Irregular settlement payments

[needtoknow2]

A school has made a series of two payments within 12 calendar months to effectively rid themselves of an awkward employee. The employer is a school. The payments breached the code of conduct for financial payments laid out in the Academy Financial Handbook.

The first payment was in settlement of an tribunal matter related to breaches of the Equality Act. It was a substantial five figure sum.

The employee returned to work and was suspended within twelve months. Without investigation the employee was paid a further years salary made to sign an NDA, given a reference and made to leave.
According to the rules in the financial handbook there are strict rules that govern these types of payments.
By breaching these rules it would appear that the school has misused public funds.
Should this be reported to any authorities as a matter of public interest?

It’s been over a year since I read the Academies Financial Handbook. Can you point me to which section/sections you feel these payments may have breached?

How do you have such a detailed account of this matter - who actually leaked the information to you if it was meant to have been secured by a NDA (has it been breached?)

I’m guessing OP takes the minutes or is a parent governor or has a talkative parent governor as a mate...,

I was a director of a Multi Academy Trust for several years.

It somewhat makes the NDA about as locktight as a very leaky sieve then doesn't it .

That said, NDAs are being discredited in general as a mechanism to try and 'put a lid on' employment issues/wrong-doing (a la Philip Green et al).

The way the OP is worded, there seems to have been an absence of governance and scrutiny that enabled the payments to have been authorised. I would have thought it was appropriate for the OP to express concerns about the approval of such payments if they breached the Trust's Handbook guidelines, even at the time the matter was being discussed in the meeting.

As we always say on here, an employer will only be incentivised to get out their cheque book and choose the settlement agreement route if there was a strong enough reason not to defend a prospective claim at Tribunal. If it was done on the basis of a 'commercial settlement' to mitigate legal costs, is that not better for the Trust than fighting it to the bitter end and racking up solicitors/barristers fees?

Hopefully @needtoknow2 can give further information....

”The way the OP is worded, there seems to have been an absence of governance and scrutiny that enabled the payments to have been authorised”

Could be that. Or it could be that the OP disapproved of the payments being made at all. I can see that happening.

For what it's worth, all of the following seemed to have been breached, if my information is correct:

“if the settlement is justified, the trust would then need to consider the level of settlement. This must be less than the legal assessment of what the relevant body (e.g. an employment tribunal) is likely to award in the circumstances”

“Staff severance payments should not be made where they could be seen as a reward for failure, such as gross misconduct or poor performance.”

“Where the trust is considering a non-statutory/non-contractual payment of £50,000 or more EFA’s prior approval must be obtained before the trust makes any binding settlement offer to staff.”

According to the Education and Skills Funding Agency (ESFA), all settlement agreements must have a specific clause about the right to make a public disclosure in spite of confidentiality clauses

If any of this proves to be true, has any law been broken? If a public interest disclosure is warranted, who might it be made to?

It appears that the school settled for a figure that was way in excess of what the claim was worth. Only it can explain why. However the publication of a damning Ofsted report, in which it (the school) was criticised in no uncertain terms for the way in which treated particular groups, might have gone a long way to persuade them to take this position.

Either way, a damning Ofsted report is not a good reason to breach the rules of the Financial handbook or the ESFA rules.
Is this an appropriate use of public funds, seeing that the money might have been used to cover up potential wrongdoing/illegal acts?

Is this an appropriate use of public funds, seeing that the money might have been used to cover up potential wrongdoing/illegal acts?

It is a good question to ask, as settlement agreements and the associated NDA are nowadays being frowned upon because they are often used to silence the beneficiary of the SA from disclosing the details and circumstances of why the payment was made (covering up malpractice or wrongdoing); - hence my comment upthread:-

That said, NDAs are being discredited in general as a mechanism to try and 'put a lid on' employment issues/wrong-doing (a la Philip Green et al)

If your statement is accurate The first payment was in settlement of an tribunal matter related to breaches of the Equality Act. It was a substantial five figure sum then arguably the wronged employee was duly compensated for being discriminated against - It entirely depends on what a substantial 5 figures mean? If it's £15,000 or similar, that isn't unrealistic, if it's £50,000 that could be deemed excessive. I can't comment on the 2nd payment as it isn't clear why it was justified.

