BBC furore: When is a resignation not a resignation?
The Chairman of the BBC Trust, Lord Patten, has now published his explanation of the termination payment made to Mr Entwhistle, which reveals that:
- The contract of employment contained an unbalanced notice arrangement. Mr Entwistle was required to give 6 months' notice, but the BBC had to give 12 months' notice in order to terminate.
- The departure has been badged a 'consensual resignation'.
- 12 months' pay was agreed in the interests of speed and to retain Mr Entwistle's co-operation during the transitional period while a new Director-General is recruited.
The case raises a number of points for companies to note:
- Whatever the label given to a termination, the essential question from a legal perspective is whether the employee has been dismissed. A constructive dismissal, in which the employee resigns in response to a fundamental breach of contract by the employer, is still a dismissal for these purposes.
- Labelling a departure a resignation, even by agreement, is by no means a failsafe option. Where it is offered in the face of the threat of dismissal, a "voluntary" resignation can be re-categorised as a dismissal, giving rise to the same degree of risk and liability as a straightforward termination by the employer.
- If this is what happened at the BBC, the decision to treat Mr Entwistle as if he had been dismissed would be all the easier to understand.
- Despite media dismay over the figure paid in this case, it may be that the contractual provisions have been followed to the letter. In any event, many employers will recognise the commercial rationale for factoring in legal risk, management time, and legal costs that might be spent in defending any claims, even if that means making a slightly higher payment (subject to Companies Act requirements for shareholder approval in some cases) in order to get to a speedy resolution.