. It seemed clear from the evidence and the fact that he became emotional at points that being the CEO of the company had been difficult and stressful for him and that the events leading to his dismissal had taken a toll on him. I found him generally a credible and reliable witness although one, surprisingly, with little understanding of his continuing obligations as an employee to the company or insight into how his failure to assist the handover to a new management team was rapidly eroding any goodwill he still had with the respondent and the Investors. I regret to say I did not find his explanations for the criticisms levelled against him for example over the stock levels and other matters particularly persuasive.[72]Mr Ward was an impressive witness. It was apparent that he and the claimant had enjoyed a friendly professional relationship. He displayed no antipathy towards the claimant. He was credible and reliable in his evidence with a clear recollection of events.[73]Mr Bryant gave clear, straightforward and professional evidence. I found him a wholly reliable and credible witness. He was still genuinely incredulous at the lack of support given to him and his team by the claimant as outgoing CEO.[74]Mr Mitchell was likewise a credible and reliable witness whose damning evidence about the state of the company’s financial affairs carried considerable weight given his qualifications and extensive experience allied to the detailed investigations he had undertaken. Submissions[75]Mr Miller first of all addressed the question of what notice the claimant was entitled to. It was accepted that the contract provided for six months. In this case there had been three resignations the final being the “I’m done’’ txt. The solicitor then took the Tribunal through the events and referred to the correspondence. The claimant in his second resignation had made it clear that he would not work beyond the 31 August. The respondents had simply held him to that date.[76]The respondent’s agent then considered the circumstances prompting the claimant’s third resignation. The difficulty the claimant faced, which he believed to be insuperable, was that he resigned because of the actions of Ms McGregor who was representing a third party. These were not the actions of the respondent company. The claimant he continued called her actions blackmail but this was business. There was nothing wrong in what she did to try and protect the Investor’s interest. She was using “leverage” a word and concept that the claimant was familiar with. Following the claimant’s resignation, he set his face against helping the company and admitted at the appeal that this was to give himself leverage” to conclude an advantageous exit.[77]The new management team found considerable problems when they took over. These were as had been said in evidence ‘life threatening” for the survival of the company. This included the misstatement of the stock value by over £200k. The company had good grounds to believe the claimant had committed acts of gross misconduct/gross negligence. If the Tribunal concluded that there was some unfairness in the process adopted the claimant would bound to have been dismissed even if a fair process had been adopted.[78]Mr Miller turned to the issue of the bonus. I had suggested to him that the bonus had crystallised when the remuneration committee had intimated it to the claimant. His response was that the Tribunal had jurisdiction to consider whether the bonus arrangement should be struck down given the misrepresentation of the stock figure in the accounts used by the Committee to fix the bonus. This was obligation voidable. He referred the Tribunal to the case of Agarwal v Cardiff University [2017] IRLR 600 and to a passage from Gloag and Henderson (Para 7.32) on Induced error.[79]The claimant concentrated on the facts of the case. Starting with the entitlement to the bonus he pointed to the fact that the bonus was payable on the EBITA (Earnings Before Interest Taxes and Amortization) and that even if the stock had been as low as the respondent’s lawyer contended, he would still have been paid in terms of the formula agree. He referred to the Minutes of the Remuneration Committee of 3 March 2021 (JB413). It was stated there: “020 was an exceptional year and whilst ordinarily the business would not look to pay out on such a result, consideration needs to be given to the company’s survival and the work that has been undertaken” The claimant explained that the background was that it was this measure used and not profit and loss as such. Even if the stock had been written down, he would have been paid his bonus.[80]In any event the claimant did not necessarily accept that the stock figure had been wrongly calculated and pointed out that the respondent was assuming that a figure reached in August could show that the stock was recorded wrongly many months earlier.[81]The claimant then went over the resignations and the exact circumstances. It was not disputed that he had first of all resigned in March. He had been persuaded to stay on. In April he had said that he would leave no later than the 31. He was entitled to shorten his own notice in his view as the Investors were not fulfilling their obligations to refinance the business. The second resignation was withdrawn. That means that all of its terms were withdrawn. Mr Ward tried to use this to shorten the notice of six months that the company had to give. He accepted that he had not required formal written notice that his withdrawal had been accepted but this is what had happened in practice.