My fwiw opinion is:

Consider whether you're opening yourself up to being vulnerable and a target for being retaliated against if you intervene after-the-fact;

Ask yourself what can be gained from what is effectively you whistleblowing them. How will your actions make a difference, will you be listened to and is it worth the risk of being disenfranchised. Will it risk your livelihood for example?

Would you be a lone voice in the wilderness, with nobody there to support you (people very often distance themselves to protect their position or because they don't want the hassle and complexity).

The employee returned to work and was suspended within twelve months. Without investigation the employee was paid a further years salary

Where did you get this information from? If it's second hand information, then it isn't validated and you have no reason to trust its accuracy or authenticity, so I wouldn't hang your hat on it as evidence.

I have seen evidence of both payments. After the first payment (which was well in excess of the 15,000 muted earlier, the employee returned to work much to the annoyance of the school.

Ten months later a senior leader who was presence throughout most of the process made an allegation against the employee. The nature of the complaint would normally have investigated and dealt with informally. Not this time. The employee was immediately suspended pending a formal investigation. The employee was never interviewed by an investigator. However, he/she was offered a payment of monies in excess of another 25 thousand pounds, provided with an agreed reference and told to go away.

There are major issues that meet the public interest disclosure criteria.

However look at things in their simplest terms:

• a governing body and headteacher with a tight budget, whilst making people redundant, decide to use public funds in this wholly inappropriate way.
• a school compromises the future employment of a member of staff by making what appears to be an unfounded allegation (NB no investigation). Remember, references notwithstanding, an employee is obliged to acknowledge suspensions and investigations on all future application forms.
• the senior members of staff continue on their merry way, feted with unwarranted respect

It's fair to say that everyone is tired of discussions about breaches of the Equality Act and discrimination. For a start it undermines everyone's right to claim that they obtained their positions on merit. It also makes a mockery of equality policies and initiatives.

In terms of a public interest disclosure, it not whether it should be made but to whom.

The 2 payments are separate

The appropriateness of the 2nd payment would depend on the salary that the person was on? I assume that the unions were involved and that the person took their advice before taking the payment and the compromise reference?

The appropriateness of the 2nd payment would depend on the salary that the person was on?

It is never appropriate to use someone else's money in this way. This is not a private business. If a private individual chooses to use their own money in this way then fair enough.

The rules that govern such payments forbid it, notwithstanding advice from unions or other advisors.

advice before taking the payment
You either take the offer or have your career terminally compromise because investigations of this nature lead to disciplinaries and then sanctions. Try explaining that to a future employer, if indeed they bother to shortlist you.

It's a bit like having a power of attorney and then using the money of your ward because to go on a Caribbean holiday.

On a side note, is it me or are most of these NDA and compromise agreements at schools basically worthless in terms of confidentiality?

The rules that govern such payments forbid it, notwithstanding advice from unions or other advisors

If I read you correctly as to what has happened, no they don't.

Remember that the £50,000 only applies to the non-statutory/non-contractual part of the payout. So payment in lieu of notice, holiday pay and so on don't count towards the £50,000 limit.

Note also that each of the two payments you mention is treated in isolation under the rules. The first was a compensation payment, the second was a severance payment. There is a £50,000 limit for each of these. The member of staff could have been paid £49,999 on each occasion without breaching the limit.

Provided the limit was not breached by either payment, the central question is whether there was legal advice that suggested the trust would lose at employment tribunal and face a larger payout than the settlement they have reached. If such advice existed there is no problem with the trust making these payments.

prh47bridge

It would appear, having looked at the relevant section that your specific point is correct.

