In this case study, we look at what an employer might do when an employee makes a costly mistake.
- Can an employee be dismissed for gross negligence?
- Can the employer deduct the losses from the employees wages?
- Can the employer recover its losses from the employee?
Sample Facts
Your employee, a manager, has made a mistake. They were supposed to do X, but either didn’t do it, did Y or did X very badly.
That mistake has cost the business a lot – not talking a few pounds we’re talking thousands of pounds.
To be honest, the employee has had issues for the last year. They’ve not been performing as well as we’d like, there’s always mistakes (albeit smaller ones) and there’s plenty of other [minor] issues which although haven’t been addressed, are now on our mind now that this significant mistake has come to light.
Steven – what can we do?
The Options
The first option would be to consider a formal disciplinary process, which entails:
- Investigation
- Invitation to disciplinary
- Disciplinary meeting
- Consideration and decision
- Appeal?
Can an employee be dismissed for negligence? Call it gross negligence or a massive cockup, or whatever, the question for the person handling the disciplinary will be is it reasonable to dismiss summarily without notice for gross misconduct.
With matters like this, there’s always a risk of an unfair dismissal claim afterwards, so employers need to be careful.
You need to understand why the employee made the mistake.
When questioned, will they say ‘I’ve never had training on it’ or ‘I’ve been asking for guidance for weeks’ – because if correct, then it might make a gross misconduct dismissal less reasonable. And require some training plans.
Can they also highlight some other reason, such as a disability, which has caused (or at least not helped) the making of the mistake? If so, again it might make a gross misconduct dismissal less reasonable and more likely a warning but with some reasonable adjustments to be made.
But if the decision maker is satisfied it is gross misconduct then the person could in theory be dismissed.
But what about the general performance issues? Can we add them in to the mix too, in order to ‘bulk up’ the disciplinary charges?
Not really – not if they’ve not been raised formally with the employee previously.
If gross misconduct is looking sketchy, then the employer might want to look at a performance management plan and a potential capabilitCy dismissal.
This is where certain formal targets/KPIs are agreed upon, and if they are not met, the employer can legitimately dismiss on notice for reasons of capability.
Performance management needs to be carefully considered and executed well, so its always best to take advice from me or get an HR expert in to help if you don’t have someone in house.
Option 3 – A Settlement Agreement
A settlement agreement is legally binding agreement under which an employees employment is terminated in return (usually but not always) for some payment.
The employer will be loathe to make any payment to the employee, of course, given that they have already caused a significant loss to the company.
However, if the employer has risks in a gross misconduct dismissal but still ‘wants the employee out’ then a settlement agreement might make sense.
The offer might be made on the basis that it avoids a negative disciplinary record on the employees personnel file, or that the employer agrees not to sue the employee for its losses if they just leave.
It makes sense to consider the options here.
Can we deduct the losses from the employees wages?
No.
You can only do this if a Court has given judgement in your favour and permitted the sums to be deducted from wages, otherwise you will find yourself in breach of contract and potentially in breach of national minimum wage regulations.
Can an employer sue an employee for losses suffered?
Yes, an employer can bring a civil claim against an employee – or add it as a counterclaim if the employee is suing the company.
It requires suing the employee for negligence and or breach of contract, and to succeed, you’ll need to demonstrate that there was negligence. It might not be the easiest task, but that would depend on the mistake, and the response of the employee.
Take Advice on Employment Law matters
Employment Law is a minefield unless you take advice. One wrong step and you’ve a legal battle on your hands. Do things properly, follow process, and be reasonable, and you’ll be fine.
It’s best that you have an experienced employment law solicitor leicester to help you, and occasionally we might need an HR expert to come in and help with the more ‘hands on’ stuff like meetings with employees. I can recommend local HR experts as well.
Get in touch today – 0116 3667 900 or email steven@stevenmather.co.uk