[82]Mr Fraser then moved on to discuss the warranties and the lack of notice he had been given to consider and adjust them and the pressure he was under to sign them. Mr Ward he said had agreed that their terms were unreasonable. He was then threatened by Ms McGregor that he would lose his preferential shares worth about £35,000 if he did not sign. He had tried to get the warranties adjusted and had instructed a lawyer to do this but insufficient time was left. He refused and said he had enough. What then happened was that he tried to adjust terms on which to leave. He negotiated in good faith. He was then asked to attend a disciplinary hearing. It was at short notice and he was unaware of the basis for the allegations and had no time to prepare. The process had not followed the ACAS guidance and was unfair. He had no access to witness statements. He believes that none had been taken. He had not gone AWOL. He had prepared the pack for the Directors meeting and had dealt with enquires made to him from customers.[83]The claimant submitted that agreement had all but been reached about an agreed exit. He would have assisted the new team. He attributed the stock issue to being movements in the stock balances and it depended how those movements were recorded. He was he reiterated the CEO and there was a Finance Director. He denied the suggestion that the Board were entitled to expect he supervised the Finance Director because he himself was an accountant. He was not he said directly involved in the department. Discussion and Decision[84]It is for the respondent to prove the reason for a dismissal under section 98(1) and (2) of the Employment Rights Act 1996 (“the Act”). If the reason demonstrated by the employer is not one that is potentially a fair reason under section 98(2) of the Act, then the dismissal is unfair in law.[85]Conduct is a potentially fair reason for dismissal. If the reason for dismissal is one that is potentially fair, the issue of whether it is fair or not is determined by section 98(4) of the Act which states that it: '"depends on whether in the circumstances the employer acted reasonably or unreasonably in treating [that reason] as a sufficient reason for dismissing the employee, and shall be determined in 30 accordance with equity and the substantial merits of the case.”. That section was examined by the Supreme Court in Reilly v Sandwell Metropolitan Borough Council [2018] UKSC 16. In particular the court considered whether the test laid down in BHS v Burchell [1978] IRLR 379 remained applicable. Lord Wilson considered that no harm had been done to the application of the test in section 98(4) by the principles in that case, although it was not concerned with that provision. He concluded that the test was consistent with the statutory provision. Tribunals remain bound by it.[86]The Burchell test remains authoritative guidance for cases of dismissal on the ground of conduct. It has three elements(i) Did the respondent have in fact a belief as to conduct?(ii) Was that belief reasonable?(iii) Was it based on a reasonable investigation?[87]Tribunals must also bear in mind the guidance in Iceland Frozen Foods Ltd v Jones [1982] ICR 432 which included the following summary: “in judging the reasonableness of the employer’s conduct an Industrial Tribunal must not substitute its decision as to what the right course to adopt for that of the employer. ........the function of the Industrial Tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted. If the dismissal falls within the band the dismissal is fair: if the dismissal falls outside the band it is unfair.”[88]The way in which an Employment Tribunal should approach the determination of the fairness or otherwise of a dismissal under s 98(4) was also considered and the law summarised by the Court of Appeal in Tayeh v Barchester Healthcare Ltd [2013] IRLR 387.[89]Lord Bridge in Polkey v AE Dayton Services [1988] ICR 142, a Judgment of the House of Lords, referring to the employer establishing potentially fair reasons for dismissal, including that of misconduct: “in the case of misconduct, the employer will normally not act reasonably unless he investigates the complaint of misconduct fully and fairly and hears whatever the employee wishes to say in his defence or in explanation or mitigation.”[90]A fair investigation should be even-handed and take into account evidence that could be in the employee's favour (A v B [2003] IRLR 405, EAT), Leach v OFCOM [2012] IRLR 839). 67.[91]Guidance on the extent of an investigation was given by the EAT in ILEA v Gravett 1988 IRLR 497, that “at one extreme there will be cases where the employee is virtually caught in the act and at the other there will be 15 situations where the issue is one of pure inference. As the scale moves towards the latter end, so the amount of inquiry and investigation which may be required, including the questioning of the employee, is likely to increase.”[92]The band of reasonable responses has also been held in the case Sainsburys pic v Hitt [2003] IRLR 223 to apply to all aspects of the disciplinary procedure. Although there is an onus on the employer to prove the reason for dismissal, there is no onus on either party to prove fairness or unfairness.