However, I have delved a bit deeper and looked at the published company accounts for both financial years that the payments fell into. The school is classified as an academy and as such must published annual accounts. Both payments were specifically mentioned and listed as severance payments. That certainly could not have been the case.

I suspect this is not oversight and they actually were trying to hide the nature of these payments; their conduct might easily bring the organisation into disrepute and be difficult to explain without allegations of misconduct being levelled against management.

The overall figure paid in a twelve month period was in excess of 50K to someone who did not do anything wrong.

The central point is that other peoples' money, public funds, were more than likely used to hide potential wrongdoing. It's interesting that no one seems bothered by that point. It is your money too.

Surely trying to hide potentially discriminatory behaviour in this way is morally untenable and potentially illegal. (breaching the Equality Act)

I suspect, also, that an allegation of false accounting might be difficult to prove but not unreasonable to make.

If, as I suspect, the law is changed in respect of such agreements (NDAs), many employers will be sit very uncomfortably.

Definitely not a breach of the Equality Act. There is nothing in that act that prevents an organisation settling a claim and putting an NDA in place to prevent publicity.

An allegation of false accounting will not fly. For such an allegation to succeed you have to show that the accused rendered a false account to make a gain for themselves or another, or to cause another loss. Simply recording what appears to be compensation in settlement of a claim as a severance payment doesn't come close.

Under the Public Interest Disclosure Act 1998 an NDA cannot prevent an employee or ex-employee from whistleblowing. For all the fuss kicked up by the press (who would, of course, like everything disclosed as it helps to sell papers), I doubt that any change in the law would go beyond minor extensions to the definition of whistleblowing.

The overall figure paid in a twelve month period was in excess of 50K to someone who did not do anything wrong

The payment is because they didn't do anything wrong.

The central point is that other peoples' money, public funds, were more than likely used to hide potential wrongdoing. It's interesting that no one seems bothered by that point. It is your money too

The academy will not have received a single penny in additional public funds as a result of this. It will have reduced the amount of money available for other things the academy might need. And the alternative was to defend themselves in tribunal with a good chance they would lose at higher cost. I am at a loss as to why you think people should get worked up about an academy keeping costs down.

I'm not clear what you think should have happened. Do you think the member of staff should have received no compensation for the breach of the Equality Act? Or should the Trust have defended the case in tribunal, potentially resulting in considerably higher costs, with legal fees to pay in addition to any compensation awarded?

I'm not clear what you think should have happened.

If you don't know, I can't help you but i'll try once more. Every member of staff responsible for the incidents and treatment that led to the coerced removal of this member of staff should be the subject of allegations of gross misconduct and never allowed to manage public funds again, much more govern as school leaders.

It is never appropriate to deliberately coerce an individual, that you know has done nothing wrong, into resigning especially when you know it will compromise their career and cost the state many thousands of pounds. I doubt very much that the employee who raised the original issues did so with resignation in mind.

Turn the situation around, if the employee had, knowingly and recklessly, behaved in a way that cost the school tens of thousands of pounds, on two occasions within 12 months, they would have found themselves facing an allegation of gross misconduct.

Clearly the school had breached the Equality Act and were using public funds to hide the matter; this is not what public funds are for.

There seems an unwillignness on the part of some posters to acknowledge this.

I am convinced that this matter should be highlighted via a public interest disclosure, at the appropriate time. Perhaps if something comes of it public employers might be more respectful of the rights of employees to complain and highlight breaches of the law without fear of retribution.

As you feel so strongly what are you planning to do?

There is a Government Spending watchdog mentioned in this recent Daily Telegraph article. They seem to be the Agency that focuses on misuse of public funds. Incidentally, the £850,000 payout cited in the article makes your case look like chicken-feed.

www.telegraph.co.uk/news/2019/01/23/academy-chiefs-misuse-public-money-should-face-tougher-sanctions/

Before the employee took action in tribunal they would have had to go through the trust's grievance procedure. The fact this went to tribunal suggests that the trust believe there was no breach of the Equality Act.

