Dundas Street - Employment Lawyers - If you are paid the big bucks you are expected to take the fall if something goes wrong. This is what accountability means, and it seems to be well understood by most people, perhaps with the exception of politicians. But when people don’t take their cue to leave, things can get messy.
In the last couple of weeks there have been a number of high-profile resignations of senior employees, both in New Zealand and abroad.
New Zealand Football’s high performance director Fred de Jong resigned recently following the player eligibility saga which saw the men’s under 23 team kicked out of an Olympic qualification tournament in July.
De Jong was leading the high performance department, and acknowledged that “As the head of the department, you’ve got to be accountable. That’s how accountability works.” An internal review is ongoing, but De Jong has already taken the fall for his department’s own-goal.
In another example, Volkswagen’s CEO, Martin Winterkorn, resigned following admissions that Europe’s biggest auto maker installed software on some VW and Audi diesel-powered cars which was rigged to manipulate emissions tests. VW’s board accepted that Winterkorn had no knowledge of the manipulation and praised his "readiness to take responsibility in this difficult situation for Volkswagen."
VW doesn’t yet know who was involved, but it has agreed to investigate and seek prosecution of its own employees who are implicated.
From an employment law perspective, these resignations both appear, at least publicly, to have been driven by each employee’s own decision to take responsibility. However in these situations it is not always clear whether the employee is exercising genuine choice.
Had De Jong and Winterkorn not volunteered to resign, it is quite possible that their Boards may have made that decision for them.
“Resign or be dismissed” scenarios can, in turn, lead to claims of constructive dismissal. The law in this area is very clear – being told to resign or face being dismissed is a dismissal, because it is a sending away which occurs at the employer’s initiative. It is not a genuine or voluntary resignation as the employer has played a material part in bringing it about.
Often claims of constructive dismissal arise following an ultimatum being issued in the heat of a discussion between an employer and a senior employee. At other times, the employee may wrongly perceive a choice between resignation or dismissal where an employer is in fact acting lawfully in first informally seeking an employee’s explanation for some event that has occurred.
In such instances, it is perfectly appropriate for an employer to put the employee on notice that if their explanation is not satisfactory, a disciplinary process will be commenced which could lead to dismissal. The employee may see that as a threat of dismissal, when that point has not yet been reached.
Sometimes “the resign or be dismissed” conversation occurs at a juncture in a disciplinary process where the employee is facing allegations of serious misconduct, and it may be in their interests to resign rather than face a disciplinary investigation that would likely lead to the termination of employment.
Employers need to be very careful about engaging in these types of discussions as they can be seen as pre-empting the outcome of a full and fair investigation process. Having said that, laying out the potential consequences of a disciplinary process, including that dismissal could result, is not in itself unfair. Likewise a suggestion that the employee may wish to take legal advice and carefully consider their options is not unreasonable.
Where employers risk over stepping the line is where they suggest, under the guise of an “off the record” discussion, that the employee may be better off resigning now before the axe falls.
There are technical legal rules around when an “off the record” discussion will genuinely be legally privileged, and simply asserting that a discussion with an employee is “off the record” does not make it so.
As the two recent cases demonstrate, when senior employees see the writing on the wall and resign before they are pushed, this can be a win-win situation as it may help to preserve their own reputation at the same time as providing an effective damage control strategy for the employer.
Where, on the other hand, an employee does not voluntarily fall on their sword, giving them a push or a nudge can be dangerous. In short, an employer is entitled to spell out the consequences of any process they are undertaking, including that dismissal may result, but any decision to resign must genuinely be that of the employee, and made without undue pressure.
Perhaps it is best put this way – you can pin a tail on a donkey, but you cannot make them drink.
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