[93]Tribunals are required to take into account the terms of the ACAS Code of Practice on Disciplinary and Grievance Procedures. They are not bound by it.[94]The Code of Practice is supplemented by a Guide on Discipline and Grievances at Work, which is not a document that the Tribunal is required to take into account but which gives some further assistance in considering the terms of the Code of Practice. Under the heading “Investigating Cases” the following is stated: “When investigating a disciplinary matter take care to deal with the employee in a fair and reasonable manner. The nature and extent of the investigations will depend on the seriousness of the matter and the more serious it is then the more thorough the investigation should be. It is important to keep an open mind and look for evidence which supports the employee’s case as well as evidence against. It is not always necessary to hold an investigatory meeting ....” Under the heading of “Preparing for the meeting”, which is a reference to a disciplinary meeting, is included “Copies of any relevant papers and witness statements should be made available to the employee in advance.”[95]A finding that there was gross misconduct does not lead inevitably to a fair dismissal. The test for gross misconduct is a contractual one based on an objective analysis of the evidence.[96]In the case Taylor v OCS Group Limited [2006] ICR 1602 it was held that a flawed disciplinary process was still capable of being fair overall where the subsequent appeal process was thorough and reasonably conducted against a background of sufficient evidence of gross misconduct. Disciplinary Process
Procedure
[97]The disciplinary process adopted by the respondent has to be seen against the circumstances prevailing at the time and in particular the state of knowledge of their senior managers. The claimant places some considerable weight on the failure, as he sees it, of there being a full investigation. He points to clause 4(a) (JB65) which provides that no formal disciplinary action should be taken until the matter “has been fully investigated”. He also objects to the lack of primary data or information and the failure to provide witness statements as being a failure to adhere to the ACAS Guidance. The policy makes reference to witness statements being prepared (Clause 7.0).[98]The disciplinary allegations were contained in the letter dated 6 August (JB316-317). The substance of the allegations were put to him and he was in a position to respond in detail to most of them. The first and most serious allegation was in effect he was gone AWOL, the second that he had not provided a handover to the new team and the third were historic matters. They all appear to have been within his knowledge as CEO. Mr Bryant was frank that one of the purposes of taking this action was to get the claimant to urgently recognise his obligations and to start telling the new team the answers to the issues set out there. The claimant was given three days to consider his position but given the urgency of these matters and the fact that the background to these issues should have been within his knowledge that is not on it’s own unreasonable or unfair in the circumstances here. If the claimant had given explanations he would have been entitled to have these investigated.[99]Witness statements are commonly used and can be of assistance in certain cases in ensuring that the employer had made a sufficient investigation and by allowing the person being disciplined to know the basis for the allegations being made. The amount of enquiry varies from case to case (ILEA v Gravett 1988 IRLR 497 EAT). For most of the issues here I am unconvinced that they are necessary. As noted earlier the claimant knows what has or has not been done. Where witness statements might have been appropriate would perhaps have been in relation to the stock take and what exact steps were taken and by whom in that process. However, Mr Mitchell attended the meeting and could have been asked about these matters in much more detail. It is dear from the claimant’s evidence that he cannot, even now, dispute the results of the stock take that was carried out. He takes a different view from that of the respondent believing that whatever the results of the stock take they do not necessarily invalidate or significantly undermine the accounts prepared some months earlier.[100]In this case the urgency of the matter also militates against witness statements and overall, my conclusion was that the claimant was not prejudiced by their absence or the absence of other data or materials which he could have sought in the time available to him both before the disciplinary hearing and or in the run up to the appeal. The manner in which these matters were dealt with fell within the range of reasonable responses open to them.[101]The claimant appealed his dismissal (JB332). It is surprising that he did not attend the disciplinary hearing and make the points he made in that document. The appeal concentrated principally on procedural matters and highlighting the seriousness of the allegations being made.