CEO dismissed for misconduct to avoid 12-month notice pay: unfair dismissal
A CEO with six years' service was unfairly dismissed after his employer abandoned a redundancy process and pursued gross misconduct allegations to avoid paying his 12-month contractual notice. The tribunal awarded £73,816.91.
1 min read · Last updated 19 May 2026
Case details
- #redundancy-process-abandoned
- #gross-misconduct-allegations
- #12-month-notice-period
- #tupe-transfer
- #grievance-retaliation
- #polkey-redundancy-finding
Key facts
- The claimant was employed as CEO from 30 March 2015 until summary dismissal on 18 May 2021.
- The respondent initiated a redundancy process in March 2021 due to financial difficulties, but abandoned it after learning of the claimant's potential 12-month notice entitlement.
- The respondent then pursued a disciplinary process for alleged gross misconduct, which the tribunal found was not the genuine reason for dismissal.
- The tribunal found that the real reason for dismissal was to avoid paying the claimant's contractual notice and redundancy payments.
- The claimant's unfair dismissal claim succeeded, but the tribunal found he would have been fairly dismissed for redundancy on 9 April 2021.
- The claimant's contractual notice period was 12 months, adopted by the board after the contract was signed.
Timeline
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Employment commenced
Mr Hegarty started as Business Development Manager.
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Promoted to CEO
Mr Hegarty was promoted to chief executive officer.
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Contract signed
Mr Hegarty and John McDonald signed a contract including a 12-month notice period.
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Contract approved
President Gary Robertson approved the contract at a lunch meeting, authorising a pay rise.
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Board meeting
Board discussed possible transfer to Transave and proposed making Mr Hegarty redundant.
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Redundancy notified
Mr Hegarty was informed of proposed redundancy and possible transfer.
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Grievance submitted
Mr Hegarty submitted a grievance alleging a campaign against him.
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Second consultation
Mr Hegarty raised his 12-month notice period; redundancy process continued.
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Grievance rejected
Grievance rejected; redundancy outcome letter due but not sent.
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HR email
HR email discussed switching to gross misconduct to avoid notice pay.
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Disciplinary hearing
Hearing chaired by John Mellor on allegations of regulatory failures.
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Summary dismissal
Mr Hegarty was summarily dismissed for gross misconduct.
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Appeal hearing
Appeal heard by Gary Robertson; dismissed on 22 July 2021.
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TUPE transfer
Voyager Alliance merged with Penny Post Credit Union.
The legal issue
The tribunal had to decide whether the dismissal was automatically unfair under TUPE because it was linked to an anticipated transfer, or alternatively unfair under s.98 ERA because the employer used misconduct as a pretext to avoid redundancy and notice pay.
The outcome
The tribunal upheld the unfair dismissal claim under s.98 ERA, finding that the employer's decision to switch from redundancy to disciplinary proceedings was a sham to avoid paying the claimant's 12-month notice entitlement.
However, the tribunal also found that the claimant would have been fairly dismissed for redundancy on 9 April 2021, limiting compensation.
- Basic award: £4,896.00
- Total damages: £73,816.91 (includes notice pay and other losses)
Lessons & takeaways
- Employers cannot use disciplinary proceedings as a pretext to avoid contractual notice or redundancy payments – tribunals will scrutinise the real reason for dismissal.
- A long notice period (here 12 months) can be a red flag if an employer suddenly shifts from redundancy to misconduct – it suggests an ulterior motive.
- Abandoning a redundancy process mid-way and switching to disciplinary action without clear evidence of misconduct is likely to be seen as unfair.
- Even if a dismissal is unfair, compensation may be reduced if the employee would have been fairly dismissed anyway for another reason (e.g., redundancy).
When redundancy becomes a pretext for dismissal
This case shows what happens when an employer tries to avoid a costly contractual notice period by dressing up a dismissal as gross misconduct. The claimant, a CEO with six years' service, was initially put at risk of redundancy due to financial difficulties. But when the employer realised he had a 12-month notice clause in his contract, the redundancy process was abruptly abandoned and replaced with disciplinary allegations.
The tribunal found that internal emails revealed the true motive: switching to gross misconduct to avoid paying notice and redundancy. The disciplinary hearing was a sham, and the dismissal was unfair.
What the employer could have done differently
If the employer had genuine concerns about the CEO's performance or conduct, it should have raised them earlier and followed a fair process. Instead, it used a flawed disciplinary process as a cover for what was essentially a redundancy situation. The tribunal noted that the claimant would have been fairly dismissed for redundancy on 9 April 2021, meaning the employer could have achieved its goal lawfully by completing the redundancy process.
Why this matters for similar claims
This case is a reminder that tribunals will look beyond the stated reason for dismissal to uncover the real motive. Employees with long notice periods or valuable contractual rights are particularly vulnerable to this kind of treatment. The award of £73,816.91 reflects the notice pay and other losses the claimant would have received if the redundancy had been handled properly. For anyone facing a sudden shift from redundancy to disciplinary action, this case provides a strong basis for challenging the fairness of the dismissal.
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