Employees who engaged in sexual activity at leaving party were not fired, unlike their manager, tribunal hears

A banking executive who was sacked after an investigation into two of his employees who engaged in sexual activity outside work hours was unfairly dismissed, a tribunal has ruled.

George Eleftheriou claimed he was made a ‘scapegoat’ after being dismissed for breaching conduct rules, and a breakdown of trust and confidence. But the employees involved were not dismissed, which the tribunal ruled was a factor in its finding of unfair dismissal.

The London Central Tribunal heard that Eleftheriou was managing partner in Clydesdale Bank’s private banking division from November 2010, before being promoted to head of the regional business and private banking centre in 2012 until his dismissal on 17 October 2016.

Because of the personal nature of the events, those involved in this case were anonymised as N, Z, S and C. Eleftheriou managed six employees, including S, the head of private banking in London, Z and N.

Allegations against Eleftheriou, which led to his dismissal, arose after a leaving party for a member of Eleftheriou’s team, which he did not attend, on 22 April 2016 at the Dirty Martini bar in the City of London. At this event, Z, a male, and N, who is female, were found together in the ladies’ lavatory before being ejected by security – an incident about which Z informed Eleftheriou.

Eleftheriou – who had a clean disciplinary record – and his line manager then received an anonymous letter alleging breaches of the banking code of conduct, including the incident. The letter stated that Eleftheriou told employees the incident had been dealt with and that he had signed off £150 in champagne expensed by Z, proving that he knew of the incident. It also alleged that Eleftheriou and N had previously engaged in sexual activity in the office, all of which the claimant denied.

During an investigation, Eleftheriou was interviewed by his line manager, at which time members of staff noted that a clique existed, and there were rumours of Z and N’s misconduct.

Further investigatory meetings occurred with Eleftheriou, S, Z and N. Eleftheriou said he was aware of sexual behaviour within the team, and said Z had spoken privately to him to confirm he had followed N into the bathroom to talk before being thrown out. Eleftheriou said he “lectured” N about the importance of maintaining the bank’s brand and good leadership, and told him to “think about” what had happened.

At the meeting, Eleftheriou was accused of favouring certain employees, which he denied, and said if there was a clique he would “deal with it”. He added that the head of private banking knew of the alleged incident and had said it was “ok” as a “one-off, childish” occurrence. But she had added that if something else materialised of this nature it must “taken seriously” or it could “grow arms and legs”.

The bank dismissed Eleftheriou for gross misconduct for breaching of the code of conduct, and a breakdown in trust and confidence in him. C and N were also dismissed, the latter for sending explicit messages to another colleague. But Z only received a final written warning. S was also given a final written warning, coupled with a demotion, for failing to act in regard to Z and N's conduct, at Dirty Martini and previously, colluding with Z over what to tell the claimant about the incident, breaching the investigation's confidentiality, and using offensive and derogatory language in instant messages. 

The tribunal also heard that Eleftheriou had texted N, referring to her as his ‘work wife’, and signed off the message with an ‘x’. He later claimed he sent it in error.

In ruling that Eleftheriou was unfairly dismissed, Judge Glennie found the dismissal was outside the range of reasonable responses. He explained that Eleftheriou was not present at the bar and was not implicated in what occurred. His management of the situation was a matter of judgement, and others involved had received lesser sanctions from the bank.

However, he later found that although Clydesdale Bank relied incorrectly in its dismissal of the claimant on its own perception of his conduct, Eleftheriou had contributed to his dismissal significantly – meaning that his basic or compensatory awards would be reduced by a third.

He had contributed by allowing a working environment to arise in which there was at least the perception of the existence of a favoured clique, and then failing to undertake a more formal or rigorous investigation of an incident that involved two members of the perceived clique, the judge found.

Jeremy Coy, associate at Russell-Cooke, told People Management that the fact that those who “engaged in the alleged incident in the bathroom were given a lesser sanction than Eleftheriou was crucial” in this case.

Given Eleftheriou wasn’t present during the event, he was potentially being made a ‘scapegoat’,” Coy said. “Employers need to treat employees fairly, no matter their seniority, and make sure sanctions are reasonable.”

Helen Watson, partner at Aaron & Partners, advised employers to consider employees’ disciplinary records before applying sanctions, and ensure sanctions correlate with the severity of the allegations.

She said: “A fair and reasonable disciplinary process must be carried out and applied consistently. In this instance, important facts in respect of Eleftheriou reporting the incident to his line manager were ignored by the employer in reaching his sanction.”

A Clydesdale Bank spokesperson said: “We are disappointed at the outcome of the tribunal, but cannot comment any further at this time as the case will not be closed until after the [remedy] hearing on 11 January 2018.”

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