[102]The claimant took exception to Mr Ward dealing with the appeal and argued that this rendered the dismissal unfair as he was a witness to events. There is no absolute bar to someone who has witnessed some events dealing with any part of the disciplinary process. The matter depends on the particular circumstances including whether someone else was available who had not been involved earlier. Mr Ward was and remained the Chairman of the Board. He was the most senior officer the company had. He was involved with the company’s affairs on an almost daily basis during this difficult period. Given that the claimant had been the CEO of the company it is difficult to identify anyone else who could have dealt with the appeal given that the dismissal was by the new CEO Mr Bryant. It would not have been appropriate for someone more junior to have dealt with the matter.[103]The issue is whether Mr Ward approached the matter with an open mind and fairly. The appeal hearing was a full rehearing of all the issues. The view the Tribunal reached was that Mr Ward did approach the matter fairly. He had previously had a good working relationship with the claimant. He gave the claimant an opportunity of explaining his actions. We would reiterate that there was no animosity demonstrated between the claimant and Mr Ward at the hearing. It was apparent that although they now had their differences both had considerable professional respect for each other. In short, the appeal was properly and fairly conducted by Mr Ward. Disciplinary Allegations Failure[104]The claimant was employed under a Service Agreement dated 4 July 2018. He latterly CEO of the company. In terms of clause 4.1.8 (JB81) he was obliged to “faithfully and diligently” perform his duties “at all times” and “promote and protect the interests of the company and group. In terms of clause 4.2 (JB81) he was required to provide the Board all “information, explanations and assistance” reasonable required of him.[105]The Tribunal did not hear detailed evidence about the warranties presented to the claimant at the end of May just prior to the restructuring deal taking place. It seems to have been accepted by Mr Ward that they were more onerous than necessary but that he expected them to be revised and to be agreed despite the timescales. He did not seem surprised at the claimant seeking legal advice and the cost being underwritten by the Investors. His initial view of the claimant’s actions was that he was trying to get a better outcome for himself by not signing the warranties (JB205). It appears that at this stage the claimant seemed to envisage a long-term relationship with the Group hence his dismay at Ms McGregor’s actions on the 28 May threatening to remove his right to preferential shares. This seems to have backfired as the claimant dug his heels in about the warranties and no doubt began once more considering his position. In the event the claimant seems to have taken the decision on the 31 May that he would not be in a position to sign documents for the delayed completion date.[106]The claimant argued that he was left unsupported by Mr Ward. The difficulty he has is that the action he complains of was taken not only by a third party but one who would become the principal investor. In these circumstances Ms McGregor’s actions must have caused the claimant to consider if he could continue to work with the Investors. Little attempt was made by the claimant to consider the position of Beechbrook in this. There was a clear danger that if the restructuring floundered the company would certainly fail, and their existing investment would be lost. The stakes were high for everyone but the actions taken by Beechbrook were lawful. It was up to them to decide on what terms they would invest and that included the CEO’s remuneration package in the new group. In these circumstances it is difficult to criticise Mr Ward from remaining aloof from becoming involved in this particular matter while continuing to provide support the claimant day to day. He was after all Chairman of the Board with responsibilities of his own to the wider staff and the company and the Beechbrook investment was the only lifeline available. He seems to have thought that the claimant, with skilled legal advisers would have been able to negotiate appropriate personal warranties and an appropriate remuneration package himself.[107]The upshot of the claimant’s actions were that considerable cost was incurred in rewriting the necessary documentation and completing the deal. The claimant must have realised that he had lost a huge amount of goodwill. This makes his actions, thereafter, somewhat puzzling as it is quite clear he did not assist with the finalisation of the restructuring or hand over. The significant email which reflected the claimant’s own evidence at the hearing was the email (JB214) from Philip Davie who managed to speak to the claimant by telephone on the 1 June that he, the claimant, did not want a call on the level of his support until his exit was agreed. He later explained his position at the appeal hearing before Mr Ward that he was waiting to hear what the exit arrangement was to be, while still taking some calls and doing some inconsequential work, before assisting properly. The matter was crystallised by his failure to respond to the questions prepared by Mr Miller and put to him by Mr Ward. It was he said his ‘’only leverage”. The claimant must have been well aware of the difficulties he was creating for the new CEO and by taking this position he was clearly in material breach of the terms of his Service Agreement and of the implied duty of trust and confidence. The respondents were entitled to dismiss him for gross misconduct. The claimant then became very focussed on trying to agree advantageous terms for his ‘‘exit package” rather than assist the new management team in any way. In doing so he eventually exhausted any remaining goodwill on the part of the company and the investors.