Introduction
When it comes to employment contracts, a breach of duty of loyalty and fidelity can often result in dismissal. However, each case must be evaluated based on its individual circumstances. In this article, we’ll discuss a case where a bank manager was unfairly dismissed despite breaching the duty of loyalty and fidelity by approving a loan that was in clear conflict of interest.
Approval of Loan
In this case, a bank manager with 28 years of service sent a letter to a company in which he was a joint owner, which the bank deemed as approving a loan worth $60 million.
Initial Investigation
The bank appointed a former manager, Mr. G, to investigate the matter, who found no evidence of any loan application or file related to the partnership. He concluded that the bank manager had breached his lending authority granted by his line management if the letter was deemed a letter of sanction in principle.
Final Investigation Report
After Mr. G submitted his report and retired, the employee received a final report concluding that he had breached his duty of trust and fidelity to the bank by exposing it to reputational and potential financial loss. The employee was dismissed with immediate effect, subject to the payment of 12 weeks’ salary in lieu of his contractual notice entitlement. However, Mr. G was surprised to find that the final report was attributed to him, even though he had not made these findings.
Internal Appeal
The employee appealed his dismissal, and the internal appeals officer insisted on a “de novo” appeal, meaning that everything should be heard afresh. The decision to dismiss was ultimately upheld as the employee had wholly and irrevocably undermined the trust and confidence, which was the cornerstone of the employment relationship.
EAT Determination
The Employment Appeal Tribunal (EAT) criticized the disciplinary process, stating that the final report's authorship and conclusions were ascribed to Mr. G even though the final report bore no relationship to the initial report prepared by him. The EAT found that dismissal was disproportionate to the employee’s offense and that the more appropriate sanction would have been to demote the claimant. The EAT determined that the claimant was unfairly dismissed, but his behavior was so egregious that the award was significantly reduced to €25,000.
Learning Points
This case emphasizes the importance of a fair and thorough disciplinary process in the workplace. Employers must make all evidence available to the accused employee, and not every breach of trust will justify dismissal. Proportionate sanctions are necessary, and strong company policies are vital. Employers should seek advice in cases involving alleged fraud, theft, or money laundering. The employee's own contributions to his dismissal can also impact the award.
Conclusion
The case of the AIB bank manager demonstrates the importance of fair and just disciplinary procedures. Employers must ensure that they follow a thorough investigative process and provide all evidence to accused employees. Additionally, they must implement appropriate sanctions based on the individual circumstances of each case.
