Making Managerial Changes? Transparency is Always the Best Policy

When changes are being made to a company’s management structure, transparent consultation with those affected is always the best policy. An Employment Tribunal (ET) made that point in the case of a senior executive whose role was steadily reduced to the point where he felt that resignation was his only option.

The man was employed as the operations director of a multinational business’s UK division. He was also one of the company’s statutory directors. The company was undergoing globalisation and responding to the challenge of COVID-19 when it embarked on a restructuring of its managerial positions.

He asserted that his position was thereafter slowly eroded and undermined and that he was, in effect, demoted. His job title was changed from ‘director’ to ‘leader’ and important responsibilities that he had previously fulfilled were removed from his remit. He resigned, citing a complete loss of trust in the company’s senior management team, and subsequently launched ET proceedings.

Defending the claim, the company contended that it had in fact intended to promote him and substantially enhance his salary. Amidst the pandemic and the company’s expansion, structural changes were being made daily, on the hoof. The company asserted that his resignation was prompted by his disappointment at not receiving a bonus and his belief that he had been overlooked for promotion.

In upholding his constructive unfair dismissal complaint, however, the ET noted that the case bore all the hallmarks of a workplace power struggle. The steady diminution of the man’s role and responsibilities was implemented on a drip, drip basis. He could only tolerate so many drips before he had had enough and felt that he had no alternative but to tender his resignation. Shorn of his executive powers, he was effectively rendered a director in name only.

Observing that transparency is preferable to stealth, the ET emphasised that good management demanded that the proposed changes to his role should have been disclosed and discussed with him, rather than being inflicted piecemeal without consultation. In the absence of agreement, the amount of his compensation would be assessed at a further hearing.