Mishcon: Repudiatory breach
A former commercial director at London law firm Mishcon de Reya (MdR) has won his claim for constructive unfair dismissal, in part over the non-payment of commission he was due.
Employment Judge Walker held that the firm’s actions – which included meetings about improving Paul Hemmings’ performance when it had been acknowledged that a failure to meet sales targets was not his fault – amounted to a breach of the duty of trust and confidence.
There will now be a remedy hearing, although the tribunal in central London noted that he had begun another job the month after his employment at MdR ended in December 2023.
He started work at the firm in May 2020 as the commercial director for MDR Cyber, its former cybersecurity consultancy. In addition to his salary, he was to be paid 3% on all fees he originated.
Covid made normal business “somewhat difficult”, the judge noted, and “thereafter both parties acknowledged that the cyber business was not as successful as hoped”.
It was only in July 2023, at a performance management meeting, that Mr Hemmings raised the failure to pay him any commission. He said the money was not important to him but rather he was concerned he was not getting credit for the client work he had brought in.
He also said he felt the performance management process was one that would lead to his departure.
The tribunal noted that, at the meeting, his line manager, non-lawyer partner Joe Hancock, “confirmed Mr Hemmings’ belief that there was nothing he could do to improve the market situation for the cyber business”.
MdR worked out the commission and paid him £4,512, much less than he expected.
Mr Hemmings was then off ill for several weeks and, on his return in September 2023, MdR sought to resume the performance management process.
He resigned soon after, citing the non-payment of commission and saying he had lost trust and confidence in the firm because of being put into the performance management process for lack of sales when he had made sales, and then being told the level of sales were nothing to do with his performance.
His final salary included a further £2,070 in commission that had become due since the first payment.
The tribunal held that the failure to pay the commission for three years was a breach of contract, as was the failure to properly account for the commission by not providing Mr Hemmings with the information he needed to understand how it was calculated.
But given he had worked for three years without commission and his comments at the July meeting, the tribunal did not find these to have been repudiatory breaches that caused Mr Hemmings to resign: “His concern related more to the attribution of origination in order to prove his achievements rather than the money.”
The tribunal went on to criticise how MdR approached the performance management process.
“The calling [of] a meeting (which is the first stage in a process which if it is carried through could lead to dismissal) and then telling the employee that there is in fact nothing they could do, had obvious potential to damage trust and confidence on the part of the employee.
“Having told the employee that there was nothing that he could do, calling another meeting to restart the process put the employee in the situation where he genuinely believed this was not being done with any intention or expectation he could improve.
“Looked at objectively, any employee in that situation would assume the respondent was determined to pursue of course which would lead to his dismissal.
“Given the comments Mr Hancock had made to him, Mr Hemmings was doomed to failure. That was certainly likely to destroy or seriously damage trust and confidence.”
The tribunal ruled that the “cumulative conduct was undoubtedly likely to lead to a breakdown in the trust and confidence between the parties”.
Mr Hemmings’ resignation “was a response to the repudiatory breach” – it was “clear from the timing that he did not want to go through that [performance] meeting”.
MdR did not argue that there was a potentially fair reason for the dismissal, meaning it was unfair.
The tribunal also ordered MdR to reimburse Mr Hemmings £2,000 for the cost of a digital marketing course it deducted from his final payslip. He had stopped it after being told to do so at the July meeting to help manage his stress, but the firm did not tell him he would be liable for the cost if he did.
“There is no doubt in my mind that the claimant would not have stopped the course had he thought he would pick up the cost,” the judge said.
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