Deputy MD dismissed during notice period: unfair process despite gross misconduct
A deputy managing director with 15 years' service was unfairly dismissed after a flawed misconduct process. The tribunal found the decision-maker had prejudged the outcome, but applied a 50% Polkey reduction.
1 min read · Last updated 18 May 2026
Case details
- #confidential-information
- #misuse-of-title
- #bonus-claim
- #polkey-reduction
- #gross-misconduct
Key facts
- Mr Nolan was employed by Phase II International Ltd from 25 July 2005 until his dismissal on 20 November 2020.
- He was promoted to Deputy Managing Director in February 2016 and effectively ran the day-to-day operations of the group.
- Negotiations for a new role and equity stake broke down, leading to Mr Nolan's resignation on 30 September 2020.
- Following his resignation, an investigation and disciplinary process found Mr Nolan guilty of gross misconduct for misusing the Managing Director title, misusing confidential information, and other allegations.
- The tribunal found that the dismissal was procedurally unfair because the decision-maker, Mr MacLennan, had misled the investigators and had prejudged the outcome.
- Mr Nolan was awarded a 50% Polkey reduction because there was a significant chance he would have been dismissed even with a fair process.
Timeline
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Employment started
Mr Nolan began employment with Phase II International Ltd as a Creative Assistant.
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Promoted to Deputy Managing Director
Mr Nolan was appointed Deputy Managing Director, effectively running the day-to-day operations of the group.
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Letter of Intent
Mr MacLennan sent a letter of intent proposing Mr Nolan become Group Managing Director with a 20% salary increase and equity scheme.
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New-Co proposal
Mr Nolan presented an alternative proposal for a new company structure with a 39% equity stake for himself.
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Meeting about MD title
Mr MacLennan raised concerns about Mr Nolan using the Managing Director title; Mr Nolan agreed to stop.
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Resignation
Mr Nolan resigned on notice, citing breakdown of trust and confidence.
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Forwarded confidential documents
Mr Nolan emailed confidential business plans to his personal Gmail account.
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Investigation started
Mr Jarman began investigating allegations against Mr Nolan.
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Disciplinary hearing
Ms Brown conducted a disciplinary hearing; Mr Nolan attended with a companion.
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Dismissal
Mr MacLennan dismissed Mr Nolan for gross misconduct.
The legal issue
The tribunal had to decide whether the dismissal for gross misconduct was fair, and whether the employee was entitled to a £25,000 bonus.
The outcome
The tribunal found that the dismissal was procedurally unfair because the decision-maker, Mr MacLennan, had misled the investigators and prejudged the outcome. However, there was a significant chance that Mr Nolan would have been dismissed even with a fair process, so compensation was reduced by 50%.
The claim for constructive dismissal (based on the resignation) failed, as did the claim for wrongful dismissal. However, the claim for the £25,000 bonus succeeded.
Compensation will be determined at a separate remedy hearing.
Lessons & takeaways
- A decision-maker who prejudges the outcome or misleads investigators will make any subsequent dismissal unfair, regardless of the employee's conduct.
- Even if a dismissal is unfair, compensation can be substantially reduced if a fair process would probably have led to the same result (Polkey reduction).
- Employees who resign may still be dismissed during their notice period, and the fairness of that dismissal will be assessed separately.
- Bonus claims can succeed if the employer fails to follow its own contractual or discretionary bonus scheme.
A breakdown in trust leads to a flawed dismissal
After 15 years with the company, the deputy managing director's relationship with the owner broke down over negotiations for a new role and equity stake. He resigned, but during his notice period he forwarded confidential business plans to his personal email. The company investigated and dismissed him for gross misconduct.
What went wrong
The tribunal found that the decision-maker, Mr MacLennan, had misled the investigators and had already decided to dismiss before the disciplinary hearing. This made the process unfair. However, the tribunal also found that a fair process would probably have resulted in dismissal anyway, because the employee had indeed misused confidential information and misused the managing director title.
Why this matters
This case shows that even where an employee has committed serious misconduct, a flawed process can still lead to a finding of unfair dismissal. But it also shows that compensation can be heavily reduced if the outcome would have been the same. The employee's bonus claim succeeded because the employer had not followed its own bonus scheme rules.
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