Last week’s very public sacking, when the chief executive of AOL told a creative director he was fired, has been recorded for posterity and has led to a written apology. There has been plenty of reflection and comment on this incident since, but little from a legal perspective. We can’t comment on what is going on behind the scenes, but what would happen were such an Alan Sugar moment to happen in the UK?
British senior executives are commonly entitled to fairly lengthy notice periods – typically between six months and a year. These are normally combined with a right on the employer’s part to buy out the notice period by making a payment in lieu. Employers have no contractual entitlement to end the relationship immediately without making such a payment, unless they are able to demonstrate clearly that the employee is guilty of very serious misconduct.
All this will normally mean that a heat of the moment firing is likely to be in breach of contract, at least if the contract is governed by English law. Until the end of last year it was generally thought that despite being wronged, there was nothing the employee could do to keep the contract alive. However a decision of the Supreme Court released in December 2012 has made it clear that employees in this situation have a choice. They can either elect to treat the contract as discharged, or choose to keep the contract alive and wait for the employer to terminate the agreement lawfully. Either way, the employer will face a claim for damages for breach of contract, and, if the employee decides to bring the contract to an end, almost certainly for unfair dismissal too. Even worse, any post termination restrictions simply fall away.
In short, as well as exposing the employer to legal claims, a heat of the moment dismissal may not even bring the contract to an end. One well-known example is the purported dismissal of Sharon Shoesmith, former director of children’s services at the London Borough of Haringey, over the Baby P affair. Public law issues also arose in that case but the end result was similar: a declaration by the Court of Appeal that the council’s hasty actions had not terminated her employment.