Care charity boss criticised but wins employment tribunal case

The chief executive of a London care charity was unfairly dismissed by his organisation, an employment tribunal has found, although the judge raised concerns that some of his behaviour was “wholly inappropriate”.

Kevin Drugan, who was chief executive of Carers Lewisham until July 2018, won a case for unfair dismissal and breach of contract against the charity, according to court documents published yesterday.  

But the tribunal concluded that Drugan was “a very significant contributor to his own dismissal”, and as a result cut the amount of compensation he may receive.

The hearing was delayed for more than four years, in part because of the coronavirus crisis.

Drugan brought the case for constructive unfair dismissal in October 2018, arguing that he resigned following conduct by the charity that constituted “a fundamental breach of his employment contract”, the court documents say. The charity then terminated Drugan’s employment during his notice period over allegations of gross misconduct.

The charity’s “finances were in a somewhat precarious state” in 2018, the judge said, and there had been disagreements between Drugan and some of his trustees over managing staff and expenditure.

The judge accepted evidence that one trustee had spoken “inappropriately” to Drugan, and noted that the chief executive and the board had clashed when Drugan planned to make a member of staff redundant only for the employee to be reinstated by trustees after appealing against the redundancy. 

Drugan told the tribunal that “this decision, and the way that it had been implemented, had made his role as chief executive untenable, as it cut across his own strategy for bringing the organisation’s finances into a better position”.

But the tribunal concluded that the board’s decisions had been appropriate in this case. 

It said: “A chief executive whose strategy and vision does not align with that of the board of an organisation may decide that the situation is untenable because he will not be able to work productively with a board whose vision differs radically from his own. 

“But that does not by itself mean that there has been a repudiatory breach of the chief executive’s contract – far from it. A charity chief executive does not have a contractual right to agreement from the board of trustees about measures he chooses to adopt. 

“A board of trustees is entitled to reach its own view of the course of action that will best serve the interests of the charity – and indeed they are under a duty as trustees to form that view independently of the wishes of the chief executive.”

The judge upheld Drugan’s claim for wrongful dismissal because the investigation into allegations that led trustees to terminate Drugan’s contract “did not in fact at any stage include a meeting with [Drugan] himself”.

This breached the charity’s disciplinary procedure, which “could not have been clearer on this point”, the tribunal found.

However, the judge described Drugan as “a very significant contributor to his own dismissal”, and referred to concerns raised inside the charity by whistleblowers worried about how the chief executive handled its finances.

The chief executive and the board had agreed “what were in effect financial subsidies” to Drugan following a cycling accident, according to tribunal documents. All parties expected that the money would be paid back once a separate personal injury claim had been settled.

But the judge’s conclusions said that Drugan “in my judgement made use of the [charity]’s finances in a way that was wholly inappropriate, effectively using his employer, a small and impecunious charity, as a banking facility”. 

A report produced by the charity in June 2018 identified several financial issues, according to the tribunal documents, including payments to a gym and £5,000 in taxi bills.

The judge said: “It was in my view clearly improper for him to be, in effect, borrowing significant sums from his employer, without proper accountability and without a clear guarantee that he would eventually be in funds and able to pay it back. 

“In a small charity such as [Carers Lewisham] the chief executive is relied upon to act with the highest standards of integrity, without the need for daily oversight and with an exceptionally high degree of trust placed in the occupant of the role by trustees.” 

The judge added that, in his opinion, Drugan “exploited the management weaknesses of his employer to his own advantage and, whether or not he was technically dishonest, this was nevertheless wholly inappropriate conduct. 

“None of the investigation into his conduct as regards the [charity]’s funds would have been necessary if he had not allowed this state of affairs to unfold”.

The tribunal therefore concluded that Drugan had made a “considerable contribution of 80 per cent” to his dismissal. 

The judge said: “In other words, 80 per cent of the reason for the dismissal lay at the claimant’s own door as a result of his failure to observe proper boundaries between his personal finances and those of the [charity]. I fall short of saying 100 per cent because of the contribution made by the serious shortcomings in the procedure adopted by the trustees.” 

The judge recommended that both the basic and compensatory awards to Drugan should subsequently be reduced by 80 per cent.

Carers Lewisham did not respond to a request for comment. Third Sector approached Drugan via his most recent employers, who passed on the query to him, but received no reply.

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