Subcontractor manager dismissed for failing to pass on penalty costs: unfair dismissal claim rejected
A subcontractor manager with four years' service was fairly dismissed for gross misconduct after failing to pass on penalty costs to subcontractors. Her claims for unfair dismissal, disability discrimination and failure to make reasonable adjustments were all rejected.
1 min read · Last updated 18 May 2026
Case details
- #subcontractor-manager
- #pass-through-costs
- #gross-misconduct
- #stress-at-work
- #bonus-scheme
- #disciplinary-procedure
Key facts
- The claimant was employed as a Subcontractor Manager from 8 August 2017 until dismissal on 19 August 2021.
- The claimant failed to ensure that penalty costs incurred by the respondent were accurately and promptly passed on to subcontractors.
- The claimant did not take adequate steps to obtain necessary data or escalate problems between January and June 2021.
- The respondent's investigation found that the claimant's inaction led to significant unclaimed penalties.
- The claimant's bonus claim succeeded in principle but she failed to prove any loss.
Timeline
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Employment start
Claimant commenced employment as Subcontractor Manager.
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Workflow process agreed
Claimant agreed to a workflow process for passing through penalty costs to subcontractors.
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Email to line manager
Claimant responded to concerns about pass-through costs, stating minimal volumes and cost-benefit concerns.
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Commercial Director request
Commercial Director requested details of subcontractor pass-through costs.
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Sick leave starts
Claimant went on sick leave citing stress at work.
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Investigation meeting
Claimant attended investigation meeting regarding failure to pass through penalties.
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Disciplinary hearing invitation
Claimant invited to disciplinary hearing for negligence and failure to follow procedure.
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Disciplinary hearing
Disciplinary hearing held; claimant attended with representative.
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Dismissal
Claimant dismissed with effect from 18 August 2021 for gross misconduct.
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Appeal hearing
Appeal hearing upheld the decision to dismiss.
The legal issue
The tribunal had to decide whether the claimant's dismissal for conduct (negligence/failure to follow procedure) was fair under section 98 of the Employment Rights Act 1996, and whether the employer had acted reasonably in its investigation and decision to dismiss.
The outcome
The tribunal dismissed all claims except a breach of contract claim for unpaid bonus, which succeeded in principle but the claimant failed to prove any loss, so no award was made.
Key findings:
- The employer had a genuine belief in the claimant's misconduct based on a reasonable investigation.
- The dismissal was procedurally fair and within the range of reasonable responses.
- The claimant's stress and anxiety did not amount to a disability under the Equality Act 2010.
- The employer did not fail to make reasonable adjustments.
- The bonus claim succeeded but no loss was established.
Lessons & takeaways
- Employees should ensure they understand and follow agreed procedures, especially when financial penalties are at stake.
- Employers should conduct a thorough investigation before dismissing for conduct, but a fair process does not require perfection.
- Claims for disability discrimination require evidence of a long-term substantial adverse effect on day-to-day activities.
- A breach of contract claim for a bonus will only succeed if the employee can prove they would have received it but for the breach.
A manager's failure to pass on costs leads to dismissal
The claimant worked as a Subcontractor Manager for four years. In October 2020, she agreed to a workflow process for passing penalty costs on to subcontractors. However, between January and June 2021, she failed to take adequate steps to obtain necessary data or escalate problems. This led to significant unclaimed penalties for the employer. When the employer investigated, it found that the claimant's inaction was the cause.
What the tribunal decided
The tribunal accepted that the employer genuinely believed the claimant had been negligent and had failed to follow procedure. The investigation was reasonable, and the decision to dismiss for gross misconduct was within the range of reasonable responses. The claimant's claims of unfair dismissal, disability discrimination (stress and anxiety), and failure to make reasonable adjustments were all dismissed. Her claim for breach of contract over an unpaid bonus succeeded in principle, but she could not prove she would have received it, so no compensation was awarded.
What could have been done differently?
The claimant could have escalated her concerns about the workload or sought support earlier. The employer might have considered a final written warning instead of dismissal, but the tribunal found that dismissal was a reasonable option given the seriousness of the failure.
Why this matters
This case shows that employers can fairly dismiss for conduct failures even when the employee is under stress, provided they carry out a reasonable investigation and follow a fair procedure. It also highlights the difficulty of winning a bonus claim without clear evidence of loss.
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