Case Study: Mediation and Disciplinary action

A business was found in need of our mediation and disciplinary services. They came to Sentient’s HR outsourcing team and we were able to provide advice and draft emails to successfully resolve the situation.

the background

A minority shareholder of a distribution business tried to remove the managing director from the board.  The managing director is also the majority shareholder. The minority shareholder’s proposed resolution at the shareholders’ meeting failed. 

The minority shareholder previously owned the Company before he sold the majority shareholding to the managing director.  The minority shareholder was not on the board of directors, and was not an employee of the company.

The minority shareholder commenced legal proceedings against the Company; and started contacting employees requesting information. 

The managing director sent a communication to all staff to advise that any request for information from the minority shareholder should be referred to the managing director and that no information should be disclosed without the managing director’s explicit permission.

the challenge

Notwithstanding the instruction from the managing director, the Sales Office Manager sent an email to the minority shareholder containing the Company’s entire customer list and sales list.

The Sales Office Manager had worked for the Company for more than 20 years; and knew the minority shareholder when he previously owned the Company.

Sentient were asked to help resolve the situation; including both that of the shareholder and the employed sales office manager.

the solution

The starting point was to investigate the Sales Office Manager’s conduct. Given that she had disclosed confidential information to a third party, it was necessary to ensure there was no repetition whilst the investigation was on-going. Consequently, we advised that the Sales Office Manager be suspended pending an investigation.

During the investigation, the Sales Office Manager believed that the former owner (the minority shareholder) was senior to the current managing director / majority shareholder and that she provided the information he requested because she believed he was entitled to that information.

the result

The Sales Office Manager was subject to disciplinary action. The act of failing to adhere to a legitimate management instruction, and disclosing confidential information to a third party, was treated as an act of gross misconduct.

The outcome of the disciplinary hearing was that the Sales Office Manager was dismissed for Gross Misconduct.  She appealed against the decision to dismiss, but the appeal was not upheld.

The Sales Office Manager subsequently told a colleague that she had sought legal advice on pursuing a claim for unfair dismissal; but was advised that the company had legitimate grounds to dismiss her and had followed a fair procedure.  The Sales Office Manager was advised that if she pursued a claim, she ran the risk that her claim would be seen as vexatious and/or misconceived and could face a significant costs order. No Tribunal claim was received.

The minority shareholder was advised that the data he had received could not be relied upon at any subsequent shareholder meeting because he had obtained it through illicit means.  The dispute between the minority shareholder and majority shareholder was subsequently resolved when the company bought his shareholding in the company.

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