Tribunal rules that underperforming Sales Director was unfairly dismissed after submitting £60k expenses claim

Paolo Porchetti was offered a lucrative settlement package by bosses at Brush Electrical Machines to leave the company after they became ‘immensely frustrated’ by his poor work.

However, the Sales Director stunned managers by submitting a huge expenses claim worth almost £60,000. He further failed to return an iPad, attempted to return a company car that needed thousands of pounds of repairs, and also gave back a broken laptop.

Bosses abandoned negotiations and fired him instead – but Mr Porchetti has now won an unfair dismissal claim.

The remote tribunal ruled that Mr P Porchetti, who was in the process of negotiating a settlement deal of approximately £660,000 for him to exit the company following years of consistent underperformance, was dismissed without proper procedure after he produced the unfiled expenses that led to a breakdown in talks.

Nevertheless, the tribunal reduced his basic and compensatory award to nothing on the basis that, had a fair process been run, Porchetti would still have been dismissed.

The tribunal said Porchetti was the “author of his own misfortune” when he submitted the backdated expenses. He also contributed to his dismissal when he returned a rental car and his company laptop damaged, the tribunal said.

A claim of unauthorised wages was successful and compensation will be determined at a remedy hearing. A separate claim of race discrimination was not upheld.

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The Background

Porchetti worked as a sales director for Brush Electrical Machines for four years from 2015 until his dismissal on 30 July 2019. In January 2017, he was appointed as the After Market Sales Director for the Asia-Pacific region. At the time of his dismissal, he was based in Kuala Lumpur, Malaysia.

However, the tribunal found that from early on in Porchetti’s employment, it became apparent that he was “not particularly effective at dealing with matters promptly”.

Porchetti’s line manager, the Company’s Executive Sales Director, Mr Van Schaik, told the tribunal that he had to constantly chase Porchetti to submit expense reports and create calendar reminders, and colleagues complained that he was unavailable.

From 2017 to 2019, Van Schaik raised several issues with Porchetti’s performance, including that he failed to respond to key clients, which Van Schaik described in an email to Porchetti as “poor performance”, and that he was not successful in improving his sales team’s performance.

The tribunal heard Porchetti’s performance caused disruption within the business, which the tribunal said was in “steep decline” under his responsibility.

In February 2019, it was decided in a meeting between Van Schaik, the Group HR Director, Christian Lordereau, and the Company CEO, Chris Abbott, that it would be “difficult” to put Porchetti on a review given his seniority.

It was instead decided that Lordereau, who is also a trained lawyer, would have a “without-prejudice conversation” with Porchetti to explore if he would be interested in a paid exit, but keeping open the idea that he may want to stay and focus on his performance.

The tribunal heard there was an “amicable discussion” on 15 May 2019 during a trip to Singapore, where a settlement sum of six months’ pay, totalling £660,000, was agreed.

However, that evening over dinner with Lordereau and Van Schaik, Porchetti admitted he had three years of expenses to claim, and kept the receipts in a shoebox. The tribunal heard that the company expense policy was that all authorised expenses for trips should be forwarded to the finance department within 14 days from the date of return.

The tribunal heard evidence that Porchetti “deliberately chose not to disclose or reveal the extent of [the expenses] as he knew it would jeopardise the settlement”.

Van Schaik agreed to review them but did not make a commitment to pay them.

The tribunal then heard that following the meeting, on 17 May, Porchetti returned his rental car in a “damaged state” without reporting the damage to the business or local police, which the tribunal said showed he had “little respect for property and local laws”.

Lordereau contacted him on 22 May to inform him that £2,000 would be deducted from the settlement amount, which he agreed to. However, Porchetti later returned his laptop in a damaged condition and also failed to return his iPad.

In early June, Porchetti submitted his outstanding expenses which amounted to £59,252.43, including some claims dating back to late 2015/16.

The company refused to pay and the settlement negotiations broke down, which resulted in the employer feeling the relationship was “irreparable”. Brush Electrical Machines terminated Porchetti’s employment on 30 July.

The tribunal said that the firm conceded prior to the hearing that Porchetti’s dismissal was quick and “procedurally unfair”.

However, employment judge Victoria Butler upheld the company’s assertion that the dismissal was substantively fair, and reduced Porchetti’s compensation and basic award by 100 per cent to nothing because he would have been dismissed regardless.

She said Porchetti’s actions “amounted to blameworthy conduct leading directly to his dismissal”, adding that his failure to comply with the company’s expense policy led to the breakdown of the settlement negotiations and his dismissal.

What can be learned from this case:

The employer was lucky the claimant’s compensation was completely dismissed.

It highlights:

•  The importance of following a fair procedure no matter how ‘just’ you may feel in moving to dismissal.
• The care that needs to be taken when having without-prejudice conversations. If a settlement never gets signed, a subsequent dismissal without a process could result in unfair dismissal so great care needs to be taken.

If you have a long-standing performance concern that needs to be addressed and want to avoid the pitfalls, please get in touch with our highly experienced team.