Once the employee started a tribunal case, the trust presumably took legal advice which told them there was a significant chance they would lose (which is not the same as saying they definitely did breach the Equality Act). The legal advice would have told them how much the employee was likely to be awarded. Taking this and the legal costs into account, the trust has clearly decided to offer a settlement to the employee. The settlement offered would be less than the amount the employee could have been awarded by tribunal, saving the trust money as compared with going to tribunal and losing but costing them money if they would have won had the case gone to tribunal. The employer would almost certainly have stated that the offer was being made without an admission of liability.

The employee then had the choice of rejecting the offer and going to tribunal with the possibility they might get a higher award. Alternatively they could accept the offer, avoiding the stress of a tribunal hearing and the possibility that they might lose and end up with nothing.

In this situation, since the trust is not admitting any wrongdoing, it is fairly normal for both sides to agree not to say anything about each other.

Once the employee started tribunal action, the only choices for the trust were to either arrive at a settlement with the employee or defend the action. That's what I was talking about when I asked what you think should have happened. Since you appear to be against them settling, perhaps you think they should have defended the action and tried to ensure the employee received no compensation at all.

I don't see settling as misuse of public funds. And settling with the employee does not preclude the trust taking action against any staff that caused the trust to breach the Equality Act, although I suspect the trust continues to believe that it did nothing wrong.

Once an employee has taken their employer to tribunal the future relationship is always going to be difficult. You clearly feel that the employee was mistreated. You may be right. But I am not surprised the employee was offered a settlement agreement to leave.

The NDA will not (indeed, cannot) prevent the employee from whistleblowing as I've already commented.

By all means refer this to the spending watchdog and/or the EFA. But personally I doubt you will get anywhere with this.

"“if the settlement is justified, the trust would then need to consider the level of settlement. This must be less than the legal assessment of what the relevant body (e.g. an employment tribunal) is likely to award in the circumstances”

Have you seen the legal assessment of what allowing a tribunal claim to proceed would have cost the Trust?

“Staff severance payments should not be made where they could be seen as a reward for failure, such as gross misconduct or poor performance.”

I'm a bit confused that you think this requirement has been breached, as later on in the thread you seem to think the employee in receipt of the settlement is the wronged party, rather than being rewarded for their failure/poor conduct?

“Where the trust is considering a non-statutory/non-contractual payment of £50,000 or more EFA’s prior approval must be obtained before the trust makes any binding settlement offer to staff.”

Doesn't sound like this was breached.

"According to the Education and Skills Funding Agency (ESFA), all settlement agreements must have a specific clause about the right to make a public disclosure in spite of confidentiality clauses"

Without having seen the settlement agreement how do you know this clause wasn't included? It's completely standard for any settlement agreement, in education or otherwise.

You may well be right about some of this stuff. I think it's unlikely those specific requirements in the AFH have been technically breached, but that isn't to say the Trust hasn't acted wrongly.

As to what you do about it, have you had a look at the Trust's whistleblowing policy? Assuming you are a member of staff, if you've seen the payments going through.

You have given a lot of info but also say 'if the information is correct'.

Is it hearsay?

OP - is it you who’s been on the receiving end of all this ?
How invested are you in this can of worms ?

Schools do this a lot ime. When they want someone gone then they’ll do anything (& pay anything) to get rid of them. Deficit budgets go out of the window in these circumstances.
Often as the result of discriminatory behaviour by the school, sometimes just plain bullying.

If it is you, is an ombudsman/ whistle blowing exercise worth the risk to the payoff ?
If it’s not you - you need to decide if you want to put yourself out there but be prepared for the fallout given all other parties (I’m assuming!) are happy with the arrangement - apart from the tax paying public whose funds it actually is of course.