Ex-Swans directors win claims for unfair dismissal
CLAIMS of constructive unfair dismissal made by two former Swansea City directors against the club have been upheld.
An employment tribunal has unanimously judged Steve Penny and Don Keefe’s claims of constructive unfair dismissal as “well-founded”, with the case now listed for a future “remedy hearing” where a settlement will be discussed.
But claims that age discrimination played a part in their departures were dismissed against both men, and the tribunal also found Mr Penny was not an employee under the terms of a consultancy agreement between himself, the club and Parc Beck Ltd.
Both had, for many years, been directors of the club and members of the board which managed its affairs, and party to major decisions such as the move from the Vetch Field to the Liberty Stadium.
As part of the proposed takeover of the club, it was decided at an early stage that only shareholder directors would remain on the board, meaning both Mr Penny and Mr Keefe – as non-shareholder directors – would no longer be directors of the club.
But the men argued that, irrespective of any other breaches, the fact that it was intended to remove them as directors, in the capacity they were employed, was sufficient to amount to constructive dismissal.
Jason Levien, one of a group of investors, felt the board of directors needed scaling down to be more effective and manageable, with only significant shareholders to remain on the main board, with the right to a board seat being 5% ownership.
Having discovered that the sale was to go ahead, Mr Penny and Mr Keefe met with chairman Huw Jenkins and vice-chairman Leigh Dineen on June 7, 2016, when they indicated they would not resign as directors. The next meeting was on July 19, 2016, when Mr Jenkins informed both men they were to resign as directors with immediate effect.
They discovered for the first time how it had been agreed as part of the sale process that the resignations of some of the directors, whose role was at variance with Mr Levien’s vision, would be delivered prior to the sale.
After the meeting with Mr Jenkins, lawyer Chris Farnell had a conversation with the claimants. Tribunal documents reveal it is “not in dispute” that they were told their refusal to resign could put the whole acquisition at risk, resulting in costly litigation.
The men alleged it was a “direct threat”, but Mr Farnell stated he was pointing out the potential consequences of their actions for all involved, not simply them.
On August 4, it was discovered that according to Companies House, Mr Penny and Mr Keefe had been removed as directors on July 21, 2016. It came after minutes from a board meeting on July 21, signed as being an accurate record by Mr Jenkins, were lodged with Companies House as part of the documentation relating to the purchase, stating Mr Penny and Mr Keefe had resigned and their resignations accepted at the meeting.
But they had never resigned and there had been no such meeting. Documents stated Mr Penny and Mr Keefe claimed Mr Jenkins “achieved by fraud what had not been able to achieve by persuasion” and that there can be “no innocent explanation”.
There was no specific explanation as to how it happened, apart from that documentation, prepared in anticipation of the purchase, had been signed and supplied to Companies House in error – an explanation which was accepted, the tribunal documents read.
It added: “Having seen and heard the evidence of Mr Jenkins, we view it as improbable in the extreme that he was a party in a deliberate deception as alleged, and that the more likely explanation is simply human.”
The tribunal judged that the new role proposed would be substantially different to that which the claimants had previously occupied, amounting to a fundamental breach of contract, entitling them to resign.
The tribunal ruled the club did not engage in any process of consultation with the claimants as to the proposal to remove them as directors, something described as “substantively unfair”.
It added that while the club was entitled to have whoever the new owners wished as directors, Mr Penny and Mr Keefe had been directors for some 14 years, and the distinction between them and shareholder directors was that they had not invested money in the club nor thought to have their contribution recognised by the allocation of some shareholding.
“This, in our judgement, should at the very least have allowed for a discussion as to whether the strict application of the respondent’s management theory might be varied in the case of the claimants,” it read.
It added: “This is a very unusual, if not unique set of circumstances... It is in our view a paradigm case underlining the importance of consultation and the entire absence of it in our judgement renders the dismissals unfair.”