Financial Advice

As a senior manager, you can be summarily dismissed under English Law for gross misconduct.

Holding (In) Decision Makers to Account

 

March 2017


Not just as a result of deliberate or dishonest conduct but instead due to a negligent failure to act – even when this decision has caused no loss your employer.

In a recent case of Adesokan v Sainsbury’s Supermarkets Ltd, Mr Adesokan was employed by Sainsbury’s for some 26 years with an excellent service record. As regional operations manager, he was responsible for some 20 stores. The companies Talkback Procedure is an employee feedback process whereby the level of engagement of Sainsbury’s staff was quantified and assessed. The Talkback Procedure is the desire to ensure that staff is engaged, motivated and take pride in their work.

The misconduct of Mr Adesokan originated not with him but with a more junior member of his team who sent out an inappropriate email in connection with Talkback Procedure, suggesting that the focus should be on obtaining feedback from the “most enthusiastic colleagues”, even if that meant less than 100% completion of the relevant survey. When Mr Adesokan learned of the email some days later he told the manager to “clarify what he meant with the store managers”. This was not done, and when he learned this, Mr Adesokan did nothing to remedy the situation.

The key to this case seems to have been the importance which Sainsbury’s attached to the Talkback Procedure. Sainsbury’s won the case at the Court of Appeal.

It is very important to note here that this is a strong example of the courts signalling a willingness to hold senior managers to strict account for failing to act with reasonable skill and care. Therefore, by association this applies to all kinds of decision-making which is made on behalf of businesses on a daily basis. From deciding on the company’s accounting policies to deciding on how to deal with a tricky employment matter, the consequences of those decisions (or indeed indecisions) made on behalf of the company could make its way back to management regardless.

Potentially directors, managers and even employees have an unlimited personal liability for the decisions and actions they make on behalf of the company. Management Liability Insurance can be purchased to mitigate against the cost of dealing with the costs of civil, criminal or regulatory investigations and litigation. Management Liability claims and actions can even come from shareholders or from internal employees. Even if you feel that you have done nothing wrong, without adequate insurance cover you will most likely incur significant legal costs to simply present a robust defence.

Woodward Markwell Insurance Brokers can provide practical advice to help you and your business assess the Management Liability risks involved, in order to give you the confidence that should decisions made on behalf of the business backfire, you can have an effective and robust insurance programme to deal with the consequences of those decisions.

Thomas Hallatt hallattt@wmibl.co.uk / 01473 408498

Source: http://www.employmentcasesupdate.co.uk/site.aspx?i=ed35011