[108]In short it could be said that the claimant overplayed his hand here. It is surprising given that he had legal advice that it was not borne carefully in mind that he had continuing obligations as an employee and Director to assist the company that was still employing him. His failure to address the queries that were put to him, which as a qualified accountant and CEO, he must have known would cause an incoming CEO and CFO considerable concern was a clear breach of his obligations. The company’s continued existence was on a knife edge. Using the company’s need for that assistance as “leverage” was a dangerous ploy and one that backfired. Ultimately it appears that the last straw in negations breaking down was him pushing for the Investors to pay further fees to his new solicitors for completing the Compromise Agreement. Fairness of Dismissal/Polkey[109]I have spent some time concentrating on this particular issue described as the claimant going “AWOL” or “not engaging” as it appears to be the crucial underlying issue in this case. The claimant’s own avowed conduct provided the respondent with a potentially fair reason for dismissal. Even if I were to take the view that the dismissal was in some sense procedurally unfair, which overall I do not, then any different process, would be almost certain to have led to the same result namely summary dismissal for gross misconduct given the claimant’s deliberate and calculated actions in failing to assist the respondent’s management at this time. Notice[110]The issue of what the correct period of notice should be took up some time. The matter seems relatively straightforward. The claimant’s first resignation was recanted. His second in May (with a leaving date of 31 August) despite being said to be “final and irrevocable’’ was accepted and later withdrawn (JB165). Mr Ward’s response was that it was “great news’’ (JB164). The claimant then continued as CEO although there was no formal letter as there had been with the first resignation accepting the withdrawal. Such a letter is perhaps prudent but legally it is not required. Indeed, even without the correspondence referred to parties’ intentions were clear by their actions that the resignation was withdrawn on the basis of assurances and discussions (although it always remained a threat in the background) and hence the earlier proposed resignation date also fell.[111]We have to now examine the events around the third and final resignation. The claimant was frustrated about the restructuring exercise. It was no doubt difficult to support the exercise while taking legal advice about the personal liabilities in the warranties and against a background of time being limited. This is the context to his “I’m done” which seems as much about the restructuring exercise as resignation, it certainly wasn’t an immediate resignation as can be gleaned from the terms of the txt which envisaged the claimant working on for a period yet to be determined. The respondent’s position that the 31 August remained as a leaving date appears to be wishful thinking based on the wording of Mr Ward’s email dated 24 May (JB166) which gives a different interpretation to the terms of the txt from the claimant.[112]The significant matter is that he did not give a resignation date. He intimated his intention to resign, and it was quite wrong for the respondents to try and impose the 31 August as the leaving day of his choice. It is also apparent from the evidence that both sides expected a negotiated exit and attempted to achieve this. The claimant was therefore entitled to either six months’ notice or the balance of his notice when the respondents insisted upon the 3 August date.[113]This matter is, however, somewhat academic. I have not found it necessary to make separate findings in fact in relation to the issue of gross misconduct where it amounts to a material breach of contract. I bear in mind that the test is an objective one. In this case it was clearly apparent that the claimant by acting as he did not refuse lawful instructions to the important information sought of him and more generally to have refused to support the new management team until his exit was agreed was in material breach of his implied and contractual obligations. In short, his actions disentitle him to sue for contractual notice or the balance of that notice. That claim is accordingly dismissed. Once more I would observe that it is surprising that someone with the claimant’s experience and who had legal advice did not focus on the likely consequences of his actions and sought no permission from the company to disengage in the way he did until the exit provisions were agreed. Bonus[114]The Tribunal considered both the terms of Section 13 and 23 of the ERA ( the right not to suffer unauthorised deductions) and the powers contained in the Extension of Jurisdiction Order 1994 (breach of contract).