Executive Terminations

How to go about dismissing a senior employee.

It sometimes happens that, say, on a change of ownership of a business or a change in direction that a decision is made that a senior manager or director no longer “fits” with the business, it’s ethos and ideology going forward. In such cases, there are a number of options for parting company:-

1. If the senior executive has less than 2 years length of service and there are no potential discriminatory issues or whistleblowing issues having been raised, then the senior executive could be dismissed on notice and if there is a garden leave clause in their contract, the executive could be put on garden leave for their notice period. In such cases, the exiting senior executive should be reminded of the confidentiality and post-termination restrictions in their contract.
2. If on the other hand, the senior executive has more than two years’ length of service or if potentially discriminatory issues have been raised then in these circumstances, the executive could be offered a termination package by way of a settlement agreement. If exit terms can be agreed and tied up in a settlement agreement this will ensure certainty and finality for the employer and is, therefore, a clean break for all concerned. We can help either drafting or advising on settlement agreements.
3. Another option is to go through a full and fair procedure, subject to there being a potentially fair reason for dismissal.
4. If however there has simply been a breakdown in the working relationship and/or a loss of trust and confidence between the parties then the potentially statutory fair reason for dismissal of some other substantial reason (“SOSR”) could be used. Appeal level case law suggests that a SOSR reason is more likely to succeed as a fair reason for dismissal if it is linked to an issue of capability and/or conduct.