[115]The claimant was awarded a bonus by the respondent company. The terms on which the bonus was agreed were negotiated. I did not understand there to be any dispute as to that. It was an unusual situation as the company was not profitable, but the Investors agreed nevertheless that the claimant should be rewarded if he improved the fortunes of the business even if it remained loss making. There was reference in the negotiations to the use of the “EBITDA” and cashflow as measures (JB405/406). The Remuneration Committee met on the 3 March 2021 (JB413) and considered the EBITDA measure which showed £405k. The target had been a loss of 154K for the financial year ending December 2020. The Committee approved a bonus for the claimant of £75,000 (payable in two equal instalments in March and August). This was communicated to him on the 5 March by Mr Ward (JB414). The first instalment was paid leaving £37,500. The claimant seeks payment of the balance as an unlawful deduction from wages in terms of Section 13 of the ERA. A bonus is wages in terms of the definition contained in Section 27 of the ERA 1996. The respondent attempted to vary the bonus downwards ( (JB 423/424) using the new audited accounts to recalculate it.[116]Mr Miller cautioned against becoming involved in the interpretation of the claimant’s contractual rights a matter reserved for the civil courts. I did not find the case he referred me to of Argwal of particular assistance in the present case. There appeared to be no dispute here as to the terms of the bonus arrangement that was arrived at in the unusual circumstances narrated above. The Renumeration Committee had awarded a particular sum as a bonus and were entitled to do so.[117]In any event there is some doubt as to whether Argwal is good law as appears to have not been a full citation of authority. It was not followed in the case of Weatherilt v Cathay Pacific Airways Ltd UKEAT/033/16/RN which looked to the older authorities. It held that for the purpose of resolving a dispute under Part II of the Employment Rights Act 1996 as to whether there has been an unlawful deduction from wages the Tribunal is entitled to determine issues relating to the construction of the contract or the implication of any term of the contract. (Delaney v Staples [1991] ICR 331 and Camden Primary Care Trust v Atchoe [2007] EWCA Civ 714 being binding authority to this effect.[118]Mr Miller argued that the Tribunal could nevertheless look at whether the awarded sum as bonus was lawfully due which is a requirement of Section 13 of the Act. His submission, resting on the passage on Gloag and Henderson was that the Committee had been in error as to the true financial state of the company when awarding the bonus and that the Tribunal could find that as they were in error the sum was not lawfully due.[119]I can quite understand the remorse now felt by the company in awarding the bonus on what appears perhaps to have been a rosier financial picture. There are some major assumptions in that position the first being whether the overestimation of stock by 200k goes back to 2020. I was not convinced that there was particularly strong evidence that that could be said to have been the case with any certainty or on the balance of probability. The second assumption is that the bonus would not have been awarded if the stock and consequently the profit had been written down by 200k. As Mr Fraser pointed out a loss had been envisaged and the company had still outperformed expectations which would have entitled him to his bonus. The respondents seem to have moved the goalposts somewhat when they wrote on the 28 October (JB423/424) referring to the audited accounts when the bonus was to be paid on the EBITA basis.[120]It is not every day that the law of error is pled before Tribunals and there are good reasons for that. Mr Miller indicated that the obligation was voidable through error. However, Mr Miller’s caution that the Tribunal should be careful in considering the ambit of its powers is one that also applies to this submission in my view. He indicated that the bonus obligation was voidable. But to make it void would be an exercise of power that I do not believe the Tribunal has.[121]The striking down of an obligation used to be part of the privative jurisdiction of the Court of Session. The Sheriff Court could reduce a document but only if required by the litigation in hand and not as a free standing action. That situation has now altered but the point is that the obligation is voidable/annullable not void. What the Committee did was clearly lawful. It is whether the award of the bonus can be struck down through error and I do not regard either Section 13 of the ERA or the powers given to the Tribunal under the Extension of Jurisdiction (Scotland) Order 1994 as sufficient to allow me to do so. In terms of Regulation 3(c) of the Order the Tribunal can determine claims outstanding on the termination of the employee’s employment. This is not a power to annul a contractual obligation.[122]Finally, there is no direct reference to the concept of error in the ET3 it being stated at (paragraph 30) that the respondents reassessed and recalculated the bonus eligibility without indication of what the basis they believed they had the right to do this and that his refusal of the recalculated bonus meant he had waived his rights to it. Mr Miller did not argue that point.[123]The claim for payment of the remaining part of the bonus being an unlawful deduction must accordingly succeed and the balance of £37,500 will be paid io by the respondent.